Ladies and gentlemen, good day, and welcome to Hitachi Energy India Limited Q1 FY 2027 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 this conference is being recorded. I now hand the conference over to Ms. Priyanka Bhagat, Head, Investor Relations, Hitachi Energy India Limited. Thank you, and over to you, ma'am.
Good evening, everyone. Thank you for joining us today for the quarter one financial year 2027 earnings conference call of Hitachi Energy India Limited. We appreciate your continued interest in our company and value the opportunity to engage with you as we discuss our performance for the quarter. Before we begin, I would like to remind everyone that certain statements made during this call may constitute forward-looking statements. These statements are based on current expectations and subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. With that, it is my pleasure to invite Mr. N. Venu, Managing Director and CEO of Hitachi Energy India Limited, to share his insights. Over to you, sir.
Thank you, Priyanka. Good evening, everyone, and thank you very much for joining Hitachi Energy India's quarter one FY 2027 earnings conference call. We have just announced our quarter one FY 2027 results and hope all of you got the opportunity to go through the same. Over the next 20- 25 minutes, I will walk you through our performance for the period ending June 30th, 2026. As always, you may follow the presentation through the webcast or download it from the stock exchange. For ease of reference, I will refer the slide numbers. Today in this room, I'm joined by our CFO, Ajay Singh, and Poovanna Ammatanda, the General Counsel and Company Secretary of Hitachi Energy India. I'm pleased to share that we have started the financial year 2027 on a very strong note, delivering a very robust growth in our orders and revenues.
Our Q1 FY 2027 performance reflects our continued focus on operational excellence and execution of the project, execution of our order backlog in a disciplined way, enabling us to effectively convert our strong order backlog into revenue growth. As part of our commitment to strengthen execution capabilities and building a more resilient supply chain, we began constructing Hitachi Energy's 20th manufacturing facility in Karjan, Vadodara in June 2026. This investment reinforces our commitment to India's energy transition, energy security, and the government's vision of Make in India. Despite the geopolitical challenges that the country continues to deal with, the underlying fundamentals of our business remain exceptionally strong. India continues to witness unprecedented investment in transmission infrastructure, renewable energy integration, renewable energy deployment, grid modernization and resilience, and urbanization and digital infrastructure. The long-term structural drivers continue to create a significant and sustainable growth opportunities for our industry.
Strong order backlog combined with a healthy bidding pipeline provides good visibility for future revenue growth. More importantly, we remain focused on execution, discipline, profitable growth, and delivering value to all of our stakeholders, supporting the country in its energy security aspirations. With that note, let me now take you through the presentation, and I am now moving to slide three. Our license to operate. Safety, which is our license to operate. As you all know, safety remains fundamental to our license to operate. We continue to embed best-in-class safety practices across our factories, project site, offices. During the quarter, we conducted more than 450 life-saving rules inspections, more than 800 safety observation tools, enabling us to close all high-risk observations identified during the period. In parallel, we continue to implement health and safety programs and training initiatives across our facilities to further strengthen our safety culture.
These efforts will remain focused on achieving a recordable injury frequency rate of 0.09. Moving to slide four, which is very important to us, the ESG target and action plan. Sustainability remains central to our strategy with a strong focus on decarbonizing our operations. As reflected in the table, we expect to achieve most of our 2030 sustainable targets by end of this financial year, with the exception of our water and diversity goals, which will go up to a year or more so, but much before our 2030 stated targets. During the year, we achieved a 16% reduction in freshwater usage compared with the 2019 baseline through recycling initiatives and the deployment of water-efficient fixtures. We are confident that achieving our 2030 water target remains well within reach.
