Ladies and gentlemen, good day and welcome to Premier Energies Limited Q2 and H1 FY 2026 earnings conference call hosted by ICICI Securities Limited. 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 the conference call, please signal an operator by pressing star, then zero on your touch-tone telephone. Please note that this conference is being recorded. I now hand the conference over to Mohit Kumar from ICICI Securities Limited. Thank you and over to you.
Yeah, thanks, Ikera. Good morning. On behalf of ICICI Securities, I welcome you all to the Q2 FY 2026 earnings call of Premier Energies. Today, we have with us from the management Mr. Chiranjeev Singh Saluja, Managing Director, Mr. Nand Kishore Khandelwal, Chief Financial Officer, and Mr. Vinay Rustagi, Chief Business Officer. We'll begin with the opening remarks from the management, which will be followed by Q&A. Thank you and over to you, sir.
Thank you, Mohit. I'm audible to you?
Yes, sir.
All right. Good morning, everyone. Thank you for joining us today for our Q2 FY 2026 earnings call. I am Chiranjeev Singh Saluja, Managing Director of Premier Energies , and I'm joined today by my colleagues, Mr. Nand Kishore Khandelwal, Group CFO , Mr. Subir Reddy, Chief Strategy Officer and Director, and Vinay Rustagi, Chief Business Officer. The company has reported another quarter with record revenue and profit numbers. Beyond the financial numbers, let me talk about some key highlights of this quarter. First, our new cell and module lines commissioned in Q1 have ramped up nicely, as you can see from the increased production numbers. The 1.2 GW TOPCon cell line, which commenced trial runs in August, should fully ramp up shortly. Second, we have made a major announcement of scaling up our 4.8 GW TOPCon cell project in Nairobi and Andhra Pradesh to expand it to 7 GW.
The total capacity of our cell lines would be 10.6 GW by September 2026, aligning closely with our module capacity and our mission 2028 target. What is important to note is that this upgrade is being done at a nominal cost, taking advantage of design efficiency, and it's funded entirely through internal accruals. Third update is we won new orders, aggregating to 6,511 crore in this quarter. These order wins come from a mix of top-tier independent power producers from across the market, which shows a strong validation of our ability to offer cutting-edge products at competitive prices with attractive margins. As you all would have seen, we have completed two very important acquisitions in the inverter and transformer businesses. K Solare is a leading Indian inverter manufacturer focused on the residential market.
Our 51:49 partnership with Syrma SGS , a diversified electronics manufacturer, brings complementary strengths and provides a solid platform for this business. K Solare is INR 143 crore in FY 2025. Our vision for this business is to increase the share of domestic value addition and market penetration over time. On the transformer acquisition side, Transcon is poised to grow strongly with a total production capacity increasing from 2.5 GVA at present to 16.75 GVA by April 2026. Transcon has rich experience and it is a 23-year-old company manufacturing transformers. The company is also moving up the value curve by moving towards more lucrative MV, HV, and EHV segments, which should improve margins on a growing top line. Both these acquisitions are highly complementary and value accretive. This helps us in offering a portfolio of allied products to our clients.
We expect that together with BESS, these new businesses will contribute approximately 30% of our revenue over time. Structurally, the business stands on very solid ground, supported by growing renewable power demand, improving technology, falling costs, and the government's ever-growing commitment to domestic manufacturing. We expect more Make in India policy initiatives for inverters, BESS, and the module supply chain in the near future. FY 2027 would be an inflection point for our company as we more than double our cell and module capacity and create additional revenues from BESS, inverters, and ingot wafer. Thank you. We are now open for questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Deepak Krishna from Kotak Bank. Please go ahead.
Hi, Chiranjeev. Hi, Vinay.
Hi.
Just wanted to understand this. If I look at your revenue from sales, based on your presentation, it's gone from roughly INR 420- 440 crore, this Q2 jump. If I look at the sales number on the DCR portal, that's closer to about 347 MW last quarter and about 424 MW this quarter. That implies that sales realizations have fallen with Q2 about in between 10%- 15%. Is that correct? Are we looking at something different, or is there, like, because the TOPCon is ramping up, anything that you can clarify on that?
Sure, Deepak. That's a very, very good question, and I would love to clarify this. The DCR portal was launched by the government of India more for traceability, rather than doing a financial analysis on sales and production. What happens on a DCR portal is there are a lot of sales which are also intercompany or sales shown which are going into module production. To update you and the other shareholders on the call, sales realizations in this quarter have marginally increased rather than decreased. The DCR portal is not the appropriate reflection which shows that there's a 22% increase in sales because that is also having sales made to intercompanies.
Got it. Got it. Maybe just on the two acquisitions, one essentially on K Solar, in terms of when you reach about a million inverter pieces capacity, what would be the total gigawatt and in terms of reach, how are you sort of trying to capture the market? Is it because you're trying to focus on PM Surya Ghar ? How is the current company doing it, and how do you see doing it? Do you also sort of build a franchise network as some of your peers or some of the consumer durable companies are doing? That's on K Solare. If I look at the transformer company, it looks like INR 1,000 crore valuation for INR 16 crore pack. Obviously, you are more than quadrupling capacity. How should we look at current order book and the revenue that the transformer business would have, say, maybe in FY 2027, FY 2028, and similarly, maybe similar numbers in terms of inverter, broad range of revenue and margins that you're sort of targeting?
Sure. I'll pass this to Vinay to answer this question, Deepak.
Yeah, you know, on K Solare, we know that the rooftop business in India is growing very strongly, mainly thanks to the PM Surya Ghar . The volumes have grown something like, I would say, 15x over the last two years. The current run rate is about 10 GW per annum in terms of the new capacity addition. We expect this run rate to actually increase going forward. There is a very, very strong demand for residential inverters. The second point is that the government is increasingly focused on domestic manufacturing of inverters, which means that, as we have shown in our presentation, all the leading inverters in India are basically supplied by Chinese companies. Even where there are Indian companies, they're mostly importing inverters and using white-labeled products.
