Ladies and gentlemen, good day and welcome to the Suzlon Energy Limited Q4 FY25 Earnings Conference Call. During this call, the company management may make certain statements that reflect the outlook for the future, which could be construed as forward-looking statements. These statements are based on the management's current expectations and are associated with uncertainties and risks, as detailed in the annual report. Actual results may differ, so these statements should be reviewed in conjunction with the risk the company faces. As a reminder, all participant lines will be in the listener-only mode, and if you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note this conference is being recorded. We will begin the opening remarks followed by the Q&A session.
To be fair with the others, we kindly request each participant to ask no more than two or three questions. From the management, we have with us Mr. JP Chalasani, Group CEO, and Mr. Himanshu Mody, Group CFO. Over to you, JP Chalasani, sir. Thank you.
Thank you. Good evening, everyone, and thank you for joining us for Suzlon's annual earning conference call. This year marks a significant milestone for us. It is our 30th anniversary. Over the past three decades, Suzlon has demonstrated resilience, innovation, and a forward-looking spirit that continues to guide us. We extend our sincere gratitude to everyone who has been part of this long journey: to our visionary leaders, to our committed leadership, passionate employees, loyal customers, and dedicated partners. A special note of thanks to our investors and the analyst community for your unwavering trust and continued support. Talking about the industry, the draft notification on inclusion of updating of wind turbine generators on the RLMM will give a big boost to the domestic supply chain, with the local manufacturing of blades, towers, gearbox, and generators. Moreover, it also requires that the R&D and data centers be placed in India.
As the most integrated domestic OEM, sorry, as the most integrated domestic OEM with an in-house R&D, Suzlon is fully compliant with and well aligned with the government's current policy direction. We are pleased to report that another record-breaking quarter, marked by an all-time high order book exceeding 5.5 GW, is reaffirming our leadership across PSU, C&I, and Utility segments. Notably, Suzlon secured 1.5 GW as the sole winner of NTPC's PSU tenders, underscoring our continued focus on product quality and alignment with evolving market dynamics. Order book for the S144 model now exceeds 5 GW, a testament to superior technology and strong customer confidence. We take pride in stating that S144 is truly a made-in-India, made-for-India product. I repeat, it is a made-in-India, made-for-India product. On the manufacturing front, our capacity now stands at 4.5 GW, with both national facilities in Daman and Pondicherry fully operational.
We have also expanded our blade manufacturing footprint with new plants in Madhya Pradesh and Rajasthan, ensuring we are well positioned to meet production requirements for the coming year and beyond. Stunning execution, Suzlon has set a new performance benchmark by delivering a record-breaking 1,550 MW this year, more than double the megawatts delivered last year. The industry commissioned around 4.2 GW in FY 2025. Though 28% growth is there, it falls short of expectations due to transmission and land acquisition challenges. However, with over 2.5 GW commissioned in March last year and April this year combined, signaling a positive shift in execution pace. At Suzlon, we commissioned 336 MW in FY 2025, with an additional 370 MW direct-hit WTGs currently in the pre-commissioning phase, bringing the total to over 707 MW.
With less than 30% of our order book comprising non-EPC projects, where land acquisition lies outside our scope, client-side delays have impacted commissioning timelines. To address this, we have prioritized projects with partial land availability upfront. Looking ahead, projects like NTPC, coming with substantial land readiness, offer greater commissioning visibility for FY 2026. Additionally, Suzlon is actively pursuing a long-term strategy to mitigate land-related delays by developing active project pipelines. Our OMS business continues to do well with more than 15 GW capacity in India, with machine availability ensured above 95%. Renom, our new entry, continues to strive for customer fleet acquisition with assets under management crossing 3 GW. Our forging and foundry business started showing uptake in the last two quarters, and we expect to continue this trend in FY 2026.
Our top priority remains the timely execution of our robust order book while maintaining the highest standards of quality and ESG. I would now like to invite Himanshu to take you through our financial performance.
Thank you, JPC sir, and good evening, ladies and gentlemen. As always, I would be using slide numbers 18- 26 of our investor presentation, which has now been uploaded on our website as a reference point for my discussion during this presentation. FY 2025 has marked a transformative year for Suzlon, defined by remarkable achievements with highest-ever revenue, EBITDA, and PAT post-FY 2017. Our entire team demonstrated unwavering dedication, making this one of the most successful and memorable years in our journey so far. Taking you through the Q4 FY 2025 numbers, in Q4, Suzlon continues its exponential growth trajectory, delivering 573 MW, which is almost 2x on a year-on-year basis, with all financial parameters showing a strong uptrend. Suzlon recorded consolidated revenues of INR 3,774 crores, delivering a strong 73% YOY and 27% Q -on- Q growth.
EBITDA for Q4 FY 2025 stood at INR 693 crores, marking a 95% YOY growth and a 39% increase Q -on- Q basis. EBITDA margin improved by 200 basis points to 18.4%, up from 16.4% in the same quarter last year. Suzlon achieved the highest-ever quarterly PAT of INR 1,181 crores. This, of course, includes the deferred tax asset recognition, which we've done in this quarter of about INR 638 crores. Taking you through the full year FY 2025 numbers, FY 2025 marked a key inflection point for Suzlon, as the benefits of operating leverage in the WTG division have begun to materialize. The WTG division revenue surged by 101% from INR 4,215 crores to INR 8,481 crores, driven by a 118% increase in deliveries from 710 MW to 1,550 MW this year. This operational momentum translated into a remarkable 392% growth in EBITDA for the WTG business, underscoring the strength of Suzlon's scalable business model.