Notably, our Halol facility earned the Water Positive Index Certificate last quarter, underscoring our commitment to responsible water stewardship. We have also made meaningful progress in governance and social impact. Our gender diversity is more to 10%, reinforcing our commitment to building a more inclusive workplace. We are targeting further improvement of three to four percentage points by 2030. At the same time, we continue to uphold an uncompromising commitment to integrity with zero incidents recorded during the year. Our sustainability progress is closely aligned with the broader energy transition and India's commitment at COP26. I move to slide five. India's electricity demand is expected to grow strongly over the coming years and also coming decade. In parallel, the power grid is becoming increasingly complex with high load densities, rising reliability requirements, and emerging demand drivers such as AI-enabled workloads, AI-enabled data centers.
This is resulting in significant investments across transmission, distribution, and consumption, and also broader grid infrastructure. Our addressable market continues to present significant opportunities, and we see a strong momentum in renewable energy transmission investments to integrate non-fossil fuel capacity, increasing investment in data centers, and accelerating adoption of electrical vehicles, to just name a few. Overall, these trends reinforce our confidence in multiyear growth opportunity for our portfolio, whether it is the product, systems, services, and software. At Hitachi Energy, we are proud to be at the forefront of India's energy transition. We recognize the responsibility that comes with this role and remain committed to enabling a more reliable, resilient, and sustainable energy future through our execution excellence, technology leadership, and strategic investments in capacity and capabilities. I move to slide six.
As you can see, our performance against this backdrop, we secured orders worth INR 5,096.5 crore during the quarter Q1. Q1 last year, Q1 included a large HVDC order you know. Therefore, to provide a more meaningful comparison of our underlying performance, we have also presented our growth excluding HVDC for the current quarter. On a comparable basis, order intake in Q1 increased by 26.1% on a year-on basis and 39% on a quarter-on-quarter. This growth was driven by several notable wins across key sectors. Among these, I would like to significantly highlight Hitachi Energy India's first battery energy storage system project, a 2 GW wind power evacuation project in Europe, part of the 2 GW wind power evacuation project, and supply of GIS GIB solutions for 100 GW solar park invested in India. In addition, we secured multiple data center orders from hyperscalers during the quarter.
A notable project among these is 42.5 MVA data center project in Hyderabad, awarded by a leading Indian multinational conglomerate. As a result, we closed the quarter with an order backlog of INR 32,242.1 crore, representing strong highest order backlog ever, and also strong double-digit growth compared with the Q1 FY 2026, providing a revenue visibility for the coming quarters. We won several projects in the renewable sectors, in industries, data center I've already talked about, and also exports. If I move to slide number seven. The first order, the key orders wins during this year. The first order support the acceleration of Europe's grid expansion, a landmark initiative comprising several projects that will enable the transmission of clean power.
As part of this program, Hitachi Energy India will collaborate on three key transmission links. These three links will deliver 6 GW of clean electricity to the grid, and we will be supplying and also both the products as well as the services partly to our customers. The second project marks a major milestone for Hitachi Energy in India. It's 165 MW, 330 MWh battery energy storage system project in AP, reflecting a strong validation of our capabilities in grid integration, power quality, and advanced energy solution. If you recall our Investors Day in Mumbai, we talked about entering into the new segments. Battery energy storage is one such segment where we are very successful in securing the first order in the quarter entered just now.
The third project is a significant data center related order for a load cooling station and main cooling station comprising of 56 days of 40 kV GIS. 12.5 km of bus duct. The project will support 100 GW of solar park in Western India, highlighting our expertise in delivering large scale transmission infrastructure for renewable energy integration and emerging digital infrastructure demand. If I go to the next slide, we will discuss the projects, what we executed during the quarter. As a technology leader, we remain committed to enhancing grid reliability through our timely execution and high quality project delivery. During the quarter, we achieved significant progress in several strategic projects. I would like to highlight two notable milestones.
The gas insulated substation project for an iron ore processing plant in Chhattisgarh, the second one is 220 kV switchyard base aligned with auxiliary systems at Damanjodi, Odisha, the 220 kV GIS project in Mumbai, Maharashtra. The last one you know very well, which is a 1,000 MW Kudus–Aarey HVDC transmission project in Mumbai, in Maharashtra. These projects underscore our strong execution capabilities across diverse industry segments and geographies. Our comprehensive scope of work spans the entire project life cycle, including design, engineering, manufacturing, supply, erection, testing, and end-to-end commissioning. This integrated approach enables us to deliver high quality, reliable solutions while addressing the evolving needs of our customers and supporting the modernization of the power grid. Beyond project delivery, we continue to invest in capability building, innovation, and industry leadership to support long-term growth, which we're going to discuss in the next slide.
