Ladies and gentlemen, good evening and welcome to Hitachi Energy India Limited's Q1FY26 Analyst conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. N. Venu, MD and CE O, Hitachi Energy India Limited. Thank you. Over to you, Mr. Venu.
Thank you, Nirav. Good evening, everybody. Thank you for joining us for the Analyst conference call today. I hope you are all doing well. Today we announced our results for the first quarter of the financial year 25-26, and over the next 20-25 minutes, together with my colleague, I will take you through our performance from April 1 to June 30, 2025. For your convenience, I'll read out the slide numbers, and we already uploaded the slide deck in the stock exchange. Today I am joined in the room by our CFO, Ajay Singh, and the General Counsel and Company Secretary, Poovanna Ammatanda, and our Head of Communication and Government Relations, Seema Siddiqui. Throughout the last fiscal, our focus was on balancing operational complexity and efficiency, which helped us continue to achieve a strong order intake, resulting in a record order backlog in first quarter of 25-26.
Despite a volatile geopolitical scenario, the Indian economy remains one of the fastest growing economies. The same will positively impact several ongoing energy initiatives, further strengthening the country's energy ecosystem. I move to slide number three. At Hitachi Energy , you all know by this time we continue to emphasize the importance of safety, integrity, and quality in our day-to-day operations. These are what we call our license to operate, and we never look the other way when we have to deal with them, and they are very key pillars of our work ethic. In the first quarter of the financial year, the focus on safety continued towards keeping the incident frequency rate within the defined corridor by learning from global incidents and also taking timely prevention actions across our sites. It's always heartening to see one's work getting recognized.
On our safety efforts during the quarter, our teams from different businesses received several appreciation letters and awards from our discerning customers. Employees are our strength, and their physical and mental well-being is of the utmost importance for us. This quarter, we organized several initiatives, including multiple awareness sessions on key health topics such as health screening, first aid training, mental health discussions, programs, etc. Also, International Yoga Day was observed across our offices and facilities, with a large number of employees participating in specially designed modules for their areas of operations. Moving to the next slide, slide number four. At Hitachi Energy, our purpose is to inspire the next era of sustainable energy by making the world's energy system more sustainable, secure, resilient, and affordable.
While we march forth to our purpose, the company also ensures that it practices sustainable measures in the three key aspects, i.e., planet, people, and principles. Under planet, we have reduced CO2 emissions by 84% and waste by 16% respectively in our own operations compared to the base year of 2019. The company continues its efforts to reduce fresh water consumption to 25% from 18% in the last financial year. We already achieved the 100% mark of using electricity from renewable sources in all of our operations throughout our sites. When it comes to our people, our focus persists on safety and diversity. We are committed to zero harm and fatalities, zero harm and fatality freeze, and maintain a healthy mix of diversity in our work ecosystem. For principles, the aim is always for zero incidents pertaining to integrity.
I move to slide number five, and I'm sure on the left-hand side you know more than me, but still I'd like to touch upon a couple of points on this. The Indian economy remains one of the fastest growing economies, reflecting the country's resilience and policy-driven growth, today making it the fourth largest economy in the world. The country is experiencing positive economic indicators. Inflation has cooled down to a six-year low of 2.1% in June 2025 along with a surge in total exports and FDI. Though uncertainty looms over U.S. tariffs, we expect more clarity in the coming weeks to ascertain the impact in India and also for our business. Steady economic growth continues to have a positive rub off on the manufacturing segment as the PMI stood at a 14-month high in June 2025 at 58.4.
The scheduled investments in growth segments like renewables, data centers, and Metrorail remain on track for the NEP, the National Energy Plan. The market reports suggest that in the next two years, spending up over INR 1 lakh crore on the Interstate Transmission System network to meet the 2027 NEP target. Furthermore, the focus on discom upgradation and modernization continues. Uttar Pradesh, one of the largest states in India, is looking to privatize two of its four power distribution companies, which is a positive step in the right direction. I move to the next slide, slide number six. This quarter, quarter ending June 30, 2025, our orders total all-time high of INR 11,339.2 crores and revenue stood at INR 1,529.8 crores, growing 365% on orders and 15.3% on the revenue on a year-on-year basis.
Effective execution of high margin orders, sustained operational excellence, and good product mix helped to achieve a high year-on-year growth in profit before tax and profit after tax. Some of the key orders for this quarter include an order from a Power Grid to supply 30 units of 765 kV, 500 F, 500 mega single phase transformers and also the renewable solar found KVGAs and industries 220 kV by 33 kV GIS and semiconductor manufacturing factories in Chennai Rail, several transformers and Scott transformers, and several automation CRP SCADA projects and also service upgrade projects. All this in addition to our HVDC project which we already announced previously.