Notably, WTG contribution margin has surpassed our earlier estimate of 20% by 360 basis points to 23.6%. On a consolidated basis, Suzlon delivered a strong performance in FY 2025, with revenue surpassing the INR 10,000 crore mark to INR 10,851 crores, registering a 67% YOY growth. EBITDA is INR 1,857 crores for FY 2025, which is a surge of 80% on a YOY basis, with improvement in EBITDA margin to 17.1% from 15.8% in FY 2024. Suzlon reported a robust PAT of INR 2,072 crores after exceptional items, including the impact of deferred tax asset recognition, marking 190% YOY growth. This strong performance reinforces our confidence that the company has firmly transitioned into the next phase of its operational turnaround, following a successful financial revival nearly a year ago. We are pleased to report our balance sheet as of March 25 reflects a position of exceptional strength with a consolidated net worth of INR 6,106 crores.
Our net cash position has risen to INR 1,943 crores, marking an increase of INR 836 crores over Q3 FY 2025, which further enhances our financial flexibility and resilience. Our end-to-end wind energy model, backed by a fully integrated supply chain and a proven execution track record with best-in-class service, offers a competitive edge that's both unique and hard to replicate. Moving on, in terms of an outlook for FY 2026, Suzlon has made significant progress in operational excellence initiatives in FY 2025 and has got full support of various stakeholders, as mentioned by JP Chalasani sir earlier. The outlook for the future looks very promising, with a strong order book in hand, proven execution capability, a strong management bandwidth, and working capital facilities tied up.
On the back of all these pillars, as we look ahead for FY 2026, we are confident of achieving 60% growth across all key parameters in FY 2026 over FY 2025, which in any case meets all analyst expectations or estimates made by the about eight analysts that we have. With that, I'd like to conclude my presentation and open the floor to any questions that the callers may have. Thank you.
Thank you very much, sir. We will now begin the Q&A 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 handset 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 Sumit Kishore from Axis Capital. Please go ahead.
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Good evening. My compliments on a strong performance in FY 2025. My first question is, what are your thoughts on ordering flows in FY 2026 after the strong show in FY 2025? Are you likely to match or surpass in show in the system, and how are you thinking about?
Are we audible? Correspond?
Yes, sir. You are audible.
Hello. Can I go ahead?
It's management, sir. Can you hear me?
Hello. Ladies and gentlemen, please stay connected. The management line has been disconnected. Please hold while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected. Yes, Sumit sir, please go ahead.
Good evening. My compliments on a strong performance in FY 2025. My first question is, if you could share your thoughts around ordering flows for FY 2026, would it be possible to match or surpass deliveries and contribution margin for WTG pan out in FY 2026? That is my first question.
Sumit, we just lost you in between for a second. Can you just repeat? We heard you about order book after being lost for a few seconds.
Yeah. So my questions are on your thoughts around order inflows, deliveries, and contribution margin for FY 2026.
See, order inflow, as we speak, we continue to see the good momentum. We are pretty confident the order inflow will continue to be a little bit more accelerated compared to what we have seen in the last year. Looking at the current visibility, why I say that is, as you know, that we started now, the public sector has one strong segment, which now almost contributes 26% of our order book, is opening up. As we all speak, there are a couple of tenders for 1.5 GW already open with NTPC, and last year we won NTPC, BPC, and both. More and more those orders will come. We are also in the process of discussing with various other people, plus our development pipeline, what we started, will now get converted into EPC.
On your first question, Sumit, yes, we continue to see the traction. We will continue to see the traction on a quarter-on-quarter basis on the order book. I'll again repeat my statement earlier that I don't think the order book is not being irrelevant, not being overconfident. For at least the next 18 months, 24 months, I don't see the orders becoming an issue for us. It's a question of ramping up the execution capabilities to meet the project readiness for supply after buys. That's how it is. On the margin, you want to comment?
Yeah. Sumit, on the margin for the WTG business, as we mentioned, we registered about 23.6% contribution margin. I would say going forward for FY 2026, we should be able to maintain a 23% margin on a contribution basis for the WTG division. In terms of deliveries, that was the next question.
As I mentioned earlier on, we are confident that we'd be able to achieve approximately 60% growth year-on-year across parameters. I think this is in line with most estimates. I think we stand by that for deliveries.
Sure. Could you speak about the progress of the land development mode as a strategy to secure contracts in FY 2026 in EPC mode? How much can we expect via this route, and what progress has happened so far? Any groundwork leading into export opportunities for WTG over the next 12- 18 months?
On the development side, Sumit , if you remember, it has been on record said that earlier that in the states of A P, Rajasthan, and Madhya Pradesh, we started this, and including Karnataka. We also said that we don't announce, but we get into these framework agreements for development of various things. Some of those things are now getting converted into EPC contracts as we speak. I don't want to put a number to it, but you will actually see some EPC contracts getting announced out of this development pipeline in this year, which will keep increasing as we move on quarter-to-quarter basis. That's one what I will talk about. The second one, what is it?
Whether exports over the next 15 - 18 months, whether you're—yeah.
See, you're seeing what's happening on the tariff barriers and various content needs, whatever is happening. Obviously, as we spoke sometime back, the geographical diversification after meeting the increased demand in India is always an option available on the table. The answer to that question is, would we be prepared? Yes, we would be prepared. Would we be doing it? Let's wait and watch for the time. As I say, 18-24 months, we would definitely be prepared to, in case there is a requirement beyond our capacity, beyond whatever we can supply here, there is more capacity, we will definitely—but at this stage, answer is not affirmative, but preparedness-wise, yes, we are moving in that direction.