I move to slide nine. The energy sector, you all know, is at the forefront of the ongoing transformation of the global economy and especially also in Indian economy, making it imperative for Hitachi Energy to continuously adapt to this evolving landscape. Engagements at industry forums, conferences and knowledge sharing platforms provide valuable insights and fresh perspectives, keeping us ahead of emerging trends and accelerate the execution of our strategic priorities. During this quarter, we actively contributed to talent development, innovation, and industry thought leadership through several key initiatives. Some of them are Hitachi Energy, the tech center in our Baroda trained several executives from Bhutan Green Power Corporation. The next one is in a partnership with NIT Warangal. Hitachi Energy hosted INNOTHON 3.0, bringing together more than 100 participants across 28 teams to develop AI ML powered digital twin solutions for the energy sector.
The third one is at ELECRAMA, Hitachi Energy joined industry leaders to discuss India's growing global influence and opportunities emerging from its accelerating energy transition, smart grid expansions and manufacturing growth. These initiatives reflect our commitment to building industry capabilities, fostering innovation, and strengthening our leadership position in shaping a more sustainable, resilient and digitally enabled energy future. I move to slide 10. Give a little bit more color on our order growth. Our order growth in the domestic market during the quarter was driven by strong momentum across industries, data center and the renewable segments. The chart on the right highlights the order mix. From a business segment perspective, product orders emerged as the largest contribution in Q1 FY 2027. From an end market perspective, the order book remained well diversified with contribution broadly distributed across sectors.
Looking at our customer channel, the quarter witnessed strong contributions from EPC, contractors and OEM customers, reflecting the breadth of our market presence and strength of our customer relationship. Overall, the order intake demonstrates continued demand for our technology portfolio. Moving to slide 11. To further strengthen our execution capabilities, we began constructing Hitachi Energy India's 20th manufacturing facility in Karjan, Vadodara in June 2026. This investment underscores our commitment to supporting India's energy transition, enhancing energy security and advancing government Make in India initiative. The new facility is being designed as a fully digital and smart manufacturing unit, leveraging advanced technologies to enhance quality, productivity and operational performance.
With a targeted commissioning date of the last quarter of the calendar year 2028, the facility will play a key role in expanding our manufacturing footprint, centering local capabilities, and supporting the growing demand for sustainable energy infrastructure in India and global markets. Overall, our strong order intake, healthy backlog, successful execution and continued investment in future capacity position us well for a sustained growth. With that, I will hand over to Ajay to take you through the next two slides. Over to you, Ajay.
Thank you, Venu, and good evening, everyone. Let me take you through the financial performance a little bit in details for quarter one. If you see orders, we had clicked INR 5,096 crore. If I compare from quarter-on-quarter, we have grown by 110%. Just to compare without HVDC, if you remove them, we see we have grown year-on-year 26% and quarter-on-quarter 39%. This gives a more robust growth in this particular quarter. The revenue from operations, we clicked INR 2,493 crore, and we have grown by 68% from year-on-year basis. That also supported in growth of the profit before tax. Profit before tax, if you see, we have grown by 120%, INR 389.5 crore, that is 15.6%. If you compare year-on-year basis, we are at 12%. Profit after tax is 11.8%, which earlier it was 8.9%.
If you see operational EBITDA, we were INR 399 crore, which is 16%, compared to what we did in the year-on-year basis, 11.5%. It is important to note that this EBITDA performance includes an unrealized foreign exchange loss of INR 36.37 crore, which is recorded in this quarter. If I come to the next slide, I'll give you more details. You see, we have a revenue from operations, INR 2,493 crore, we had other income of roughly INR 57 crore, which includes the interest income that we have through our deposits that we have kept. Margins, gross margins is fairly consistent, I will say 40% for this particular quarter. Personnel expenses, around 6.5%. Other expenses, 17%, if you compare from year-on-year basis, which was earlier 23.5%. Exchange loss is INR 60 crore, which is basically notional in nature.