Moving to the slide number six, sample number seven, this is the one which you know we have announced, this Badla-Fatehpur HVDC project in this quarter from Adani Energy Solutions, which is awarded to the consortium of Hitachi Energy India and B HE L, which is a 6,000 megawatt of 800 kV bipolar bidirectional HVDC project over a distance of 950 km from Badla in Rajasthan to Fatehpur, and our scope includes provide converter, transformer, AC DC control protection, thyristor valve, 765 kV, 400 kV grid connections and magnet systems, etc. If I move to the slide number 8, at Hitachi Energy we have encouraged knowledge exchange across industry stakeholders. To this end, we have organized technical seminars for esteemed customers across geographical boundaries. The sessions focused on the advanced features and benefits of our hairpin type dead tank and EconiQ solutions.
The sessions were attended by domestic utilities and national utilities of neighboring countries, rail segment customers, and also the new age customers to name a few. In our keenness to level up our services, we have received two industry recognitions for consistent quality improvements. Our teams won the Gold award at QCFI Convention 2025 for Transformer and CII 52nd Kaizen Competition 2025 for Grid Automation. I'm also happy to inform you that we expanded our Women in Engineering program by welcoming a new batch of students from Gujarat. Also, as part of our commitment to education, we have undertaken the task of upgrading two government schools in Madodhara with smart classes. We continue to encourage our employees to participate and represent the companies on various platforms.
During this quarter, two of our women colleagues represented Hitachi Energy as the key speakers at the IEEE Power and Energy Society and IEEE Asia 2025 events, and the company Hitachi Energy India is a key contributor to the National Energy Policy through India Energy Stake. Moving to slide number nine, as a pioneering technology leader, we remain steadfast in our commitment to strengthening the nation's energy security through a range of impactful projects. This quarter, we successfully commissioned some key projects, and I would like to take a moment to highlight a few of them. We commissioned a 66 kV GIS transformer bay extension at Kerala Delhi for Tata Power Delhi Distribution Limited, a 412x220 kV AIS substation at Lapanga, Odisha for Aditya Birla Aluminum smelter, bay extension in Odisha, and installation in Chhattisgarh respectively for OPTCL and BALCO.
For all these commissioned projects, our teams were responsible for designing, engineering, manufacturing, supplying, erecting, testing, and commissioning according to the defined scope of work. Moving to slide number nine to provide some more color on the orders received this quarter in terms of segment, the transmission continued to lead the order book, followed by orders from the rail and metro and data center in Q1 FY25-26. Both transmission and rail metro experienced a sharp growth of 625% and 845% respectively. The data center segment witnessed almost a 7% growth, and industry growth is at 23%. However, there is a decline of 25% in renewables wind and solar, which we feel is a temporary phenomenon and it's a timing issue. In the order mix shown on the right in the graph, you can see the projects have taken the lead.
Of course, if you look at the order mix on the right-hand side, this is without HVDC. If you do with HVDC, the project takes the leap, but without HVDC scenario, the products continue to be higher, followed by the projects and services. Moving to the next slide, which is our further levers of our growth: service and exports. Both services and exports remain consistent in this year as part of our order book, and diverse geographies and industries help sustain export momentum. Exports maintained consistently by contributing nearly 25%, 24.7%, etc., order book, that is without considering the HVDC. This quarter export orders were received from Europe, South America, and Asia, ranging from common apparatus and devices, capacitors, filters, circuit breakers, grid automation, etc. Service orders grew 90% year on year.
This is also our first quarter after we carved out our new service business, which started from both effective from April 1, 2025, and contributed a high single digit to the overall order book. Some of the key service orders include SCADA upgrades, equipment replacement, and annual maintenance contracts. As you are aware, we introduced our service business, which I have already told you, and basically the purpose of the service business unit is to intensify life cycle engagement with our customers, not only utilities but also industries and the new age customers. All of our business units are working closely with the service business unit to maximize our reach. I now go to slide number 12 and hand over to our CFO, Ajay, to take us through this slide and the next slide. Over to you, Ajay.
Thank you Venu and good evening to all. Hope you are all doing well at your end. Let me take you through the financial performance for quarter one 25-26. In this quarter ending 30 June, orders were INR 11,339 crore, up to 365% year on year. This was primarily because of the large order of Badla-Fatehpur HVDC project order that we booked in this particular quarter and that is the result. You see we closed the highest ever order backlog of INR 29,135 crore, which provides the visibility of revenue for the famous quarters. The company delivered a strong revenue performance of INR 15,029 crore with 15.3% growth Y on Y and this actually happened from very good order execution during the quarter and constant improvement on the overall operational efficiency.