There is a great opportunity for us to create a new segment, which is growing very rapidly. Our plan is to basically enter the residential market first, offer inverters together with their modules as bundled products. We are also expanding our retail supply chain, building and investing into their distribution network. That is the starting point. Over a period of time, what we want to do eventually with this business is, one, increase the product range to eventually go to a utility-scale segment also, increase value addition over time by making more components in the company, and obviously grow the top line and the bottom line. In terms of, you know, you've mentioned a gigawatt of capacity. 1 GW would typically, for the residential market, employ, mean, sorry. The plan is to basically sell about a million inverters, which would typically translate to about 3 GW of capacity.
At that capacity, we should be about, you know, given the current market prices, that would imply about INR 1,500 crore of revenues. Eventually, our expectation is that the company should be able to easily, I would say, treble the current top line and the overall financial performance over the next two to three years.
The inverter, I'd also like to add something, Deepak, that if you look at the inverter acquisition and the strategic partnership with Syrma SGS , you would see that Syrma SGS is already having 14 factories in India, into electronic component manufacturing. They're getting into PCB manufacturing. At Premier, we really value partnership. The strength which we are getting with Syrma SGS coming in is backward integration, more adherence to Make in India, where we would actually be sourcing PCBs from within India once Syrma starts manufacturing PCBs. When you spoke about channel network, K Solare itself is a 13-year-old company having its own channel network. Basically, we are doubling our channel network between Premier and K Solare on the retail side. K Solare also does OEM for some large brands in India, which also is adding to our strength of contract manufacturing as an OEM partner. I think we can move to transformers now.
Yeah. I think on transformers, your question was about, I think, indirectly about valuation.
I think more on forward, yes. Maybe just on valuation. You can go ahead.
No, no, sure. As you can see from the presentation, the company is actually expanding the capacities to about 16.75 GVA from the current base of 2.5 GVA. There is almost a seven to eight-fold increase in capacity. The company has a very, very strong order book. Execution is actually very, very strong. We have seen, even over the last six months' results, the numbers are significantly up over FY 2025. At the same time, the company is moving up the value chain by moving to the more attractive HV, EHV, and other MV products. Basically, our plan is to be able to offer transformers to our customers and offer synergies in that respect, reducing the cost of customer acquisition.
In terms of revenues and PAT, given the current run rate and the planned capacity ramp-up, our expectation is to actually more than quadruple the financial numbers and the overall performance over a period of about three years.
Sure. Maybe just one thing on the strong order book growth that we've seen this quarter. You know, we've seen a large tradition in cells, lesser in modules. Is it just because cells are more longer cycle and, you know, modules are more shorter cycle? It's because of, you know, people blocking capacity for about a year, year and a half? Is that the way we should look at it? Or are we incrementally trying to be more of a sort of a cell supplier to the various pump guys, module guys, or, sorry, rooftop solar guys? How should we sort of imply this through, you know, probably jump more in cells and less in modules?
I think, Deepak, you're right there. There is more of capacity blocking for cells going forward over the next 12- 18 months, because several module manufacturers who are not getting into cell or who have not had plans to do cell manufacturing want to block capacities, and then they look up to tying up with, you know, high-quality, high-efficiency cell supply contract. That is where we have seen an increased growth in cell orders.
Sure, those are my questions. I'll just get back on the queue. Best of luck for future quarters.
Thank you, Deepak. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. The next question is from the line of Nidhi Shah from ICICI Securities Limited. Please go ahead.
Yes, thank you so much for taking my question. My first question is, are you looking to expand into the U.S. still, given that it makes much more sense now with all the duties?
Yeah. Hi, Nidhi. I think that's a good point. Obviously, there has been, you know, the U.S. policy has been quite unpredictable. There have been a lot of changes in terms of the, you know, IRA itself, tariffs on other countries, anti-dumping duty investigations going on. We had put our old plans on hold while all these changes were going on. Now, I think as we begin to kind of get more clarity, it does seem like, you know, making it in, in making the U.S. is going to be very attractive, particularly as the IRA incentives for manufacturers will stay until almost 2031, 2032. Also, I think you would understand, you would know that in the U.S., you know, between the cell and the modules, there is already sufficient capacity for modules, but the market remains terribly undersupplied on the cell side.
Basically, our current analysis suggests that the U.S. is an attractive market for local manufacturing. We are doing a lot of work internally to assess the market, get some policy clarifications, understand the execution issues, etc. We are studying the market, and at the right time, we will make a decision whether to go ahead with it or not.
All right. My second question is, that given that, you know, the transformer company that we have acquired is also doing CapEx, we have a lot of CapEx upcoming in the next couple of years. What is our CapEx requirement for the next two years, year-wise, FY 2027 and FY 2028?
Yeah. Maybe I'll take this question, Chiranjeev here. As of now, we feel that our cash flows are quite healthy, and most of the CapEx spend, what we are doing, is coming in from internal accruals. We don't plan to take any new debt. In fact, we are working towards making the company debt-free, gradually over time. We don't see any concern with the healthy cash flows coming in, in terms of CapEx deployment.
Okay, would you be able to give like a ballpark number as to what CapEx you're looking at for FY 2027 and FY 2028?
This keeps changing based on the plans. Now, you see, we have announced the ingot wafer because the government has sent out the draft guidelines for ALMM list three. Also, the cell technology, we have increased. We have advanced for almost 18 months the target of 10 GW. We could achieve efficiencies in terms of the scale, in increasing the capacity from 4.8 GW- 7 GW. Would you like to add something here?