Depreciation has increased compared to the previous quarter, and basically, we are doing CapEx for the capacity expansion. Finance cost remains consistent, that is how, if you see overall profit before tax is 15.6% and profit after tax is 11.8%. Over to you, Venu.
Thank you, Ajay. Ladies and gentlemen, our Q1 FY 2027 demonstrates the strength of our strong go-to-market strategy, our business model, and the effectiveness of our execution strategy. We delivered strong growth in orders, revenue, and profitability while continuing to invest for the future through capacity expansion, technology, leadership, and talent development. Our record order backlog and healthy bidding pipeline provide strong visibility for growth, and we remain focused on translating these opportunities into disciplined execution and sustainable value creation. Our focus remains on strengthening our core business, the core in utilities, our renewables, HVDC, industries, infrastructure, while ensuring the continuity and resilience of our installed base through the service business. At the same time, we remain committed to effectively executing our strong backlog, enhancing productivity, and maintaining the highest standards of quality and customer satisfaction.
We are also well-positioned to capitalize on emerging growth opportunities, particularly in the battery energy storage system, renewable integration, data centers, grid modernization, where demand fundamentals remain highly encouraging. Looking ahead, we will continue to invest in our people, technology, manufacturing capacity, and operational capabilities to support long-term sustainable growth. Backed by strong market fundamentals, a robust order pipeline, and our differentiated technology portfolio, we remain confident in our ability to create long-term value for all our stakeholders while contributing to more resilient, secure, and sustainable energy future. So thank you very much for listening to me. Now we open the floor for question and answers. Thank you very much.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Participants viewing the webcast may click on the Ask a Question tab on your screens. Our first question comes from the line of Amit Anwani with PL Capital. Please go ahead.
Hi. Thank you for the opportunity, and congrats for the very strong set of numbers. First question pertains to the 2 GW TeneT order in Europe. What's the quantum of that order, which is there in your INR 5,000 crore book order inflow? Second, are we expecting more orders as we understand there's a joint venture for at least four or five orders with L&T globally by Hitachi Energy. Are we expecting more such orders in the coming time?
Yeah. Right now, at this point in time, it is a combination of three orders, okay? We do more of services and also supporting from here. All three orders put together is approximately around INR 1,700 crores.
Understood. Second, sir, I wanted to understand, you highlighted about battery energy storage on the strong pipeline side, battery energy storage and data centers. On battery energy storage, wanted to understand Will you be primarily focusing on the domestic market for BESS as of now, or there's an export opportunity? Second, where do we stand in terms of BESS? Probably, are we expecting orders this year? If you can highlight more on the BESS side.
As you know very well, the domestic, the battery energy storage, we have quite a strong and robust requirements. There is also mandated that every renewable energy need to have a mandatory energy storage. All those things are driving the huge amount of growth opportunities domestic. Right now, our focus is to supply for the domestic market. The domestic market itself is a huge requirement. We have just started, so we will be doing, as you know, there's a new technology. We have to first ensure that this technology is deployed, and then we will scale it up slowly on that. The pipeline is quite robust.
Right. Sir, lastly, if you could share the export contribution and order inflows and revenues.
Export contribution on the revenues is ballpark around 25%. That is the run rate we are seeing at the moment.
Understood, sir. Thank you, sir. Thank you so much.
Yep.
Thank you. Ladies and gentlemen, in order that the management is able to address questions from all participants in the queue, you are requested to please restrict yourselves to two questions only. You may rejoin the queue if you have any follow-up questions. Our next question comes from the line of Shirom Kapur with Jefferies. Please go ahead.