Furthermore, our continuous focus on the effective execution of the high margin order, sustained operational excellence and a good product mix and also increased export momentum saw a phenomenal Y on Y growth in the profit before tax and profit after tax. If you see the PBT and PAT, PBT is standing at INR 176.9 crore and PAT we closed at INR 131.6 crore respectively. If you see the operational EBITDA, operational EBITDA for the quarter stood at INR 170.2 crore.
crores, and this has resulted in a d ouble digit margin of 11.1% for this particular quarter. If you go to the next slide, let me see a little bit dissect more on the cost structure, how we fared. If you see for the three months ended the 30th of June 2025, of the total income INR 1,529.8 crores, the material cost was 53.8%. In this particular quarter, as we discussed earlier, there is a very good development on the gross margin which has really helped in the bottom line development. Personnel expenses were 9.5% and if I compare with Y-on-Y of last year, 9.2%, fairly I will say they are consistent. Other expenses 22.7%, again if I compare Y-on-Y, 23.6%, I will say it is consistent. In this particular quarter, we had exchange and commodity loss of INR 9.4 crores, depreciation INR 25 crores.
Basically, if you see, there is a slight increase and this is mainly because of the capitalization for the CapEx projects that we are doing, continue doing that. Finance cost is INR 4 crores which has come down. If I compare Y-on-Y, and majorly because we do not have any short term borrowings in this particular quarter, and that is how the development we see in this particular quarter. We are able to close the PAT INR 131.6 crore of 8.6%. With this, I hand over to Venu for the closing slide.
Thank you Ajay. If I move to the slide that is slide number 14, which is our priorities for the coming quarters and the whole of the financial year. As we closed the first quarter of this financial year, our focus remained on the dual objectives of maintaining growth momentum and enhancing overall efficiency in all spheres of our work. Maintaining our leadership in core segments—renewable utilities, HVDC, industries, infrastructures—remains our key priority. We consistently endeavor to harness potential opportunities in new segments like data center and focus strategies to leverage opportunities in service export and digital segment. Furthermore, the focus will remain on strengthening the service business in India, and the company will continue to drive productivity with an emphasis on operational excellence to improve productivity, quality, and opportunities under one Hitachi umbrella to leverage synergies, et cetera.
On the business front, consolidated efforts will be made to leverage the large order backlog for revenue accretion and margin accretion and also focus strategy for the inclusion of the capital rate during the QIP to complete the expansion projects in line with our timeline strategies, et cetera. With safety deeply embedded in our culture, our commitment to fostering a strong safety-first work environment remains steadfast. At the same time, we continue to invest in expanding our capabilities for sustainable growth, whether through upskilling and cross-skilling our workforce or by strengthening our operational footprint to inspire the next era of sustainable energy future. We are looking for long-term strategy and long-term growth and sustainable strategy in that. With this, I close my presentation and open the channel for questions. Thank you.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. A request to all the participants: kindly restrict to two questions per participant and join the queue again for a follow up question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from Mohit Kumar from ICICI Securities. Please go ahead.
Yeah, good evening sir and thanks for the opportunity. My first question is what was the value of HVDC order in the quarter which you can quantify, or can you give us the growth in the order HVDC
Pavil? What is the second one?
No, either you can give the value of HVDC order or give us the growth in the order HVDC.
No, we have also seen the growth without HVDC. Also, the growth without HVDC is in the double-digit range, around 22, in the range of 20+%. Yeah, I just know the similar projects are going on, so we will not quantify exact value of HV, but you can understand what kind of number.
Understood? Understood, sir. The second question is, sir, how has been the progress on execution in the HVDC which we won, I think, in September or October 24th.
We also told in the last thing you know these are HVDC projects, it is a pretty long multi-year project. Our completion period is 48 months and 54 months. 48 months is we have to complete the bipolar one and 54 months is a bipolar two. Execution will take place and normally in the first year, I also told you the revenues are not much. We expect some amount of revenue starting from the next year, next financial year, and thereafter it will pick up. That's an issue.
Thank you and all the best. Thank you.
Thank you. Next question is from the line of Ankit Pandey from Motilal Oswal. Please go ahead.
Hi sir, regarding the margin.
Profile, we'd like to know when we c ompare it with our peers. Our peers have increased margin significantly. Our margins do have improved but not up to that extent. Any possibility of reaching to those margins or it will take us a time to revamp on those kind of margins.
Thank you, Ankit, for your question. We have, as I said, we are building a company on a very long-term focus, not on a short-term basis. We also told you several times that our main focus is to address the domestic market. We believe that the domestic market, the pipeline, and the market visibility is very strong, and it will continue to be strong. That's the reason we are investing INR 2,000 crore of capex, which I'm sure you have not seen this kind of capex from others. When I would like to compare, I would like to compare. We are improving margins, and you have seen almost 650 basis points were improved Y- on- Y on EBITDA basis, and we continue to improve going forward. Going forward on that.