Yeah. I think it is really quite simple. Over the next, I would say, 12 months, our big project is going to be the 7 GW cell line and the 5.6 GW module line. Together, the CapEx on these is going to be about INR 4,000 crore. In addition to that, the next priority thereafter is basically the ingot wafer project, which is about 5 GW in the first phase and 5 GW in the second phase.
Bulk of that CapEx will basically come after the next 12 months, and that will be a CapEx of somewhere around INR 6,000 crore. That is the kind of big numbers. The rest of that, there'll be some marginal CapEx here and there on incremental upgrades and other businesses. Of course, there is a BESS CapEx also. Again, BESS, we have laid out quite clearly in two phases. One is till June next year, which is about INR 300 crore, and then another nine months after that, another INR 300 crore. These are the kind of three main items for CapEx until 2028.
All right. Thank you so much.
Thank you. The next question is from the line of Nitin Arora from Axis Mutual Fund. Please go ahead.
Hi. Good morning, team. Just two things I wanted to know. Morning, sir. Just two things I wanted to know. One, we looked at your revenue for this quarter. Given the strong backlog, it looked a little slower ramp-up on the revenue side. If you can throw some light, was it related to something on the client side, number one? Number two, when you, given a press release in the presentation, you stated about 4.8 GW and 2 GW of cell getting commissioned in June and September 2026. This, I think, earlier was planned to achieve this cell capacity in FY 2028. Have we preponed this? What has led to this preponement? Is it like the efficiency what you're getting in terms of faster CapEx, or were the earlier plans different? If you can throw some light on that.
Yeah. I think your revenue first. Despite a full order book and, you know, a very strong production number, we were flat for two reasons, right? One is because of unprecedented pain. Customer sites were not ready to receive deliveries, causing certain issues. We had the reduction in the GST rates, which is a big, big advantage for our IPP customers, and they wanted shipments to be postponed beyond 22nd of September. This is kind of a temporary lift. Production numbers have actually increased as per our plan, thereby causing an increase in the FG inventory levels. You would see this getting cleared out in this quarter. There is no major revenue as such. Your other question on the justification to expand cell capacity. We feel that many companies have announced cell manufacturing plans.
Most of this new capacity will take two to three years to come online and ramping up. With the demand being so strong and an attractive market opportunity to be captured in this period, we had actually gone back to the drawing board and seen that our building and utility design were anyway ready for the enhanced capacity. Therefore, we took a decision that we would increase this from 4.8 GW- 7 GW with a nominal incremental CapEx . We'll be able to pull this off quickly. That is, by September 2026, we increase capacity. 4.8 comes in June. You're right that the original plan was to achieve 10 GW in FY 2028. We've actually, you know, advanced this target by 18 months.
Okay. And.
This is with internal accruals.
Yeah, please go ahead, sir.
Yeah, I said this is with internal accruals, no new debt being taken.
Got it. Just one thing I wanted to go. Sorry, I have one question on the cell. It's a follow-up. Just one question. You know, when we look at the DCR portal, which, I don't know, sometimes it becomes very misleading because the cell utilization you're showing in your presentation is very different from the DCR. Even for other companies as well, it's like 0.1 GW going to 0.2 GW it's like a 100% jump, but overall utilization is very low. The question was that with the new cell which you have commissioned, do you think by Q3 and by December, this new cell of 1.2 GW will be going towards 80%, 90% utilization?
Yes, we have clearly indicated that the lines are getting ramped up, and by December, we will reach full utilization, almost full utilization.
Got it. Very helpful. Chiranjeev, sir, thank you so much. All the best, team. Thank you.
Thank you. The next question is from the line of Subramanyam Yadav from SBI Life Insurance. Please go ahead.
Thank you, sir. I just wanted to understand this incremental INR 300 crore of inventory built up is largely because of delay in the shipment, right?
That's right.
Okay. Sir, just to understand on the cell realization front, because we refer the DCR portal and, as you explained, that the number is misleading. Just to understand some flavor, how much realization has improved quarter- on- quarter? If you can give some color on that because as per our calculation, it is a decrease. It would be really helpful.
Yeah. Mr. Subramanyam, I think the calculation which is as per you, which is based on the DCR portal, we had clarified that the DCR portal just talks about sales done. It doesn't show the clear demarcation if the sale of cell has been an intercompany sale, which means that data is incorrect. If you want to understand what has happened on quarter on quarter, the cell realization has marginally increased and not decreased. When I say marginally increased, it's a very small number, but there's no reduction we have seen in the selling prices.
Okay. Sir, the DCR sale of module as of.
If you have a follow-up question, please rejoin the queue.
Okay.
Thank you. The next question is from the line of Mayur Patel from 361 AMC. Please go ahead.
Congratulations, Chiranjeev and the team for, again, a stellar win. It's happening to see an 18-month advancement of the expansion plan. I have just two questions. One, this 1.2 GW new facility, have we achieved our desired level of efficiency or is it still in the stabilization mode?
It is still in the stabilization mode. We are almost there. We will achieve full ramp-up and stabilization by December.
Okay. What should be the ultimate efficiency you would be targeting in this new TOPCon facility?
We are targeting an efficiency of over 25.2%- 25.4%, about 25.2%.
battery energy storage systems, what is the scalability we should assume next year, say, for FY 2027 in terms of revenue, or if you can give any insight about what's the scalability in the first year of operation in battery energy storage systems?
Sure, I'll leave it to Vinay to answer this. Yeah.
Hi, Mayur. We're expecting the first phase of the BESS line, which is 6 GWh , to be completed by June of next year. There will be obviously a slightly slow ramp-up, and this line would effectively be capable of producing about 4 GWh of end products. We would expect very roughly about 50% annual output, say, somewhere between 2 GWh- 3 GWh in FY 2027. The realizations in the industry currently are at about, I would say, somewhere around INR 60- INR 65, you know, depending on exact specifications, duty rates, etc. That will give us a turnover of about, you know, if you use that simple math, that will be equivalent to about INR 1,000 crore plus of revenues in the first year.