Hi, sir. Thanks for the opportunity. My first question is on your margin. While, of course, the operating EBITDA margins have improved very well YoY, but on the gross margin side, there seems to have been a contraction of over 350 basis points. If you could comment on that, what has driven this gross margin contraction? Is it a function of mix or maybe the commodity costs, where we have not been able to pass through the entire commodity inflation? Could you give a bit more color on that?
We are talking about the gross margin. I see the gross margin compared to the previous quarter, it is improved in my view.
Year-on-year, sir. That's what my question was.
Yeah.
On a year-on-year basis.
On year-on-year basis, I think we are talking about only 0.2 basis points , 0.3 basis points, right? Even you talk on year-on-year basis, I think basically there also I see improvement, not contraction in my gross margin.
Okay. I can check on that and come back. Okay, my second question is on the BESS side. You, of course, highlighted you've won your first order on BESS. Could you elaborate on what exactly our offering is here in BESS? Who is the competition? What are the kind of products that we're offering? Is the margin profile here similar or better versus the rest of the business?
No, I think what we are talking about is the battery energy storage is everything. It's more of a modular and scalable versions, what we have unveiled during our Investors Day thing. It doesn't include the batteries. Normally, we don't pull batteries into that because we design what kind of battery is required, and the customers will place the batteries on that. Right now, the margin profiles is, as you know, this technology need to get matured. We need to also do a lot of localizations. Over a period of time, these margins also will become similar to the margins, what we have with that.
The key is that this is a scalable version where easy to fit, easy to do that, and there's a lot of revenue potential going forward on that because we do a lot of digital layer onto that so that we are able to monitor and provide the digital services going forward in that. As I said, we got the first order, we got to execute. We got to also look at what are the things, and it's the end-to-end we offer to our customers, excluding the batteries. Integrating the battery into the software of the battery management is also part of our solutions.
Got it, sir.
Excuse me, just for the earlier question. When we see at the year end, more or less the gross margin is same. When you compare with the same period, yes, there is some contraction, but that is mainly because of the product mix that we have executed. This is only dependent upon the product mix.
Got it, sir. Just lastly, just a bookkeeping question on your order flow. You mentioned that year-over-year, excluding HVDC orders, we saw a 26% growth.
Yes.
Just to clarify, in your second quarter presentation last year, you had mentioned that versus the first quarter last year, you had seen 28% growth in your order flow. That number implies you did about INR 2,200 crore in the second quarter last year orders. That would imply about INR 1,700 crore ex HVDC orders in the first quarter. Here, if we look at your first quarter this year, out of INR 5,000 crore, if we exclude the INR 1,700 crore, you've done about INR 3,300 crore of orders. That seems to be more than a 26% increase.
We remove also the HVDC both. When we compare, we remove the HVDC from both sides. We remove also HVDC from quarter, we remove HVDC from that quarter.
Right, sir. Just to understand, if we take the 26% year-over-year growth, that means whatever number we get for the first quarter last year, that will be the ex-HVDC number, which means that the balancing would be the HVDC order in the first quarter of last year. Would that be the correct understanding?
More or less, yes.
Got it, sir. Thank you so much.
Thank you. Our next question is from the line of Parikshit Kandpal with HDFC Securities. Please go ahead.
Yes. Sir, hi. Congratulations on a great quarter and a strong order inflow.
Thank you.
My first question is, if I remove this HVDC order of INR 1,700 crore, balance is about INR 3,383 crore or INR 3,400 crore. Out of that, how much is the base order? I mean, more regular base orders, excluding the data center and the BESS order.
Most of them are BESS orders. We don't have any major large orders this quarter. All are BESS orders. It's quite a good, strong thing from the data center this quarter.
The data center would be a large order, right? I mean, almost INR 400 crore to INR 500 crore, and I think even BESS.
Data center is a multiple order. It is not a one order. It is a data center, multiple orders we are taking.
Okay. This BESS you are doing, is it for the utility-grade customer or is it a C&I customer, I mean, for which you are doing the BESS?
It is a C&I customer.