On the core order inflows wise, one should expect this kind of a trajectory to continue where we are seeing good traction on the core order.
Look at the overall orders. There are two aspects to that. There's the HVDC portion and then the rest of the things. Rest of the things is we are talking about the renewable industries, data centers, and rail, etc. That pipeline is extremely good, and HVDC, you all know that I've been saying that to manage the network of India we need to have at least two to three HVDCs per year, at least in a couple of years to start, come at least couple of years more.
Got it? Got it. Great. Sir, I will come back for any further questions.
Thank you.
Thank you. Next question is from the line of Umesh from Nomura. Please go ahead.
Yeah, hi sir. Good evening.
Hello. Yeah, go ahead.
Sir.
My first question is pertaining to.
Umesh, sorry to interrupt you. Your audio is not clear. Can you speak through the handset, please?
Is this fine now?
Yeah, it's okay.
Little better.
My first question is pertaining to translation of gross margins into EBITDA margins for this quarter. If I look at despite achieving closer to 44% plus kind of gross margins, our EBITDA margins are remaining in the range of about 10 to 11% and larger. Part of that is also because of higher other expenses at about 24% of sales. I believe our related party transactions like royalty management fees, trademark fees are also eating up closer to 8%- 9% of sales within that other expenses. How we kind of expect these kind of expenses to go down so that our margins can improve in line with.
We have been saying this consistently, on this . We are a technology company, so we need to really create technological advantage. By paying royalty and other things, it is absolutely important because we are able to get technology as and when it is available anywhere within Hitachi Energy globally. That will be there in that. We are looking at overall expenses; once our revenues go up, probably some of the expenses are not percentage. Some are percentage, some are a fixed amount which will be converted into the percentage in that. Those things will be tapered out over a period of time. Maybe Ajay, you would like to add on this.
Thank you for this question. If you normally see our quarter one, quarter one, our other expenses as that is the reason when I told you other expenses on basis more or less it is consistent. Going forward, once we develop on the revenues, some of the expenses automatically get translated. That is why if you see the same other expenses we closed at the year end, it was around 20% so to say. We are working on the other expenses piece for sure. Overall, at the end of the year you will get a visibility on how when we have the full loaded revenue we will be able to see that our other expenses are also in line.
Got it. Sir, my second question is pertaining to HVDC project pipeline. I believe there are three projects which are in the pipeline to be finalized for FY26. What is your view in terms of timeline for one, Koda South Alwar HVDC project, second, Barmer South Kalan HVDC project, and third, Leh-Ladakh HVDC?
Yeah, I think what you talked about the pipeline is absolutely correct. If you're talking about our view on the finalization, right?
Yes sir, in terms of rough cut, approximate timeline.
For awarding, talking about finalization, our view is that one project in this financial year for sure. There could be also potential for the second project getting finalized. It's basically one to two projects finalization in this financial year that is on or before March 31, 2026.
Got it, sir. Thank you so much and all the very best.
Thank you.
Thank you. Next question is from the line of Parikshit Kandapal from HDFC Securities. Please go ahead.
Hi sir. Congratulations on a recent quarter. My first question is on what is the total order book of the base orders X of HVDC out o f the INR 29,000 crores,
roughly in the range of, you know, you can take anywhere between 55% to 60% is the HVDC. The rest is okay.
Out of that, how much is export and services?
No, we don't split there. How much is exports and service? You know service is just picking up, right? We don't split further on that. It's again, don't look at in every quarter whether the product service thing. You have to look at the whole portfolio, right? The whole portfolio for us includes the project systems, services, and software and also HVDC. Again, when you say HVDC, the HVDC portion also has transformer, HVDC portion also has GIS and high voltage, HVDC portion also has, you know, grid automation. It is very difficult to segregate, you know, HVDC market. The point what probably you are looking at it, that's the reason I said 55%- 60% is how much will be executed in the next, you know, 18 months and how much will be executed beyond 18 months.
Got it. Just on the total GPM, we have reported 44% on gross profit margin. There's no major contribution to the HVDC. It will start contributing maybe a year after from now. In the HVDC, what kind of GPMs do we look at? Will it be substantially lower or will it be in the similar range? What kind of dilution can happen on the GPM from the HVDC project?
We will not talk about our project level margin. All we have been saying is that we have been building, not today, over a period of time. We have been saying that we are looking at very sustainable margins, double digit margins, and that's what we are in a roadmap. Last year we said when we enter and we have entered much ahead of our own target, and then we also starting the same strong way, it will be very solid performance going forward in our own view. Did we miss the operator? Are you there?