Got it. Thank you so much. I'll join right back here. Thanks.
Thank you, Mayur.
Thank you. The next question is from the line of Amit Mahawar from UBS. Please go ahead.
Yeah, sir. Hi. Congratulations on a great operational set of results. I just have two quick, yeah, two quick questions. First is, seemingly, the domestic demand can be very, very strong if we go by the policy framework, the optic, you know, YTD on solar. Your capacity expansion plans are also echoing the same the way we are preponing to capture maximum value. Sir, how do you think the dynamics playing out in China on anti-involution, the local government, you know, central government there in China stand impacting the profitability for us? There is a point till which we can localize and integrate. Any color on that first? That's the first question.
Yeah, sure, Amit. I think China, again, is a little bit unpredictable in the short term because of the changes, as you mentioned. There is a very strong effort by the companies who've been making these losses, which are unsustainable in the long run. Now the government has also got involved. There is an attempt, together with the government, to try and boost profitability of the segment. Now, the counter to that argument is that polysilicon prices have gone up, and there have been consequent increases in wafer prices and cell prices also. The counter to that argument is that demand in China is slowing down, with the move now to market tariffs as against feed-in tariffs, until June of this year. Exports to the U.S. have completely stopped. Exports to India, module exports have completely stopped now.
Cell exports are very strong right now, but they will also kind of come down and get phased out over the next two years. While the government is trying to reduce capacity or improve prices, there is a big negative impact on the industry, on the Chinese industry in terms of slowing down of demand. I think our view, it's kind of very hard to say, and we will have to see how things develop. Our view is generally that the prices have nearly stabilized and don't have much more room to go up from current levels.
Sure. Thank you very much. That's very helpful. Second and quick question is, on the expansions that companies are planning in India, right? Module is a gone case now, and the focus is now on cell integration and then wafer and ingot eventually. The cash flows currently are very, very strong, but these are bound to change. The profitability and the cash translation that we will see in the next two, three years might be very different than the current case, even despite the integration that top three or incumbents achieve. Any color on how should we see where will this settle in the next two, three years, assuming India local demand still stays at 30 GW, 40 GW annually? Any color on some dynamics of what cash we translate, the returns that we make, that changing, the way capacities are coming. Any color on that, sir. Thank you.
Yeah. I'll take this question. I think it's very difficult to give a forward-looking guidance as a previous perspective. If you talk of industry, we have actually given in an earlier presentation also a report from Bloomberg, which talks about what the deployment capacity in India would be by 2035, if I'm not mistaken. This is showing a very strong demand. To your question on module, you know, getting more and more difficult, you're right. The story is getting more into backward integration. We have taken this step towards enhancing cell capacity and achieving our targets 18 months in advance. Within two to three years, I think the story will move from cell to ingot wafer. The ingot wafer ramping up and scale would play a very key role. Would you like to add something, Vinay?
Yeah. I think, Amit, one, two, three years is a pretty long time in the context of this industry, very difficult to foresee. A few things are likely to happen. One, while yes, you're right, more capacity will come up, leading to these fears about oversupply and margins going down. At the same time, there'll be two other counterweights. One is that there'll be further emphasis on backward integration, and it remains to be seen how many of these new companies can backward integrate into ingot wafer, particularly at the kind of scale they're operating at.
Even ramp-up cell lines. That's right. We have seen, for example, with the implementation of ALMM policy, many of the smaller module suppliers, particularly those with outdated, obsolete capacities, are going to be stranded and eventually go out of business. I think the same kind of trend will also play out in the cell business because the cell technology is also changing. For example, increasingly, the talk is about perovskites, new tandem technologies, back contacts, etc. We ourselves, while all our new lines are going to be TOPCon, are already thinking of investing in R&D. We are exploring tie-ups and trying to adopt new technologies over this two to three-year kind of timeframe. While these new capacities come up, our expectation is that we would have leapfrogged in comparison with our scale, adoption of new technologies, and the backward integration that we are planning.
I think these are the three fundamental pillars that will determine the overall competitiveness of all the players in the long run. Given what Chiranjeev Singh Saluja just said in terms of soaring demand and these factors, we feel that some of these concerns about margins going down are a little bit overdone.
Thank you, and good luck, sir.
Thank you.
Thank you. The next question is from the line of Raman Kerti from Sequent Investments. Please go ahead.
Hello, sir. Can you hear me?
Yes, we can hear you, Raman.
I just have two questions. One is with respect to the margins with the new business lines, like inverter and transformer and BESS. What are the margins we expect?
Hi, Kerti . In terms of these businesses, these are fundamentally very different businesses from cell and modules, obviously. You know, battery energy storage systems, I would say what we are entering into right now in the first stage will be an assembly business where we will basically be assembling, importing cells, converting them into battery packs, and eventually containerized solutions. There, the margin, if you look at it purely as like EBITDA by sales or PBT by sales, will be lower in comparison to our current business, which is basically cell and module, but close to the module assembly business and for transformers. I think the key thing there, again, is to look at what is your capital employed. Given that it is an assembly line business, the fixed asset turnover will be actually very, very high, something like between 7x- 10x .
The result of that will be that the overall returns on capital will still be very attractive in line with our current business. On the transformer side, I think, again, we will see the margins actually going up over the next few years because of the shift towards higher value-added and larger, more specialized products. Again, it is difficult to give any kind of guidance, but I can just tell you that in the industry, all the analysis that we have done, the leading players make EBITDA margins of somewhere between 20%- 25%, again, with very healthy return on capital employed. We would be hoping that we'll be able to lower these numbers.
What about the inverters?
The inverter business, again, fundamentally speaking, is going to be very structured and is similar to module assembly or BESS assembly business, i.e., lower margins as a percentage of sales, high fixed asset turnover, and attractive return on capital employed.