Your focus largely will be on the C&I segment, right? Not at the utility scale.
No, we will also do, over a period of time, utility customers. As I said, we are doing first thing, where we need to see how our product will fit into that. Those are the things we'll do. We are not limiting only to C&I.
My second question is on this quarter's revenue. Just wanted to understand, there is a dip in the gross margin. What I understand is that there is a contribution coming in from the two HVDCs on the revenue front. The GPM may be slightly lower, but it's been neutralized with the uplift at the EBITDA level. Just wanted to understand how much was the contribution of the HVDC project in the revenue in this quarter.
Actually, we do not give the breakups separately on the margins for the respective segments. Overall, as I explained, the gross margin, if you compare from the last quarter, it has improved. If you compare from Y o Y basis, it has a slight contraction, and that is mainly coming out the different product mix that we are executing. Again, if you compare from the March year-end closing, we are consistent. Also, if you remember, this is the first quarter. The first quarter is generally a very soft quarter from various other things standpoint.
No, sir. I just wanted the revenue of the HVDC, share of revenue. I don't want the margins. I just want to understand in this quarter's revenue, how much is this contribution from the HVDC project, the two HVDC projects. Approximately. I mean, if you can give some color on that.
If you have been following us, we have been telling you know that the first year, the revenue execution will be slightly on the lower side, and then it will pick up from the second and third year. That is what we have been telling. This is also all the HVDC revenues has not been flown, or it is not there in this particular quarter. That much we can say. It is picking up.
Picking up.
At least in the first project. Khavda project is picking up. Bhadla project is short, but Khavda is picking up.
This quarter largely is a base revenue quarter, so no major contribution from HVDC revenues.
No, there is some contribution from the HVDC. It's not that nothing is there.
Okay.
There is.
Sure, sir. Thank you. Okay.
Yeah.
Thank you, sir.
Thank you. Our next question is from the line of Rahul Gajare with Macquarie. Please go ahead.
Yeah, hi. Good evening. Thanks for the opportunity, and congratulations on a very strong first quarter performance.
Thank you.
Sir, I've got two questions. One, how much of the order backlog is coming from the export market? If possible, you could give us geographically which markets you're getting the export business. That's the first question. The second question is, once you finish your entire CapEx that you have lined up, including backward integration, component manufacturing, is it possible to give us some qualitative sense of how Hitachi will be placed vis-à-vis Korean or Mexican manufacturing? These are the two questions. Thank you very much.
On the exports as part of our this thing is roughly ballpark, again, we are trending 25%-26%. Let me just check one second.
Okay.
Give me a minute.
Yeah.
On the overall order backlog, if you're talking about our order backlog of INR 32,000 crores in that our exports is in the range of ±25%, is that? ±25%.
Okay.
Yeah. What was your second question?
Sir, second question is, once your entire CapEx is done, which basically you are doing a lot of backward integration, including component manufacturing, I wanted to understand how will Hitachi Energy India will be competitive vis-à-vis Korean players or Mexican players. Some qualitative sense, if not quantification is possible.
We are already competing with Mexican, Koreans, or everyone, right? Our manufacturing here is to increase our capacity, and also, of course, localizing some of those components here for that.
Correct.
I don't see any issue with competing with any of those players. With Koreans.
No, once.
Mexicans or anyone for that matter.
No, actually.
Our requirement to compete is that as long as there's a level playing field, we have no issue with competing with anyone.
No, actually, what I was trying to get to was, once you have more backward integration, you're obviously better placed. Localization will obviously lower your cost. From that perspective, you will be maybe 10% more cheaper to manufacture compared to what you are today. That's where I was trying to get to.
No, as I said, it's definitely our volume and other things will give us more leverage. That's a different issue. Whole idea is we continue to localize more and more components and also create an end-to-end manufacturing scenario over a period of time, right? That's our intention, why we are doing these kind of CapEx.
Okay, fine. Thank you very much, sir. All the very best.
Thank you.
Thank you. Our next question comes from the line of Jason Soans with IDBI Capital. Please go ahead.