The line for the participant dropped. We move on to the next participant. Next question is from the line of Renu Baid from IIFL Capital. Please go ahead.
Yeah, hi, good evening team. I have a couple of questions. First, can you share with us the update on the first HVDC which we had won with Adani? How far are we from the formal completion of the project? Second, would you have any insights on the prospects for HVDC? As we hear that Hitachi apparently has not submitted the bids and there's only one sole builder for the project so far. Are we seeing the project, the Leh project moving ahead or any updates from your side if you would have any on it?
Yeah, what was your first question? We have already given update in the presentation.
Not the current project, the Mumbai HVDC which we have, we were executing for Adani .
May be around six months. Six months is the one where we are looking at to close. We commission that six to nine months.
Okay, sure. Second, any insights on what's the status for Leh HVDC?
Yeah, as far as we are concerned, it's going. Also, you know, there have been a lot of discussions taking place about what kind of, you know, technology. All those things are still in the discussion stage. I don't know about what is the latest, but this is how it's going on there.
In your view, do you think there is a probability that instead of the project coming on HVDC format, it may actually eventually turn out to be an AC project?
That is, anything is possible. I can't say that, but the probability of that AC transmission coming in that thing is very less. I would think that. Okay, so yeah.
Lastly, while I know you don't comment individually project wise, just trying to understand the current quarter as in gross profits have come back at pretty healthy levels compared to the previous cycle. Do you think this kind of gross profit performance of almost 45% is sustainable given the current mix of backlog that we have? It would be more of a combination impact for this particular quarter alone and one should not bake it into the expectations going forward.
No, I think not only gross profit has come back but also net profit also come back EBITDA level. We have improved 650 basis points compared to the loss of Y-on- Y. We will not comment on quoted, but what we are looking at on an overall basis, we said we are looking at a very long term strategy, mid to long term strategy, and we are continuously improve on our performance. We are also investing on the future things. That also need to be done. If you really want to look at in a long term, it's always between what is that you take a short term measures and long term measures. We choose right.
Because some of these investments in technology capacities will all be a part of other overheads, which was the reason why the question was on.
Yeah, also look at, no, structurally we are absolutely fine. Structurally I don't see there's an issue in that either. Volumes go up, that's where the thing, rest of the things as I told, some of our, you know, charges which are fixed in nature will convert into % and as the volumes go up become as a low, low % in that. That's what you are seeing, and we will improve. Last year improved, and this year also on an overall basis we will improve higher than last year.
Got it, got it. Lastly, anything specific that you would want to share in terms of export pipeline? Any regions or markets where you are seeing increasing traction with respect to order conversion?
For us, the export pipeline is quite strong, quite robust, and as I said, we have a three-pronged export strategy. Exports are also sustainable exports, not that we want to go spike and then come down. That's not our strategy. We have products, four or five products, which are four products, which are global products. We are improving that, and then on top of that, we have also allocated markets. We are getting more markets allocated, either when those markets are rectifying it, and we will put a lot of our efforts to develop those markets in a sustainable way, just like how we develop the Indian market. The third one is we have a very base exports strategy, which is we create components for our feeder factory, and those things are also very robust.
We do not want to increase the export at the cost of the domestic market, which I have said previously. I'm reaffirming, clarifying that, and our domestic pipeline is quite strong.
Okay, thanks Martin. Best wishes, team. Thank you.
Thank you.
Thank you. A request to all the participants, kindly restrict to two questions per participant. Next question is from the line of Rajesh Kothari from AlfAccurate Advisors . Please go ahead.
Good evening, sir. Thank you for this opportunity. Rajesh Kothari from AlfAccurate Advisor s. Sir, I have one question with reference to the export opportunity. If I look at globally the statements, what I am reading from the top CEOs of the world, they all are hinting towards the very large pipeline of the potential demand growth. How the Indian company is positioned to cater to such requirements? Since you are looking to invest about INR 2,000 crore in terms of your exports target over next, say, three to four to five years, how should we look at the total revenue mix?
Yes, we have clarified this again and again. We want to clarify once again, the investment, whatever we are doing, we are doing it to the close. Basically, we believe that we have a huge domestic market, domestic demand, and that's the reason we are doing it. Exports is, yes, on top of it. We don't create capacities only for the sake of exports. Exports will, as always it has been there, it will continue to be there. I explained just now also, it's a three-point strategy. Roughly, we are looking at around 25% of exports. Maybe it might go a few % this way, that way over a period of time. It depends upon the thing. Maybe putting a lot of efforts to serve our domestic demand, and that's what we're going to do.