Thank you so much.
Thank you. The next question is from the line of Puneet Gulati from HSBC. Please go ahead.
Yeah, thank you so much, and congratulations on great numbers. My first question is on your new product development. You have bulk of your pipeline coming from S144. Where are you in the next leg of development for higher voltage turbines? Do you even see a need for that, or are you happy with this product at this point of time?
Puneet, we work in a different environment in India. We do not react to the market. We actually create the market. When I say we create the market, it is you need a product to suit the market at different points of time. As you know, we have the concept of setting up wind masts every single year to identify what is the wind data for the future sites, let us say two to three years down the line. Even as we speak, in FY 2025, we had put 60 masts in different—and in addition to those eight windy states, in fact, we have opened up one more state in the eastern sector. I just do not want to name it, but we are opening up. These sites are clearly giving us the visibility of what product is required in the next two to three years, and we are ready for that.
Current product, whatever is coming S 144, is the product which can easily meet the demand of the current market requirements in terms of both technology as well as pricing. What you can expect is that could be a variant of 144 coming in, like this platform variant. For the next model to come in, it will definitely be there as and when the country needs in terms of tariffs not going up. I keep always giving the example, most important is tariff. In AP , I always say the example is that we sold 1,000 MW of S111 in FY 2017, but same AP today, we cannot sell S111 because the tariffs are different. At that point of time, it was INR 4.84. Today, tariffs come down to INR 3.6, INR 3.7. Therefore, you need a 3-MW platform.
The answer to that is, yes, the next model will be ready, but it will be ready as and when it's required.
Understood. That is very helpful. Secondly, we also keep on hearing lower wind speeds. What do you think is the solution? Is there a better product needed, or do you think that is what developers will have to now factor in their estimates as well?
No. There are two different things. The sites in future which are coming in could have a different wind regime. That's one part of it. Secondly, the existing sites where we've already set up the projects, people talking about the wind is not coming the way it was expected when the plants were set up. These two are completely two different issues. On the first category of fresh sites coming with the low wind, obviously, the new product is required, which could be—megawatt is not an issue, okay? Because normally, we think that 5 MW, 6 MW, what is required. No, that doesn't make the difference. What makes the difference is your rotor diameter and your arc height would decide what is required for the low wind sites, not the megawatts. At the end of the day, what gives the lowest cost per kilowatt hour?
As far as the existing sites are concerned, wind, it's very clear to everyone that as long as you're taking proper estimates with data available for two years, variability will be less. Still, on the wind, the average would touch around—it takes about a seven-year period where you get event out, and then you get exactly the PLF of what you initiate for it. Year-to-year variations cannot be counted in terms of wind. The wind itself is a cycle of seven years, which is known. In fact, even when we do the analysis, we do it for the entire life of the project, and then you will get the same at the end of it. The quality of wind data when you select a site becomes very, very important. You've got to have those wind masts. You've got to have the two-year data.
If you have selected a site from somewhere where you do not have proper wind data and you have made a mistake, then you have made a mistake.
Understood. That's very helpful. Lastly, for your new upcoming orders that you'll be participating, do you see a higher share of utility-scale projects or more C&I coming in from the wind side?
If you see today, our C&I continues to grow. While the percentage-wise, if you see there's a slight increase, that's only the percentage-wise because our public sector has grown significantly. Otherwise, in absolute terms, our C&I continues to grow. We expect C&I, the growth rate will remain the same like what we have seen earlier. The public sector will continue to increase for us. Obviously, the bid availability will be there with projects on this, but that's depending upon the competition. Whatever we can increase, we can increase. In order of magnitude-wise, the C&I, PSU, and the bid. I don't call it a utility; it's a bid, these things. In the bid, again, you have two categories of people. Utilities which are participating in the bidding, we will continue to grow with them.
Understood. Lastly, one more, if I may. On the wind side, there is also a bit of movement towards solar plus BESS. Does that worry you at all, or do you think the hybrid product is still stable?
See, at the end of the day, you need to look at where is the demand and what is the tariff, okay, from the point of view of the grid is offering today. We have all clearly seen that in the solar hours, the tariffs are not touched at zero number of times. Also, if you see, it is not just the tariff alone, the grid stability-wise. Almost about 20% of the time in FY 2025 second half, that is October to March, the grid has seen a frequency going beyond the norms. Therefore, obviously, there is nothing called the during the period solar increasing. Now, at the same time, if you see in the evening peak and other peak hours, the demand is going up. In fact, there is a prediction that there will be a shortage of capacity even in July and August.
Whether it is solar plus BESS, it is solar or wind is immaterial. Which product gives you, depending upon when you want power, that is what will happen. Therefore, whether the wind is cheaper or the solar is cheaper, the battery is cheaper, it is not the issue. The issue is at what point of time, what is your load curve, at what point of time you want power, which offers the lowest combination will need to be there. All three will be there, four exist, but the design of the product would change depending upon what product are you asking for. Are you asking for round the clock? Are you asking for morning two hours, evening two hours? What are you asking for?
I don't see, to answer you simply, I don't see, at least I personally don't see any risk of solar exchange in the power sector of wind getting impacted because we have a solar processor. That won't happen. Combination will need to be there.
Understood. That's very helpful. Thank you so much and all the best.
Thank you.
Thank you. The next question is from the line of Mahesh Patil from ICICI Securities. Please go ahead.