Thank you so much, sir, for taking my question. Congrats on a good set of numbers.
Thank you.
First question just pertains to how is the HVDC pipeline looking, the Bama project is there, and just an update on how is it looking from a six months to one year point of view, awarding, et cetera, how is it looking?
Yeah. I think as you all know that there is an HVDC project, full greenfield HVDC project is already bidding for our customers as well as, we expect that should be awarded in six months or early.
Okay. Sir, also, during the quarter, there was a news about the entry of basically the government allowing the entry of four Chinese players into the market. Basically, they'll be more catering to the GIS side and the transformer side. I just wanted your opinion, your color on how do you take this up. There's a 60%, 65% local content thing also is there. Just wanted to know your understanding of this aspect. Will it push prices down? How do you see this thing going ahead?
Our view is very clear. Any more competition is absolutely welcome to meet the demand and supply challenges or perceived demand and supply challenges, if any. Our thing is very clear. As long as the level playing field is there and we do not see any issue in competing and also ensuring that whatever our margin ambition is met in that. Coming back to this specific question here in this particular case, out of that one transformer and the others were the switchgear, the GIS, et cetera, they were already competing in some form or other form. It may not be in some segment, but other segments in that. I don't see any major material impact for us.
Sure, sir. Okay. Sir, TBEA being one of the largest players, do you think You still feel competition, et cetera, will be okay as far as in we'll be able to thwart that threat going ahead?
Absolutely. No, we don't see any major threat at this point in time.
Sure. Thank you so much, sir. Thank you so much for answering my questions. Thank you.
Thank you. Our next question comes from the line of Umesh Raut with Nomura. Please go ahead.
Hi, sir. Good evening. Congrats for very good set of numbers.
Thank you.
My first question is pertaining to BESS capability that we have. If I understand correctly.
Sorry, which one? First, BESS?
BESS capability.
Oh, okay.
If I understand correctly, I think the scope of work that you can cater to is basically pertaining to, say, inverters, PCS solutions, then probably integration between cell and grid connection. That's what you can offer. How much of this is basically localized and whether those capacities are currently ready with you?
On the battery energy storage, we approach this segment in two ways. One segment where we will also supply our PCS solutions, which we are not localized yet, whenever we localize. That will be supplied to our battery energy storage developers. The second one is through our grid integration business. We will also do the complete battery energy storage solutions end-to-end. End-to-end means we will not do the civil and other things, but right from the grid connections and till the last thing, we'll do that. In this case, we are doing a complete containerized and scalable solution, and we don't pull batteries into our thing. We're excluding batteries, but we do complete design, complete automation, and also PCS, and everything, grid connection, everything, we do that. It's an end-to-end solutions. Customer can take this and put into this.
Understood. That software would be also part of this package?
Yes.
Understood. Second question is pertaining to slide number 10, where you are indicating probably downturn in terms of growth for transmission as well as railway and metro in first quarter. If I also look at your order mix between utility for last year one quarter and this year, I think it is down. Any read through here? Is it a temporary thing where you see probably?
It's a temporary thing, the transmission temporary thing. I don't see that as any major issue there. The rail as such, there is a bit of the projects are not coming as per plan, and when we talk to the rail authorities and the metro authorities, we expect that should come in the second half of the year, and that should pick up with that. Transmission is just a timing issue and also it's also our ability to pick up everything. Whether it is meeting the delivery requirements, et cetera, and that sometimes those other things also will play a role, not as a segment issue.
Understood. Third question is basically the data center order that you have received during the quarter. Now that you have received the order, any color about opportunity that you can cater on a per gigawatt basis, in terms of, say, value in case of data center? Second, I guess there is one large project from Hyderabad, that is from one of the leading MNC company. Would this be an exclusive collaboration that you have?