Then on top of that, if we get an opportunity, we will do more than 25%. 25% is what I see in the next couple of years, plus minus % this way, that way.
When you look at your competitive positioning to get the export orders compared to, say, Hitachi Energy India within the group, who will be the other competing companies within the group?
Within group means,
for example, I mean Hitachi Energy globally,
again it is a market. We have a lot of, we are working in more than 60 countries. Our footprint is also very, very robust in many countries. It's not that anybody can send anything. We have factories in the regions, we have the factories in some countries, and there is a clear market allocation guidelines so that you are able to develop those markets sustainably over a period of time. There is also a lot of approval process to approve our factories. All those things are guiding principles.
Okay. Basically, even if your domestic revenue is going to go up significantly because of this order book and also the pending HVDC order pipeline, you think that exports will also be able to maintain that growth. Therefore, your revenue mix will not change significantly, at least 25%- 27%.
That's the reason we are investing, we are investing in the capacity. Our capacities will start coming in in the next 18 months or so, and that will be compensating that so that we are able to keep 25% as a revenue mix even at a higher revenue.
Just last question, till the time of course the new orders come to the execution stage in the next, from the 12- 24 months kind of a period, you know, the shorter term, kind of a shorter tenure orders, particularly say for example for data centers or for other such application or for the metros. Can you give us a little bit more insight into that? You know, how is that demand growing? If you can quantify that in terms of the overall demand and how we are winning it and a little bit outlook on your different segments, data center, metro trains and other segments that we have.
If you really look at my slide 10, as you can see, industries, we have a 23% growth. They are very short cycle projects. Data centers, 98%, almost doubled compared to the data center last quarter year. Data center, there was a bit of lull previous quarter, but now everybody has really looked into what is the AI ready data center. Now they're all coming back very strongly on that. The rail and metro also, we see a very, very robust thing in that. With the renewable now, the issues of PPA and other things getting resolved, we see that the renewable projects also come. All these things are short cycle projects. They will be executed once we get the order, anywhere between 6 months to 18 months, we complete the execution in that except the HVDC which takes a longer, longer time in that. Those things, the pipeline.
That's what I said. The pipeline is very robust. It is much, much stronger, much higher, and we see the visibility of those things coming in that.
Great. Thank you, sir. Wish you all the best.
Thank you.
Thank you. I request all the participants, please restrict to two questions per participant. Next question is from Shirom Kapur from Jefferies, India. Please go ahead.
Thanks for the opportunity. I had a question on, you know you classify your business into your five business units, transformers, high voltage products, grid integration, grid automation, and now services as a new business unit. Would you be able to give us some color, you know, individually within these units if it's possible on how the outlook is and maybe a rough sort of share in the business of each of these units?
No. Thank you, Shirom. Actually, we are not giving a split of this, but we can give you a little bit of direction on that. Transformer is by far the highest, followed by our grid integration business, and the next is high voltage business, followed by the grid automation and the service. We're talking about the outlook. Most of the segments, they buy more than two BU products portfolio. I'll give you one or two examples. Transmission, for example, transmission needs transformer, transmission needs our high voltage BU products, transmission needs our grid automation products, transmission needs our either power quality or HVDC or STATCOMs, etc. That's why all the four business units will go into that. Transmission also needs the service as required.
When it comes to the industries, industries may need your transformer or high voltage, or sometimes industries need your grid connections, etc. Again, two or three BU product portfolio will go into that. Data center, I'll give you a last example. Data center, for example, needs your transformer, your dry type transformer, your also grid connection transformer, your grid integration. You need a substation to hook up to the hyperscale data center, and then you also need automation and the consulting efforts in there. Basically, most of these things, two, three BU or more than three BU products portfolio. That's the outlook, means if the segment outlook is strong, then all the four BU outlook is also equally strong.
Okay, understood. Thanks, that's very helpful. Second question is on your capacity expansion over the next four to five years where you're incurring about INR 2,000 crore CapEx. Could you maybe quantify how much your capacity is going to expand by specifically within transformers as well as the other business segments where you're expanding capacity, and how that could scale up your revenue potential? If you could give a sense on what the current capacity utilization is which is warranting this major CapEx expansion.
No, I think we talked about the capacity expansion. We basically said that the capacities are required when we announced it. It's also for our transformer, not only transformer but transformer, high voltage automation, and also HV. The scale of expansions are different from different bus, etc. in that, and all these things also we are doing in a phased manner. For example, first transformer capacity, which is a small capacity expansion, is already coming in, and the next phase we are going in like that. We are going in a phased manner so that we are able to complete our scheduled CapEx in line with our own targets, etc. in that.