Yeah. Hi sir, congratulations on a good set of numbers. My first question is on this RLMM norms that have come in, right, which mandate the domestic procurement of towers, blades, gearboxes, and generators. Just wanted to understand in terms of the capacity that we have or the procurement that we do, how are these four products, are we procuring, how much percentage of this is being procured domestically, and if there is some portion that is not, then what are our plans to do that?
Let me just give you the sector-wise in terms of the launch that we've started. RLMM, the draft notification came on 17 April. It does not just talk only about the domestic manufacturing. It talks about domestic manufacturing. It talks about cybersecurity. It talks about having R&D within India so that you design your turbines to meet Indian conditions in terms of temperature, grid, ceramics, etc. Okay? Your question being specific to the first one, I will answer to the first one. These four products, what you said, if you look at, first of all, the OEM capacity in the country, these are all numbers retained to MNRE by various OEMs. Backup to OEM capacity today is 20 GW in the country. The gearbox capacity is 29 GW in the country. Different manufacturers, different component manufacturer .
Hello.
Yeah. Can you hear me?
Mahesh, can you mute yourself, please?
Yes, sir. Sorry, sir, there was some disturbance. Can you please repeat this capacity question list?
OEM capacity is 20 GW in India, installed capacity to supply turbines. The gearbox capacity is 29 GW in India among three major gearbox suppliers. When I'm talking about gearbox capacity, it also includes SEZ, which means within India SEZ. You were the blade capacity is 28 GW, which includes 11 GW of third-party blade manufacturers. Okay? Means they can manufacture blades for any volume. They're OEM agnostic. Okay? The generator manufacturing capacity is almost about 14.5 GW. Okay? This is the capacity what is available in India. Therefore, in our opinion, the capacity not being available, projects getting delayed is out of question. The second is that the price is going up. These are the two things what we keep hearing is out of question. Because the same set of people, if the capacity utilization increases, the prices will actually fall. Okay?
If today we have a casting business in this country, which is being used for 25%, if the 25% goes up to 60%, our fixed cost per component will come down so much. Obviously, we can offer much cheaper. We had a 3 GW generator factory, which we sold off at some point of time. Even today, it is not being operational. Not even a single generator is getting manufactured there because there is no demand. These component manufacturers, if the demand goes up on them, the consistent demand these days, the prices are going to fall. There is adequate capacity. There will not be any issue in terms of disturbance in terms of supply, or the cost will not increase. That is what we believe. As far as we are concerned, we completely comply with these conditions.
We have no issue with respect to meeting all those conditions, whether it is manufacturing, or it is cybersecurity, or it is R&D. We are completely compliant today, and we have no problems at all. That is what we are writing to the government of India, saying that we welcome this, and we actually support this.
Sure, sir. Sure. Sir, one related question is, so you have mentioned that we have enough capacity in India itself, but when we look at the competition also, that means they likely will not face any challenges. What I'm referring to is that NITI Aayog paper wherein the compliance was mentioned as lower for some of the other peers. I was just thinking, do we have any advantage, competitive advantage here because of this? You said that there is enough capacity, so there may not be anything like this, right?
No. The advantage is that if it is a domestic manufacturing and a domestic procurement, we as an Indian company would, in India, we'll have a level playing field. Okay? Compared to some other people who are getting some products, which may look initially cheaper, but I do not think they will have a similar life cycle cost. Therefore, what would happen, this is advantage to us, is that we will be competing on the same ground with everybody today in the country. That is what I look at this whole thing is very different. In our own country, we will get the level playing field.
Okay, sir. Got your point. Sorry, sir, I missed that part where you gave guidance for FY 2026 order inflow. That and one related question is, I think we have a capacity of 4.5 GW, right? Do we have it sufficient to meet this demand, or are we doing something on the CapEx side as well in next one to two years?
Yeah. 4.5 GW is what can be supplied when there is a bit of an inconsistent demand on a quarter-to-quarter basis. If there is a consistent demand with improvement in productivity, this 4.5 GW actually, without adding any further manufacturing capacity, can deliver 5.5 GW existing capacity. Provided you have a consistent demand and you know that it is going to be taken, and then we can improve the productivity if you do a three-shift operations and everything, the same capacity can deliver 5.5 GW. What happens is one quarter, you have 1 GW demand, and second quarter, you have 2 GW demand. With that variation, that is where we say that 4.5 GW is our capacity. We have been on record, and Himanshu also said a number of times that for us to enhance further capacity required, we do not need to enhance the Nacelle capacity.
It's a question of the blades. You can always add more molds, which is not a high CapEx if you're not a CapEx intensive or not at least at this time. Therefore, the demand capacity is not a constraint for us.
Okay, sir. Got it. Got it. Thank you. Thank you so much. I know what the question is.
Thank you. The next question is from the line of Deepak Gupta from JM Financial. Please go ahead.
Good afternoon, sir. Thank you for taking my question. My first question is on the guidance that you've given for FY 2026 in your opening remarks. Did I hear it correct that you're looking at 50% growth across all operating parameters? If you could specify what operating parameters are you specifying?
Hi, Deepak. We mentioned that we're looking at about 60% growth across the parameters. Be it RR, as we call it, or deliveries, or revenue, EBITDA, normalized PAT, of course, not taking into account one-off DDA. Across all these parameters, we are confident of a 60% growth in 2026 over 2025.
Only exception would be COD, which would be much higher than 60% because obviously this year was a low year for us. That's the only exception which will have multiple times more than what we have done this year.
What is the current deferred tax asset on the balance sheet?