My second question is, I just want to understand this, the new acquisition which you made with respect to the transformer company. Sir, from the PBT, what I can understand is in the acquired entity, the capacity will ramp up to 4.2 GW. There is another JV formed with respect to the new, the acquired entity and the management team, which is of 72%- 28% JV. In that, you will add 10 GW, 10 GVA, capacity. Effectively, what will be the Premier Energies share in this entire totality of the business?
Raman, just a small clarification. First of all, the 4.2 GW, 4.25 GVA, is addition on the current capacity. The total capacity will actually go up to 16.75 by April of next year. In terms of our share, we are obviously 51% shareholder at the top level, which is the Transcon Inn level. Then, if you just do a simple math, 51% into 72% at the new trafo level. Our share of revenues and profits will be perita on that basis.
That will be effectively around 37%, right?
Of the new transformer business in terms of the profit, the bottom lines, yes.
Yeah, yeah.
Yeah, yeah. It also depends on the capacity, right? The majority of the 10 GW is coming into that line. Correct. It's a subsidiary of Transcon. We being the majority owners, the entire top line will be console.
Okay. Understood, sir. Thank you. Thank you so much.
Thank you. The next question is from the line of Kunit from HSBC. Please go ahead.
Thank you so much. My first question is on your capacity expansion on the cell side. You initially, in your comments, talked about this being brownfield and coming at significantly lower cost. Can you talk how much will it cost versus a greenfield?
Hi, Kunit. We will, you know, the 4.8 GW- 7 GW, the incremental CapEx which we are incurring is about INR 502 crore. As we clarified on this call earlier, our existing 4.8 GW line had, you know, additional capacities in terms of utilities, land, the power connectivity. That's how it really helped us in terms of scaling up with just adding equipment. The initial design of our 4.8 GW had adequate space left for expansion. Now, with the result that, you know, overall, on a per gigawatt basis, we have seen a 23% saving in our CapEx. You know, and then, in looking at the demand, the call which we have taken in the interest of the company and the strong order book.
Interesting. That's very helpful. Secondly, on battery energy storage systems, right,
Kunit, it's going to be India's single largest, single location, 7 GW cell line, TOPCon line in one building.
Okay. The entire 7 GW will be housed in one location?
Yes, one block, yes.
Okay. Good. That's very interesting. On the battery energy storage systems side, are you, you know, on the cell side, what kind of timeline are you building in for executing the order book?
The existing order book spans between 12- 18 months.
12- 18 months. Okay. Yes, that's all from my side. Thank you so much and all the best.
Thank you.
Thank you. The next question is from the line of Apoorva from IIFL Capital. Please go ahead.
Hi. Thank you for the opportunity, sir. I wanted to understand if the recent rise in silver prices is going to have any impact on our margins going ahead and if you can quantify that.
Yes. Yes, silver prices have gone up substantially. There has been a marginal increase in our bond cost. Looking at the operational efficiencies which we have achieved, there has been no impact on our margins with respect to silver. We do keep hedging silver at various intervals. We have not seen any effect on margins because of this as of today. Going forward, also, we feel that with the operational efficiencies which we are reaching in terms of scale, we don't see any problem there.
Understood. Also, on your ingot wafer capacity plans, can you help us with the execution and then the stabilization timelines expected over there?
We have charted out our plan to have this commissioned by December 2027. The original plan was to set up a 2 GW wafer by June 2026. We have now expanded this to a 5 GW ingot wafer instead of just a 2 GW wafer. This is because of the announcement and the push by the government for Make in India and the ALMM list three draft guidelines. Maybe Vinay can add something to this.
I think that explains it, Apoorva. We have always maintained that the government is extremely committed to Make in India and becoming self-sufficient in the solar sector. As expected, a very well thought-out ALMM three draft has come out, and we expect the final policy announcement also to be made imminently, because of which we get the confidence to kind of accelerate our plans and announce the first phase for completion by December 2027. In terms of ramp-up, we would again expect very much like a cell line. The first line may take about, close to about, four to six months for ramp-up, which will help us eventually in the second phase in any future capacities.
The stabilization should happen in four to six months?
After the lines are fully built out, yes.
Okay. Maybe first half calendar year 2028? Understood. For the new order bookings that we have done, obviously, the number has increased quite a lot. What is the realization and the margin profile you are seeing over there for DCR modules? Are you seeing any pressure over there because capacities are coming, or do they remain steady at $0.24, I think?
I think we don't see a major difference there in realization. Of course, the contracts are generally variable in nature with the link to wafer prices. Overall, we don't see any major change in the realization.
Should we expect 30% margin for this entire order book going ahead for cells at least?
Apoorva?
It's a follow-up question.
Yeah, it's very difficult to give a future guidance on margins. Yeah, generally, you would want to say something?
Yeah. I think the only thing to clarify, again, which we have also said earlier, is that, you know, the overall outlook for sales for the DCR modules remains very strong. That is obviously going to be the more increasingly, you know, more focus of the business going forward. There, the margins are very steady. If anything, you know, like we said earlier, the margins actually went up in the last quarter. On the non-DCR modules, you know, obviously, there is a little bit of an overcapacity there, and even there, the prices are stable. Margins have slightly gone down, you know, with recent changes, particularly, for example, the cell prices increases, etc. Most of these cell prices increases have been passed on to our clients, and we kind of see, we'll see how things develop from here.
Understood. Thank you so much.
Thank you. The next question is from the line of Keith and Jane from Avendus Spark . Please go ahead.
Thank you for the opportunity, sir. Congratulations on a very good set of results. My first question is, just your view on how you look at this that ALMM2 or the DCR module results in a higher cost of solar tariff by around INR 0.30 to INR 0.40, and which might again be increased with the ALMM3 introduction as well. What makes you think that there won't be any pushback from the industry, because in the end, the price is borne by the consumer, by the retailer? How do you look at this?