No, I think we are competing right now. Most of the data center customers are securing the long lead items like a transformer, like a dry-type transformer, the GIS, et cetera, and that's what we are getting the orders in that. As you know, this is our portfolio. Our portfolio will be all the grid integration, GIS, the transformers, the dry-type transformers, all the power transformers, et cetera, will go there, including the services, and we have been working on this. We also have another portfolio we have just launched, what we call as a Grid-to-Rack. We have shown in our investors meet in Mumbai, Grid-to-Rack. We are still working on that, where the Grid-to-Rack is a modular, scalable, where all the products will fit into that, and for them customer, it's more like a fit into it.
Those are the things we have launched. We are working on that with some customers to see whether it makes sense for the customer as well as for us.
Understood. If I can squeeze one more, just last question, which is basically on transport side. On slide number five, you have mentioned about a large program related to Kinet Railway Solutions. What is your scope of work here, and how big ordering opportunity could be from these train sets?
No, I think this is what we talked about Indian Railways, Kinet Railway Solutions to manufacture Vande Bharat sleeper trains. I think this is coming up. Our scope of work is, again, it's depending upon whether it is the engines or the cross-country electrification. All of our the 4B business unit portfolio will go into that, depending upon that. If it is only for the locomotives, then you'll get this trust, and transformer will go into it.
Understood. Any color on the quantum side in terms of value, how much of opportunity this could be?
No, we don't have at this point in time. We don't want to also share on the segment-wise the quantum.
Sure. All the very best. Thank you so much.
Yeah.
Thank you. Ladies and gentlemen, you are requested to please restrict yourselves to two questions only. If you have any further questions, you may rejoin the queue. Thank you. Our next question comes from the line of Sumit Kishore with Axis Capital. Please go ahead.
Good evening. Thanks for the opportunity. My first question is in relation to your order backlog of INR 322 billion. Roughly what percentage of this is non-HVDC right now? Of the non-HVDC order backlog, roughly where are we on the proportion of data center contracts? Broadly, if you could also comment on the momentum on the data center order prospects that you are seeing. Is this growing exponentially or this is still an opportunity which is already maturing?
No, on the order backlog, we don't give specifically how much is HVDC. We have not given so far. As you know, these are all very equivalent projects are coming up. We don't like to do that. You should please respect that. You can make your own guess. We have given enough indications, enough things for you to understand how much could be that. That's number one. Then number two.-
Data centers, if you could.
Data center, this quarter, it's quite a launch. In this quarter, quite a launch. The visibility for us going forward is also very strong. The key is, when we talk to data center developers, they say that there's a lot of plans are there. The key is that there should be a lot of support from governments to ensure that the land and the data center customers, the gestation period is very short. It's not like a long gestation period. They wanted to develop wherever it is available there. I think that is what we are looking at it, whether this particular strong pipeline will be sustainable going forward. If you see whatever they're talking about, 15 GW by 2030, if that is true, then this thing will be sustainable going forward.
My second question is in relation to your business, which is into transformers. You are insulated, we understand, against commodity price variations to a large extent, given the demand-supply mismatch. What would you say would be the commodity price volatility for the non-transformer part of your business portfolio?
At the moment, we see that we are not getting any material impact as such. Most of the contracts that we have talked about, let's say approximately 70% is variable clause we are having. Overall, if you see, let's say in this quarter, there is no commodity impact per se. Even if there's small, the small impacts are being managed.
Got it. Thank you and wish you all the best.
Thank you.
Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Mr. N. Venu, MD and CEO, for closing comments. Over to you, sir.
Thank you very much. We are very pleased with our strong start to the financial year 2027, the business is executing very well. The market demand remains robust, our pipeline is stronger. While we remain mindful of our macroeconomic uncertainties and also West Asia crisis and elevated commodity prices and project execution challenges that can arise in a dynamic environment, we are confident in our ability to capitalize on the opportunities ahead and continue creating a long-term value for our shareholders. Thank you once again for joining the call, if you need any more information, please reach out to Priyanka Bhagat, who heads the Investor Relations. We are happy to provide or engage with you as the case may be. Thank you very much, and take care.
Thank you. On behalf of Hitachi Energy India Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.