If I go INR 2,000 crores CapEx, if I'm going to put it there, once it is complete, the asset turnover is in the range of anywhere between three to four or something like that, 4 to 5 as it depending upon that. You can just look at it, what could be the revenue potential once it completes that. Initially it starts with a low asset turnover and then thereafter it goes up higher than that.
That's very helpful.
Current capacities, I think current capacities are. I would say we don't quantify exactly the capacities, but it's very strong in some of the product lines like insulation, like large power transformer, like GIS, et cetera. In that, of course, there are also some capacities available in automation and other things.
Understood. Thank you so much, sir.
Thank you.
Thank you. Next question is from SBI Life Insurance. Please go ahead.
Thank you, sir. Sir, if you can share what is our export order, X of HVDC in our order book, and how are the margins in that vis-à-vis our domestic order?
Yeah. On the segment wise, on the category wise. Mr. Subramaniam, what we can say is that our exports are roughly, exactly, exports are roughly as part of our backlog. You want, you are talking about order backlog or what are you talking about?
Sir, I'm talking about the export orders of HVDC in our order book. What would be the %? Yeah, yeah, right.
Yeah. If you talk about exports, ex of HVDC, in our order backlog is roughly around in the same range.
20%, right?
Yeah.
Okay. If you can share some big pipeline, excluding HVDC, in the domestic as well as export, what we are looking at it for.
The year pipeline numbers we don't share. What we have been saying is that without HVDC, pipeline is very strong in the industries, in the transmission, in the renewables, in the data center, in the railways. Also, the pipeline is very strong in our exports as well.
Sir, if you can share at least the growth number we were with last year, how is the pipeline looking?
We have not shared so far, Mr. Subramaniam, but when we share, we share.
Okay, great. Thank you, sir. Yeah.
Thank you. Next question is from Harshit Patel from Equirus Securities. Please go ahead.
Thank you very much for the opportunity. Sir, could you give us an update on the Mumbai Ahmedabad HSR electrical package? When will it get tendered, and how large is this opportunity size for us?
No, see again the whole project, I'm not sure how it is taking different turns or things like that. We also do not have visibility. We have received a couple of orders for some transformers, but then on overall basis we don't have a visibility. We are still discussing with our customers. We don't have any timeline for that.
Understood. My second question is on the STATCOM. Have we started any kind of manufacturing or assembly integration for these systems in India? What are our plans to increase local value addition in these STATCOMs?
We do everything in India. We've been doing all the STATCOM projects which we have got, and in India we do the valves, we do the transformer, we do the complete engineering, everything.
Just a small follow-up to that. What is the overall opportunity size for STATCOM in India in the next four to five years in your assessment?
In our assessment, you know you can also go to the NEP, the National Electricity Plan from the CEA, and you can check yourself also anywhere between 25- 30 projects in the next four years.
Perfect. Thank you very much for taking my questions and all the very best.
Thank you. Next question is from Pratik Singh from Helios Capital Management. Please go ahead.
Yeah, thank you for the opportunity.
Sir, just a quick question.
Was there any execution miss in Bunq?
Or any potential delays in execution which we face because of other income, our execution. I mean the top line growth considering.
The order book which we have looks.
Slightly softer at 10%-11%.
Sorry, revenue growth 15%.
Excluding the other income, I think the core top line growth looks tad softer at even 12%. Just wanted to check if there.
Are any execution delays which we had in 1Q.
No, you know I don't see any major execution delays in any of those projects. There will always, with such a big large portfolio, you'll always have one or two delays, but not any major delays.
All right. Thank you, sir.
Thank you. Next question is from the line of Abhijeet Singh from Systematix Group. Please go ahead.
Thank you for the opportunity. Sir, my first question is.
Abhijeet, you're not audible. Can you speak a little louder, please?
Is it better now?
Yes, go ahead.
If we compare HVDC and non-HVDC transmission projects, what is the difference? One is, you already mentioned that in terms of execution, the time taken for an HVDC project is almost 2x, at 54 months versus about 24 months for a non-HVDC one. In terms of product, service, and project bifurcation, and not going into the technical part of it, if we can differentiate between an HVDC and a non-HVDC.
Project, HVDC and non-HVDC project, you know, from a complexity standpoint, both are same for a developer. So developer, for example, if he has to do HVDC project, it takes 48 months. You can do a non-HVDC project, it may not be that much time, but it will take. If you talk about including all the ROW, etc. From an equipment supply standpoint, it's a developer because from an equipment supply standpoint, HVDC we need to also do a lot of system studies, etc. So engineering, those things will take pretty long time compared to a pure vanilla transmission project like a 400 kV projects, 220 kV projects there. What we do, we supply in a 400 kV transformer, 220 kV transformer. If you do a system basis, we do design engineering which in 18 months you can complete anywhere between 765 kV substation to 400 kV substation. Right.