Currently, we've created a deferred tax asset of about INR 638 crore in this quarter. We've created this on the back of assessed losses. Assessed losses in the books are about INR 2,500 crore. Clearly, as per Ind AS 12, which provides that even now, that there is an absolute certainty of profits in FY 2026 for the corporation based on the assessed losses that we have. We've taken the DTA at INR 638 crore. Of course, there are additional losses that are available in the books, but those are not assessed as yet. As and when those assessments get completed, and based on how the company tracks along, there could be a possibility of creating further DTA as well.
Understand. So therefore, there will be likelihood of no tax liability for the next three years?
I won't say three years. I mean, clearly, the DTA that we've created would start getting charged into the P&L from Q1 of this financial year itself. Whilst it will be a P&L charge, there won't be a cash outflow. Basically, performance in FY 2026, our belief is that a large part of the DTA that's being created in Q4 shall get absorbed during the year in F 20Y26. Of course, if there's any new DTA that gets created, it's contingent upon complete assessments of the losses getting assessed by the department.
Understand. Just last question from my end. As I look at your quarterly numbers, you've shown a sharp improvement in your EBITDA margins for the quarter despite your contribution margins coming off meaningfully, largely led by lower employee expenses. If you could give us a sense, how do you see your EBITDA margin shaping up on a full-year basis, on a consolidated basis in the coming years?
EBITDA margin on a consolidated basis for the full year this year has been about a little over 17%. We would maintain that for FY 2026. We would also be around the same 17% margin for the full year FY 2026. Of course, when you look at the contribution margin, that shifts because as the WTG business volumes or numbers increase, which is a lower contribution margin business as compared to the OMS, the consolidated contribution margin would see a reduced number in terms of percentages. If you look at our consolidated contribution margin for FY 2025, that's about 33.7%, which is a little lower as compared to 36% in FY 2024. That's purely because we've doubled the WTG division in terms of deliveries in FY 2025. As we move along in FY 2026, with the growth that we're expecting in the WTG division, the contribution margin will come down.
While the consolidated EBITDA margin, we'd be able to maintain.
Sure. Noted. Thank you so much.
Thank you. The next question is from the line of Shweta Dikshit from Systematix Group. Please go ahead.
Hi. Good evening. Thank you for the opportunity. So my question is, what are your thoughts on a longer-term growth trajectory in terms of deliveries? We agree that we've been riding to 60% growth for FY 2026, but if we broaden our horizon, if we look beyond FY 2026 and go towards maybe FY 2028, 2029, 2030, what could be the growth that is in your vision at this point?
See, we gave a guidance for FY 2026. Therefore, obviously, FY 2027, FY 2028 as we move ahead, we see it. As we see today, obviously, while we do not use a guidance beyond the first year, if you look at the sector that we have said directionally, we are at 51 GW , and then we want to touch 100 GW. We can always argue that it will be 100 GW, it will be 90 GW or 85 GW . Even if you take the lowest of 35 GW, we are talking about an average of 7 GW per year in India. Therefore, you can see that there is going to be continuous growth. Compared to FY 2026, expectation is FY 2027, the capacity addition in the country will be higher, and 2028 will be still higher. In 2030, you will see year-on-year growth in the country's addition.
It is reasonable to expect that there will be growth rate, but what and how much is the, I do not think we are in a position to give guidance at this stage. Directionally, yes, we will continue to grow.
Thank you. Next question, just want to understand what's happening on the.
Sorry to interrupt. Ms. Shweta, can you speak a bit louder, please?
Just a second.
Yeah.
Hello?
Yeah, yeah. Go ahead, Shweta.
Turn it out a bit.
Yeah, yeah. You are good.
Just want to understand your thoughts on what's happening on the replacement market. How is this market expected to turn around in the next coming years, next few years since a lot of older turbines are still in place? What exactly is happening or could be expected in that market segment?
See, there are two types of repowering potential what we're seeing. One is you don't change much. You just increase the capacity by maybe replacing just a blade or the nacelle . That's one type of thing. We are working on a product for that, which can increase the capacity of some of our older turbines that are of lesser capacity. That will map, there is a significant amount of potential for that, and which we would see that tapping into that potential maybe starting towards the end of this year and picking up next year. Second type is that the repowering is really where there are the fragments of the lines uprooting completely the existing turbines. Because these sites are of high wind regime, replacing them with the latest turbines with much higher efficiency.
That will take a little longer time because currently, everyone is preferring the virgin sites because the cost of uprooting, and there are a few connected sites that we have a market for that. I think that will take a little less time. The first one, what I said, repowering is going to start, and then we expect that to make some start this year. We will see traction for that in FY 2027 and FY 2028.
Any chances of quantifying this number in terms of megawatts?
No, no. Right now, it's in the beginning stage, Shweta. Let's wait and see that. First thing is to make a start. Okay? Then we can start estimating how much will be for FY 2027 or how much will be for FY 2028.
Okay. Thank you so much.
Thank you. The next question is from the line of Ashish Aggarwal from Sundaram AMC. Please go ahead.
Yes, thanks. I hope I'm audible.
Yes.
The key question from my side, first of all, when you gave a guidance of 60% growth, even in the start, given your contribution, it should be going at more than 60% periodically. Your EBITDA should be going faster. Given your fixed cost will not be going at the same fixed rate. Just wanted to understand where we are missing this thing. Secondly, on the segmental margins on the O&M business, it seems like that the margins have gone very sharply. Anything one-off in that, one should be aware of. Lastly, on the balance sheet, there has been a very sharp increase in contract liability. What is the reason for this effect?