Keith and the ALMM2 timelines have been known since December 2024. It has been a long time. Obviously, there was an amendment issued about two months ago on that. In terms of how that is going to play out and the impact on cost, etc., we can already see, by and large, the tariffs which have been bid out in the solar sector have been very stable. Increasingly, there are no more standalone tenders. Most of the bids now are some kind of hybrid design, solar plus battery energy storage systems or solar plus wind plus battery energy storage systems. There, again, you can see the tariffs are at all-time low levels. Even solar plus 2R battery energy storage systems and 4R battery energy storage systems are now less than INR 3.
Other anecdote I can give you in terms of very minimal impact on tariffs is our own open-access projects. We have been planning to develop captive projects for our own needs. There, as you know, from June 2026 onwards, all projects completed thereafter have to comply with the ALMM2 . Based on our studies, the increase in cost of power is of the order of about INR 0.10. That is, I would say, a very small increase, and the market is very easily able to absorb that. All the discussions with clients basically show that the demand for renewables remains very strong, and there is no concern related to cost of ALMM2 or ALMM3 implementation.
Understood. Thank you. Most of the questions have been answered. Just two bookkeeping questions. One, what would be our percentage of cost of silver in the BOM for cell? It's for the manufacturing and cell. Yeah.
You know, all the different kinds of pastes we use, it was about $0.01 a watt about a year ago, which has now gone to somewhere around $0.014- $0.0145 at present.
Understood. Just the last question. What would be our mix of cells used for captive use and sold outside in the first half of FY 2026?
This keeps changing. It's very dynamic. We would not be able to give you a number on this, current.
Understood. Okay. Okay. Thanks. Thank you, sir.
Thank you. The next question is from the line of Subramanyam Yadav from SBI Life Insurance. Please go ahead.
Thank you. I just wanted to understand on the gross margin trend because we have seen improvement in this quarter with the last quarter, despite silver paste cost going up. When we look at the sale of module also has come down. I just wanted to tell you this thing. Is there anything specific here or cell realization has improved much because of that, your gross margin is higher?
Hi, Subramanyam. First thing I would say is that changes in margins are not particularly large. I don't think, and they come from many different reasons, including a greater proportion of cells sold in this quarter. Of course, because of the increasing volumes, we also see some efficiencies, particularly on the sales side, as well as fixed cost operating leverage in the business. I think those are the two main reasons why there was a marginal increase in gross margins. Overall, I still want to kind of add that the overall prices and the outlook for particularly cells and DCR modules remain stable, and the margins are at the current levels. Any changes that you see on a quarter-to-quarter basis can arise from one-off changes in the business mix in that specific quarter.
Okay. That's just a bookkeeping question on the depreciation and the other income trend. Because we commissioned one module and one cell plant in the last two quarters, but still, the depreciation is coming down. Is there some change in policy again, or other income has also strictly gone up if you can explain that?
On depreciation, Mr. Subramanyam, we depreciate some of our equipment on an accelerated depreciation basis. There has been a slight variance in the depreciation because on certain equipment, what we had embarked on, accelerated depreciation has been completed. This keeps on changing based on our evaluation of specific equipment. That's why you see a slight change in the depreciation. On the other income, we have other income largely because of forex gains. Generally, forex gains have been favorable in the last quarter. INR has depreciated from 85.7 to around 88 during this quarter. This has resulted in a gain in the other income.
Can you quantify the other forex gain?
Sorry?
Can you quantify the forex gain?
We would not be able to quantify a number now, but yeah.
Okay. Okay. Fine. Thank you. Thank you very much.
Thank you. The next question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Yes, sir. Sir, one quick clarification on Transcon. There seems to be a competing business, Sealwell Group, right, which also does the manufacturing of transformer, right? The second clarification is that EBITDA has been declining for the last three years on Transcon industry, right? Can you just help us with the synergy between our business and Transcon business, which lead to a higher growth and operating profit?
What is Sealwell Group? Yeah, Mohit, we did not understand the first part of the question.
Can you please clarify? I think they're the company or business of the same group, right, which also is it correct?
No, it is not. They're not aware of any other sister or group company of Transcon.
Understood. I think we're reading somewhere the Sealwell Corporation Private Limited, Hyper Electrical Industries, and Transcon together represent.
Yeah, I think, yeah, I understand now, Mohit. You're talking about the partnership firm which Transcon was running, which was, the slum sale was done to Transcon Inn Ltd. There is no connection with those companies anymore. They do come under a related party, but if any related party transaction is done, it's going to be arm's length.
Understood. My second question on Transcon, the EBITDA has been declining for the last three years, right?
Yes.
What will lead for what is our right to win, right?
Mohit, you know, this is a company which actually has a very strong execution capability, over 20 years of track record. Like I said, you know, the current run rate of the company is extremely strong. There is a growing order book, and, you know, last year, the company delivered EBITDA of about INR 30 crores. This year, we are expecting significant growth in that number. You know, going forward, we are expecting strong growth not just from the current capacity, but also obviously from the expanded capacity, going up by about six times over the next few months, next six months. In terms of synergies, a lot of the growth in the transformer business is directly or indirectly allied with the growth in the renewable energy capacity.
Our analysis, all the work that we have done, shows basically that for every gigawatt of capacity that is added into the grid, there is a 10 GVA demand for transformers. Now, given that about 80% of the capacity installation is now coming from renewables, there is a tremendous synergy in offering these transformers, different range, inverter duty transformers, HV and EHV transformers to the same clients who we are selling our modules. Increasingly, you know, we'll be selling inverters and battery energy storage systems too as well. I think there are great synergies, end customers same for many of these products, and that is why it makes sense for us to make this, go for this acquisition.