So that's how the thing is that.
Sir, can we quantify the service component in the HVDC project?
No service component will be there everywhere. We're not able to quantify service. Everything will have. Yeah, everything will have.
In HVDC service component, which will definitely be significantly higher compared to a vanilla, designing and engineering and everything will be much more intense. From that perspective, you are right.
We will not be able to quantify, you know, what is the service setting in it for us. A particular system or thing which includes product supply, design, engineering, and also erection, testing, commissioning, which we have in our scope. That's how, you know, we quantify the whole portfolio. Look at the portfolio as a whole, you know, portfolio which includes designing, product supply, and also commissioning, things like that. Yes, you are right. For a HVDC it is slightly higher, but it is not that major compared to other projects.
Right, sir. Also, you mentioned in your comments that in the next few years or after a few years you are expecting about two to three HVDC projects per year in India. I hope I heard that correctly.
What I’ve said was to manage the complexity of India’s network, we need to have two to three HVDCs per year. That much is my expectation. If you really look at NEP, which is almost talking about two projects per year, the project comes to the market, whether we win or not, that’s a different issue. Those projects will be coming for bidding, at least two projects per year in the next three to four years.
Understood, sir. Lastly, this tenth slide of the PPT, the growth you mentioned of different segments, this is the order inflow growth for Q1 for us. Is that correct?
Ordering progress.
All right, sir. Thanks a lot. That would be it from my side. Thank you.
Thank you very much, ladies and gentlemen. We will take that as the last question and now hand the conference over to Mr. N. Venu for closing comments.
Okay, no, I was thinking that we have two more minutes now. Why don't we take one more question?
Sure, sir. The next question will be from the line of Dhavan Shah from AlfAccurate Advisors. Please go ahead.
Yeah, thanks for the opportunity sir. My question is on the royalty payout. If I compare your royalty versus the GE T&D India, I think GE is paying roughly 1% and we are paying roughly 4%. I can understand, you know, we are getting the superior technology and everything which helps us to bid for the complex projects. Just a suggestion, I think, can we do it or not, I'm not sure. Can we reduce the royalty payment and increase the dividend payout? Given that, you know, even if you increase the dividend payout, Hitachi parent itself holds 75% stake, so they will get more of the lost money whatsoever from the royalty through dividend. Can we do that kind of arrangement?
Thank you, Mr. Dhavan Shah. Thank you very much for your thing. As you know, we are a company, a global company, and we don't do any financial engineering on a short-term or mid-term basis. Let me again tell you what is important for the IELT payment. As I said, I don't want to compare with others. You may be comparing only short-term basis, but we have a lens not only short-term, mid-term, and long-term. If you look at from that, then you understand after some time. Why I said the technology, what we are developing, we are by far the world leaders, and that technology is available at a 4% cost. If you want to develop that, that's not possible. In that today, whatever we have, we were able to win is mainly we are able to localize a lot of the technologies here and there.
It's important that we continue to pay and develop the new technology. The new technology is not only on the HVDC. The new technology is the energy storage. The new technology is on the synchronous condensers. The new technology is our automation. There are many things are happening, right? Those technologies, we need to invest continuously on that. Whenever the technology is complete and it is available for a commercial use, any part of the world, it is available to us. That is a big thing from shareholder standpoint, that it is available and we are able to offer and you will see more such things in the coming quarters, what I am talking about.
It is very important we will continue to, you know, invest in the technology, we continue to pay the royalty so that we are able to access the technology and put our company in a far ahead of that. Yes, we are working on the margins and you have seen the improvement and it will continue to be improved going forward. Thank you.
Understood, sir, understood. One question is on the admin cost. You know, even if I compare the admin cost, it is still higher for us compared to the peers, which is roughly 4.5% for us compared to 1.2% for the other competitor. Any room for improvement over there? That is more or less fixed.
Cost, you know, despite.
Our revenue size is more or less the same at the moment. There is still a difference in terms of the admin cost they are paying. They are having lower admin cost versus us. Any improvement over there?
Those things also, some of these costs are as a %, it will continue as a %. Some are fixed cost and that has been converted into a %. As our revenue goes up in the coming years, those things will, as a %, come down. You will see later on. Thank you very much.
Thank you very much.
Once again, big thank you to all of you and thank you for taking time from your busy schedule and attending to that. If you need anything, please reach out to us. Happy to engage with you. We are in what we call energy super cycle, super excited and the growth opportunities both locally and globally and looking forward to working very closely. Thank you very much.
Thank you very much. On behalf of Hitachi Energy India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.