Hi, Ashish. To answer your first question on the 60%, when we say 60% across all parameters, we meant a minimum of 60%. Yes, you're right in your estimates that the EBITDA growth would, or rather could be higher than 60% based on the logic that you drew up in your question. When we gave a guidance, we're saying that it could be a minimum of 60% across all parameters. That does not necessarily mean that it will be exactly 60% across all.
Because, like I said, that COD will be much different. Commissioning of the turbine capacity will be much higher than 60%.
Read that guidance for 60% with the minimum as before it. To answer your question on the OMS margins, if you look at our contribution margin on the OMS business, that's about, for the full year, 68% that we maintain. Last year, it was about 66.7%. If you look at the Q4 this year, it's about 69%. Of course, I'm not sure which exact numbers you're looking at, but also keep in mind we've also started having Renom, which would be a separate division of multi-brand O&M. That would take the consolidated O&M division margins down if we put Renom as a division also as part of the O&M, which so far we haven't. There are no significant one-offs.
The margin guidance on O&M business we continue to maintain would be in the late 60s at the contribution level and at about 40% from an EBITDA perspective.
Sorry, what I meant was on the P&L, right? On the consolidated P&L, if we look at the segmental profit, it seems like that the segmental margins in O&M has declined from roughly 38% to 26%. That's what I was trying to understand.
No, no, no. O&M margin issue looking at it along with Renom, then yes, it would have declined along with Renom and International. When we report the 38% operating margin, that is just the India O&M. When you look at the segmental in the REC- 33 results, that comes along with the International O&M also, which takes the margins down. That business is very small for us. You should just look at the India O&M, which is if you look at the investor deck and not the REC-3 3 results, you will be able to correlate the two numbers.
Yeah, because in the investor presentation, it's given 40%. That's what I was saying.
Yeah. My suggestion would be that whilst, of course, we cannot ignore the REC-3 3, for the true segmental India O&M margins, please look at the investor deck presentation. I mean, if you have, of course, any detailed follow-up queries on that, we can do a one-on-one follow-up call.
Look at the absolute number instead of percentage.
Yeah. With regards to your last query on the liabilities, we've created about close to INR 900 crore of liabilities on the balance sheet. That is on account of two events. One is, of course, the additional stake buyout of Renom. As you know, we bought a little over 51% during FY 2025. There are certain put-call options that have been built in when we signed the original SHA. Approximately about INR 400 crore of liability, contractual liability, has been built on that count. Another close to INR 400 crore has been built on account of the One Earth, which is the Pune-based headquarters that we have, wherein we have a put-call option that kicks in about 12-18 months from now. Based on these two contractual liabilities, which are probably more than one year down the road, we've created those liabilities in the books.
Got it. Thanks.
Thank you.
Thank you. The next question is from the line of Dhawal Doshi from Dymon Asia. Please go ahead.
Hey, congratulations to you on the super set of numbers. My questions have been answered. Thanks a lot. Himanshu, I would ask you to please really refer to the analyst estimates for giving guidance.
Thanks, Dhawal. Learn from you.
Thanks so much, guys. I'm out of this.
Thank you.
Thank you. Bye.
The next question is from the line of Arun from Geojit Investments. Please go ahead.
Yeah. Hello. Can you hear me? Please go ahead. Yeah. First of all, congratulations on a very good set of numbers. I wanted to understand why the gross profit margin has come down in this particular quarter. I see that the cost of raw materials is higher, right? What is the reason for that? Also, similarly, for the finance cost aspect.
Again, Arun, as I mentioned earlier, as the share of the WTG division in the consolidated numbers keeps increasing in absolute INR crores basis, the consolidated contribution margin will keep coming down because the WTG business has a contribution margin of close to 23%, and that is growing at a rapid pace, while the O&M business, which has a contribution margin of close to 68%, is kind of flattish or growing at an inflationary growth rate. Therefore, when you look at it on a consolidated basis, the gross margins will come down, even despite us having a better COGS, which is resulting in higher contribution margin for the WTG business.
Okay. And then the other question was on actually recently, last Sunday, if you see the spot prices on the electricity market had almost come down to zero, right? It was, I think, the minimum clearing price was around INR 0.5 per kWh. This has kind of put the question on whether there is a green energy surplus risk that we all should be factoring in, which could probably lead to further curtailment on renewable additions. I wanted your thoughts on that and also what are your expectations that you have built for capacity additions for the upcoming years, say, for the next three to four years?
Yeah. See, when you said that it has reached zero, obviously, that's right. In fact, it can even be negative as we move ahead. You need to see at what point of time.
You have a demand curve for 24 hours and 8,760 hours in a year. What you're seeing is surplus power on the supply side and less on the demand side is the solar generating hours. That's where we have the surplus, which is causing prices to fall and also causing the grid frequency to go up, as I said earlier. At the same time, when you see the tariffs on the exchange during the wind generating hours, it continues to be plus INR 4.50-INR 5. Okay? Whereas the prepaid tariffs are INR 3.6, INR 3.7, the exchange is still at the point of time, the prices are INR 4.5-INR 5. And that demand during that particular part of time is continuing to grow.
As I also said at the cost of reputation, the National Load Dispatch Center has predicted that in the month of July and August, loss of load probability is as high as 40% for the evening hours. Okay? They are expecting a 25 GW-30 GW shortfall during the hours. Therefore, the demand continues to be there. Even if you see the overall electricity demand projections are anywhere between 6%-7%, it continues to grow. At what point of time? That is the reason sometimes I said that it is a question of when do you want power and what point of time, accordingly, your renewable energy mix will change. Okay? That is what is important. The only question of looking at exchange, a minimum price does not make any sense.