Understood, sir. Thank you and all the best. Thank you.
Thank you, Mohit.
Thank you. The next question is from the line of Sanjay Mookim from JP Morgan. Please go ahead.
Hi, Jatibai. Good morning. A couple of questions from my end. The order book has grown very substantially this quarter. It's a very large order book now compared to current revenues. Can I ask about the dynamics of this book? How firm are these orders? Do they guarantee a margin as they are executed, or do you carry margin or pricing risks on these order books?
The contracts on the order book, which we generally share with the shareholders in the market, is firm order books. We never account for any framework or orders which have a possibility of order cancellation clauses. The prices and the margins are fairly protected, and any change in forex or wafer pricing is passed on to the customer, because these are variable kind of contracts with a pass-through. I think that should answer your question, Sanjay.
No, thanks, Chiranjeev. If I may follow up, perhaps push you a bit on this, Chiranjeev. Now that this order book is visible, like I said, it's several quarters' worth of revenue, would you be able to guide to a margin outlook since you have such a large order book?
As a board policy, we don't. I think I'd like to say no for this question, Sanjay.
Of course. I was just trying to. The second question, if I may, Chiranjeev, one of the utility companies recently on that call have sounded a little bearish on new tendering for solar projects. They've suggested that only 5 GW of renewable was tendered in the first half of FY 2026, and that about 40 GW of previously tendered solar do not yet have PPAs. Do you see this as a temporary phase and slowdown before the government figures out the new policy environment?
Sanjay, hi. This is Vinay here. I think, you know, if you're an independent power producer, if you're a new independent power producer trying to bid for projects and build up a business pipeline, then I can understand that the outlook is not great because there is a bit of a slowdown in new tender issuance and auctions. If you're an independent power producer which has been in the business for, I would say, three years or more, then I think you have nothing to be concerned about because most likely you have a great pipeline of business and a lot of execution coming up over the next two to three years. Just to give you some numbers, there is currently about more than 100 GW of solar capacity which has been auctioned and allocated to developers. This is only the utility scale.
We're not talking about rooftop or open access or custom scheme here. Even accounting for the fact that, you know, as per the press, the 30 GW or 40 GW of projects which have not been kind of getting converted into PPAs, there is still a large backlog of these projects which are due for execution over the next two to three years. You see that in the execution run rate and the capacity addition that we see on a month-on-month basis. All the leading developers, you know, if you just look at what is their current business vis-à-vis the wins that they have, for all the developers, the number is something like, the pipeline is something like 1.5x to 2x of their existing business.
I think, you know, if you are an established independent power producer or if you're a module equipment supplier like us, there is a very strong visibility of demand and growth in this segment.
Great. That's very useful. Thank you, Vinay.
Thank you. The next question is from the line of Harsh Mishra from BN State. Please go ahead.
Hello. Am I on?
Yes, you are, Harsh.
Yes. Congratulations on the good set of numbers. I just had one question. Regarding ALMM2 demand, rooftop remains very strong, you mentioned. For utility scale, ALMM2 demand, the timeline is now only for tenders after September 2025. No such tender has concluded until now?
That's right. As you were discussing, the activity on the new tenders remains very small, and for utility scale projects now, I want to clarify one thing. While the government issued this announcement, the relaxation from shifting the implementation or the bid cutoff date from December 2024 to September 2025, the government has also subsequently issued a clarification that all the projects which were bid out in the intervening period, where the tenders had a specification that the bidders have to use ALMM modules, will still have to use ALMM modules. For those projects, I think we would expect all those tenders to actually already have that clause because that is the policy design. The government has effectively clarified that even projects bid before September 2025 will have to comply with ALMM2 as long as the tenders had stipulated such conditions.
Overall, we think that the ALMM2 implementation timeline and the clarity is there now. Of course, from early next year, we will start seeing all the rooftop solar and the CNI segment demand also coming into the market, because of which we expect very strong demand growth over the next two to three years for ALMM2, stroke DCI modules.
Okay, go ahead. Just one last thing. For the big jump in order, that's, of course, excellent. Do we have a sense of the realization for the DCR and non-DCR part of the pipeline?
We just clarified that, Harsh, that the margins remain similar to what they are today. These are backed up by variable clauses in terms of forex and wafer. We would not like to make any future guidance as such. You know, but we, as a rural sector, are clear that the demand is quite strong.
Okay. Thank you. That's all. All the best for the next quarter.
Thank you, Harsh.
Thank you. The next question is from the line of Anupam Goswami from SUD Life. Please go ahead.
Good morning, sir. Sir, we're focusing on the industry, given that new cell capacities are also on the line. How do you see the operational capacities, efficiency, as well as the quality, compared to the Tier 1 and the Tier 2 players in this? Do we see any shift or preference to tier one main cell as ours?
Yeah, I think that's a good question. With new capacities coming in, we have always been clear that new cell lines do take time to ramp up and stabilize. And TOPCon is more difficult compared to mono PERC, and small lines, which are the scales of maybe one or 2 GW, would become not quite viable. There is going to be a clear differentiator over the next 24 months in terms of players having experience, high-quality efficiency scale, and continuous investment in future technology. All this is going to play out in a big way.
Yeah. Anupam, one of the learnings that we've had over the years is that the large independent power producer clients want to work with companies, suppliers with proven track record, offering the latest technology and the best products. We can see that even in the non-DCR segment, where there is already concern about huge overcapacity, etc., clients are happy to work with us. We are signing large orders for non-DCR modules at current price levels. Obviously, with the shift towards ALMM policy products, which are technically much more complex and challenging, we would expect this trend to actually strengthen over a period of time. Clients would naturally gravitate towards suppliers with bankable suppliers offering scale and the best technology. I think that definitely we would see some preference for companies like us offering these characteristics.