We need to see at what point of time the minimum is reaching. It's only reaching during the solar generating hours. That is where the time spikes are going up.
Understood. Understood.
On the guidance part, the second question is concerned that we compare to 2.1 GW what we commissioned this year. We expect this to be north of 6 GW in FY 2026 and should touch about 7 GW-8 GW in FY 2027. Demand at that are going to be about 9 GW thereafter. Looking at the current way the project development pipeline is taking shape from various people, as well as looking at the grid capacity, what is going to come up.
Okay.
Okay. Thank you, sir. That'll be all from me. All the best for the upcoming quarter.
Thank you.
Thank you. Participants, you are requested to limit your questions to two per participant. As there are several people waiting for their turn, the next question is from the line of Pradyumna Choudhary from JM Financial. Please go ahead.
Hi. Congratulations on the set of numbers. Again, my question is something which has been previously done as well as addressed to a certain extent by you. Regarding how would you compare solar plus wind to solar plus battery in terms of cost? Also, when you say that it depends on requirement, what mix would be used? Given that battery is a storage project, would a solar plus battery not really automatically solve for solar plus wind as well? It can be used during wind generating hours in case of solar plus battery.
See, the solar plus wind hybrid tariff we all know is still running around INR 3.35-INR 3.4 per kWh. Okay? Hybrid. That's the solar plus wind tariff. And the solar plus the battery, the only one bid has been seen till now declared, which was for the existing solar connected people. They said that we need power in the evening peak and the morning peak for two hours or so, which tariffs came to INR 8, which I don't think will move ahead. Simple thing to understand is that the pure wind is INR 3.6-INR 3.7. In fact, even if you look at past three bids, which got awarded, which got opened up and awarded in the first three months in this financial year, its average is about INR 3.76. That's the tariff of wind. Solar is now, let's say, around INR 2.55- INR 2.6, which is always domestic.
INR 2.56 plus the battery cost. Unless the battery cost is less than INR 1 . 25 per kWh, solar plus storage can never replace wind. As simple as that. Therefore, I do not think it is an issue. Having said that, again, I want to say that it is not solar plus battery versus wind. It is all three combination depending upon what profile of generation you want to meet your load curve at what point of time you want this. That is what will decide whether which combination of renewable energy capacity you need to create at the back end.
Understood. Sorry, just to make sure, does it go in before solar plus battery, what's the tariff?
Sorry? Come again?
I think solar plus battery came up only one bid.
Pure solar plus battery, one bid came up, which is they asked for. It was open only for the existing solar connected people, developers, where they can put additional solar capacity and put the battery and supply in the evening peak. That tariff was somewhere around INR 8. So obviously, I do not think.
Okay. So one of the.
Yeah. Yeah. But subsequently, the battery prices are coming down. So even today, I do not see the solar plus battery tariffs can be anywhere less than INR 6.5-NR 6.75 per kWh. Let's wait and watch. Again, I said that it is not a comparison in that way. When you need power is what makes the difference. For example, now the CRC has come up with a draft, and then everybody has commented on opening up the connected substation connectivity during non-solar hours where solar is already connected. When you do that, the wind can get connected. Obviously, wind also generates sometimes daytime. Then you put some battery there in the daytime and then for the wind to bring the battery. The rest of the time pure wind. That is very competitive. Therefore, there are so many new opportunities that are coming up.
I say that this is not one versus the other. It is exactly what combination gives you the best power for you for the demand curve what you're proposing.
Understood. Thank you.
Sorry, your voice is breaking up. Can you please ask your question again?
I think we can move to the line of Aruna.
Yeah. Thank you. The next question is from the line of Mayank from AMC. Please go ahead.
Thanks for the opportunity. My question is related to the possibility of the import substitution when we talk about the manufacturing of the blades and the initial move. How do you foresee that in future? What are the components currently you do import from outside India?
No, no. We do not import as of now. Okay? First of all, we do not import. Our domestic component is anywhere up to 80% today. Even some of the imports we do is mostly for supply security. As I answered sometime back in detail on this question, there is much more than the required capacity in India of various components. Therefore, I do not see any issue in terms of that mandate what RLMM draft said and stemmed to say that only four components to be manufactured in India. I do not think we personally do not see any issue, not just for Suzlon, but the sector as a whole.
On that point, I mean, what could possibly be a backward integration for us if at all we think on that?
No, see, today we do ourselves snails. We do ourselves the blades. We procure the gearboxes, which is domestic. The fourth component, they put in generators. We never used to manufacture our own generators in the joint venture, which we sold. Therefore, we're still buying from the same company. At this stage, we're not really looking at backward integration because for us at Suzlon, nothing is changing by this import substitution. It is not changing for us as of your concern. If your question is that because this is coming in, is there a potential opportunity for us to do some more backward integration? Possibly the answer is yes, but it's too early to talk about that.
Okay. Secondly, the R&D expenditure for this year, could you give the number?
R&D expenditure has been close to about, I would say, INR 150 crore historically. Going forward, we may be having an increased R&D expenditure. I would say about INR 225 crore would be the R&D expenditure estimated for this year.
26?
Yes, 26.
Okay. Thank you.
Thank you. The next question is from the line of Shiva from Purnartha Investment Advisers. Please go ahead.
Hello. Am I audible?
Yeah. Yeah. Please go ahead.
Yeah. Yeah.
Hello?
Yes, sir. The current participant has been disconnected. We will move on to the next question. It is from the line of Sunil Jain. Please go ahead.
Yeah. Thanks for taking my question. Sir, can you give why the interest rate and depreciation both have increased in this quarter and how it is likely to move?
Firstly, on the depreciation, for Q4, it is at about INR 93 crores as compared to INR 66 crores in Q3 of the same financial year. The increase has been on two counts. One, of course, due to the Renom acquisition. We have capitalized certain items which over a period of five years we shall be providing for. Also, there have been certain one-off small IT assets that we've provided for. Going forward, in terms of the depreciation forecast, I think it is safe to assume that with the increased CapEx on capacity expansion plus the Renom, with the intangible that we've created writing that off over five years, it is safe to assume about INR 350-INR 400 crores of annual depreciation cost going forward.
As far as interest cost is concerned, again, we've started consolidating Renom, which has a small working capital, which is a cash credit debt of about INR 120 crore. Additionally, we made a small borrowing in our subsidiary SE Forge in Q4 of about INR 100 crore, for which there have been certain one-time costs, and the interest on that has been starting to get charged. As we use our increased working capital for enhanced deliveries plus these couple of items, the interest costs will go up. If you look at our full-year interest cost this year, it has been about INR 150 crore. We estimate that going forward for FY 2026, this will be close to about INR 250 crore.
Okay. That was my question. Thank you very much.
Thank you.
Thank you. The next question is from the line of Shiva. Please go ahead. Mr. Shiva from Purnartha Investment, please go ahead.
Yes, sir. I have two questions to you, sir.
Sorry, sir? Shiva, say.
I think we can take the next question, please.
Okay, sir. The next question is from the line of [Prit Nagesh Sheth] from [Venth Sinsal]. Please go ahead. Mr. [Prit Nagesh Sheth], your line has been unmuted. Please go ahead with your question.
Okay. Move ahead with the next one.
Yes, sir. The next question is from the line of Vikas, an individual investor. Please go ahead. Mr. Vikas Mukundan, your line has been unmuted. Please go ahead with your question. As there is no response, we will move on to the next question. It is from the line of Sumit Kishore from Axis Capital. Please go ahead.
Okay. Thank you.
There's no one.
Sumit, are you there?
Yes. Am I on? Am I audible?
Yes. Now you're audible.
Okay. My question is in relation to SE Forge. Is it ready now to cater to forging of 3.8 MW for internal requirement and for external sales in wind? Are we going to see the acceleration top line in SE Forge in FY 2026, given that this did not happen in FY 2025 despite sharp increase in delivery?
Yeah. I think if I submit it to see, while you are right on overall year basis, not much has changed compared to last year to this year. There is some growth. If you see the quarter three and especially the quarter four, you are seeing that increasing trend now coming up. We expect to maintain that momentum of quarter four. We expect that this year would be different for SE Forge to start getting into street gear. To answer your first question, yes, it can supply for our 3-MW demand, and it is also continuing to supply. We are also trying to enlarge our capacity there to even meet the larger diameters.
That's very important.
We are now looking at the non-wind sectors within India, plus we are also significantly concentrating on exports as well.
Sure. Because logically, I was thinking that if there is like 60% growth in delivery at the minimum, then some of that growth should get reflected in SE Forge as well because there is a significant portion which is for Suzlon itself.
I agree. I think what will happen also is that if the domestic manufacturing requirement comes in, obviously, I think that also will, though castings are not put there, or the bearings are not put there, I think assuming that they are all going to move in that direction, obviously, that will benefit SE Forge as well to improve its capacity utilization factor significantly.
One question for.
They are not waiting for that. They are now looking at non-wind in terms of railways, defense, etc., plus looking at the export market.
Got it. One question for Himanshu on CapEx. Now that you are done with the 4.5 GW capacity-related CapEx, IT CapEx, are you still going to have more than INR 4 billion of CapEx in 2026, or is it going to come off now?
As long as you don't ask for the CapEx, that's when the next model comes.
No, Sumit. I think from a cash flow perspective, we've incurred about INR 350 crore of CapEx in FY 2025. As we've guided earlier, it is safe to assume INR 400 crore of CapEx year- on- year. A part of it is sustainance CapEx, but also a part of it is whether it is R&D, IT, or capacity augmentation. While we are working on fine-tuning some of our aggressive CapEx plans for this year, you can assume a base case CapEx of close to about INR 400-INR 450 crore also this year.
Got it. Just on tax rate for the full year FY 2026, I know that there are moving parts, but what is the reasonable tax rate to assume for the company, or how should we think about tax rate for FY 2026 and even FY 2027 where you move to a normal tax rate?
I think 25%, Sumit, is, I would say, safe to assume. As I explained on the call earlier, the DTA that we have created will start getting charged back into the P&L from Q1 of FY 2026 onwards itself. When we speak again in July, you will probably see a charge back or charge off of the part of the DTA in Q1 itself.
You'll start seeing a positive tax rate as a percentage of PBT starting Q1 of FY 2026 itself?
Yes. That will be a P&L charge, but not a cash outflow for the company.
Understood. Thank you and wish you all the best.
Thanks.
Thank you. Ladies and gentlemen, this was the last question for today's conference call. I now hand the conference over to Mr. Himanshu Mody for closing comments.
Okay. Thank you, everyone, for attending the call. Our investor relations team will be available for any further detailed queries that you may have. We look forward to interacting with most of you at either one-on-one or separate conference forums over the next few weeks. Thank you and all the best. Bye-bye.
Thank you. On behalf of Suzlon Energy Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.