Can this be interpreted to smaller players sticking only to rooftop demand while the utility scale independent power producers can say, and our customers will go for the tier one with a large capacity and operational execution?
It depends on the capacity, you know, demand and supply. If large players are able to scale, as we are to 10 GW, and for all you know, if the demand is good, we may even go beyond 10. We have enough land and facilities available. It would depend on which market, which player would be able to address.
I mean, they may not have a choice but to compete only in the rooftop market. Even there, companies such as ourselves will be extra competitive because of our scale, procurement advantage, operating efficiencies, best technology, etc. We are ourselves focusing on building out the retail business, as we said earlier. All the feedback from the industry is very, very positive. Demand for our products remains very strong. Because of these reasons, we believe that we will be able to compete and offer better, overall, better product at a better price in comparison to the smaller players.
The last question, given the ALMM policy implementation, do we see in the near term any shortage of supply given backlog of demand and backlog of approvals and sanctions also? Do we see the next year, last six months or eight months, do we see any short supply?
Your question is about short supply of domestic cells or ALMM modules.
Yeah.
You know, current cell capacity in India is about 27 GW, and the current run rate in terms of production is about 16 GW, 17 GW per annum. These capacities are obviously, many new players have announced new capacities, and our expectation is that by the end of 2027, we should be able to have a total capacity of about 80 GW in the cell business. Production obviously would be much lower because of all the ramp-up time and stabilization time taken by these companies. I think there will be a dynamic, you know, changing from quarter to quarter in terms of overall demand supply, but the overall theme going forward remains that the market should remain tight, projecting volumes and margins for products. Was I able to answer the question?
Yes, thank you, sir. I'll join.
Thank you.
Thank you. The next question is from the line of Srinidhi from ASK Investment Managers. Please go ahead.
Yeah, hi. Thank you for the opportunity and congratulations on a great set of numbers. Sir, I was wondering, would it be possible to give some color on what percentage of your cell production next year is likely for external module manufacturers?
It's extremely difficult to answer this question because this keeps changing, you know, based on the dynamics, quarter on quarter. We would not be able to give you a firm number on this.
It's some broad range, sir, given you have a very firm large order backlog compared to your capacity. Even like some broad numbers should be fine just from a modeling perspective.
Yeah, about 50/50.
Right. Sir, I'm presuming as the time passes, more and more cell required for your own module manufacturing will be internally produced. Wondering, does development, first of all, it's a correct assumption. Second, will it be contribution profit accurate to you, or it would be more like neutral to diluted?
As I said, it's going to be dynamic, right? I mean, let us say we get more of non-DCR orders for our module lines, then we would sell ourselves to other module manufacturers. If we get more of DCR module orders, then we would be internally consuming them. Very difficult to give an answer on this now for the next year.
Understood. Sir, the 60% backlog that you have for the cell, it's all external, right?
Yeah. The order book which we are showing, of course, the cell orders are all external.
Right. Sir, just give us some color on.
Sorry to interrupt, Srinidhi. If you have a follow-up question, then please rejoin the queue.
Sure, thank you.
Thank you. The next question is from the line of Deepak Krishna from Kotak Bank. Please go ahead.
Maybe just two follow-ups. One was essentially on the FX gain. Srinidhi, we indicated FX gain, but the cash flow statement shows zero FX gain. Mr. Mukesh, if you could clarify why the cash flow statement has zero FX in one edge and we are seeing a Q2 impact. If any sense of what that number is. Second, just on this, the previous question that Srinidhi asked, essentially, what is stopping us from winning the DCR module orders directly? Because we have the cell, so we should be in a dominant position to win the majority of the DCR module orders. Why is it the case that we are being a sales supplier to someone and they are winning a DCR order when they don't have cell capacity?
I think, Deepak, this is mainly because if we have non-DCR orders from our long-term clients who are independent power producers, then we do not have enough module capacity left to convert them into DCR module. In that situation, we would do pure cell sales. As I told, it's kind of dynamic in nature, depending on the module order book, whether it's the backlog of non-DCR orders because these are fairly large orders which we cater to, and large IPPs whom we have a very long-term kind of a relationship. It is kind of dynamic.
You know. Just to add to that, I mean, there's nothing that prevents us directly from taking the DCR orders. By doing that, we will be basically blocking out both our cell and module capacity. Whereas, you know, because the demand for non-DCR modules remains strong, if we can get a better overall result in terms of profitability and margins by selling the cells and the non-DCR modules separately, then that is a better option. That is what we are kind of, we evaluate that dynamic and accordingly decide our sales mix and strategy.
Sure. Maybe just on the FX question, if you could sort of clarify, the cash flow shows zero FX gain in this particular quarter for one edge.
Yeah, hi, Deepak. The FX gain is basically the reinstatement of the drawn exchange, which is not realized. If it is realized, then only it goes to the cash flow. Since it's the reinstatement, it is coming as another income.
Sure, sure. Okay. Thanks for the clarification.
Thank you. Ladies and gentlemen, due to time constraints, this is the last question for today. I now hand the conference over to management for closing comments. Thank you and over to you.
Thank you. I just wanted to say we went through a range of questions about the company's business in terms of our expansion plans, acquisitions, government policy, etc. Overall, our view is that the fundamentals of the business are very compelling. Demand is showing exceptional growth. There is obviously a very strong focus of the government on domestic manufacturing. We see a lot of new initiatives to be announced, covering a whole range of products, including battery energy storage systems, inverters, electrolyzers, etc. Our aim, obviously, there are a lot of new players coming into the sector, but our aim remains that we want to focus on scale, on vertical integration, and adopting the latest technology. We feel that our business is poised to grow very strongly, given our plan for capacity expansion, backward integration, and diversification into new areas. We believe that this is a very strong investment opportunity, and we hope that you buy into our plans and support us going forward. Thank you.
Thank you, sir. On behalf of Premier Energies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.