Ladies and gentlemen, good day and welcome to Sterling and Wilson Renewable Energy Limited Q2 FY 2027 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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 touchtone phone. Please note that this conference is being recorded. Today on this call we have Mr. C.K. Thakur, Global CEO, Mr. Ajit Pratap Singh, CFO from Sterling and Wilson Renewable Energy Limited, and SGA, who are their IR partners. I now hand the conference over to Mr. C.K. Thakur. Thank you, and over to you, Mr. Thakur.
Thank you, and good morning, everyone. Thank you for joining us to discuss the results for the second quarter's first half of fiscal 2027. As we flagged on our last call, the first half of this year turned into a transition period. Our ongoing projects are in their final stages, while eight new projects, four in India and four overseas, were moving through LOA and notice to proceed. I will begin with where the industry stands today, because it shapes both our opportunities and our discipline.
I will then cover our operating performance and outlook, and Ajit, our CFO, will take you through the financial updates. I will just touch upon the industry overview. India's renewable energy journey continues at an extraordinary pace. Renewable and large hydro capacities stood at about 308 GW as of September 26. Roughly 53% of the country's total generating capacity. Solar remains the engine of this growth.
Installed solar capacity has grown from under 3 GW in 2014 to about 171 GW today. Calendar 2026 is on track to be the strong year for solar capacity addition in India. India added about 34 GW DC in first half of this year, 38% more than a year earlier, and full year additions are expected to be in the range of 50 GW DC, ahead of the record 49 GW set in 2025. That said, the near term has been more challenging. Two factors slowed new utility scale awards in the first half of the year. A third factor, competition, has influenced how we bid. First, the shift to domestic solar cells. Since June 2026, projects must use modules made with Indian cells as per ALMM II. India has over 200 GW of module capacity, but about only 35 GW of cell capacity.
So compliant modules are scarce and costly, and it raised project cost by around 15%-17%. As a result, developers are reworking project economics and tariffs, and many have delayed EPC awards until prices and economics settle. We see this as a temporary phase. Cell capacity is expected to reach about 100 GW by December 2027. This should ease prices and restore award activities. In the long run, it will give India a stronger and more secure supply chain. Second, delay in power purchase agreements and transmissions constraints. About 40 GW- 50 GW of awarded renewables capacity is still awaiting for signed power purchase agreements. Solar output is also being curtailed at times in Rajasthan and in some parts of Western India because of grid limitations. As a result, projects pipelines in Rajasthan and Gujarat have been pushed out of several quarters. Third, the competitive landscapes.
Competitive landscapes has affected how we win the projects. Entry barriers in reverse auctions are low, and some new players have bid at the prices we believe are tough to maintain margins and may not be sustainable. We have been very much cautious and selective in such bids, and hence our own order wins in domestic markets have been lower. We saw similar cycles in 2011 and around 2015, 2016, and disciplined experienced players came out stronger each time.
The government is now acting firmly on some of the issues related to transmission's bottleneck. On 30th September 2026, the cabinet approved Green Energy Corridor Phase III with an outlay of around INR 1.86 lakh crore. This includes about INR 1.36 lakh crore from state transmission networks with central support of around INR 54,000 crores. It aims to connect up to 135 GW of renewable energy to the grid by FY 2033.
In addition, on 6th October 2026, the Ministry of Power issued new rules to pay landowners market rates for the land used by the transmission lines. This should reduce disputes and speed up construction. These measures will take time to deliver, but they directly address the transmission bottleneck that is holding back PPAs and new awards. Of course, the flip side of this circular has to be seen once the high land cost will come into play. Battery energy storage systems. Battery storage in India has moved from pilot projects to large-scale deployment. India added about 8.2 GWh of battery storage in the first half of 2026, compared with less than 100 MWh a year earlier. Almost all of this came from large standalone projects. Rajasthan and Gujarat, two of our core markets, account for over half of installed capacities. The outlook is also robust.
We still expect 45 GWh- 50 GWh to be commissioned in FY 2027 and FY 2028 alone. Projects with storage made up nearly 40% of renewable capacity auction in FY 2026, up from about 5% earlier. The Central Electricity Authority expects 236 GWh by FY 2032. The government also plans to require storage of new solar and wind projects from July 2027. We expect most large solar tenders to include storage going forward. We are actively monitoring the best opportunities and are selective in bidding new BESS projects. Battery prices have risen in 2026. After years of decline, the domestic battery supply chain is still developing, and customers increasingly expect long performance warranties from EPC contractors. Now, coming to operating performance for Q2 FY 2027.
Revenue was INR 1,527 crores in Q2 and INR 3,118 crores in the first half, about 11% lower than H1 FY 2026. This decline is primarily from our international businesses. International revenue was INR 165 crores in the first half, compared with INR 929 crores last year. Our four older international projects in South Africa, Spain, and Italy were completed, and the new ones are yet to start. Meanwhile, our domestic businesses grew. Domestic EPC revenue in H1 FY 2027 rose about 13% to INR 2,100 crores, and O&M revenues in H1 rose 48% to INR 183 crores. The lower revenue therefore reflects the timing of international project execution. Eight projects in our order books, four in India and four overseas, are yet to start. Since contract timelines start only from LOA to NTP, these delays do not expose us to potential penalties or bank guarantee risks.
As of 30th September 2026, our order book stood at INR 12,481 crores, about 34% higher than a year ago and up from INR 11,813 crores in March 2026. The order book is diversified and well balanced, with about 56% from India, that is INR 6,943 crores, and 44% from international market, that is INR 5,538 crores. We won orders worth INR 3,626 crores in the first half, nearly 90% of them international. This was a deliberate choice. When domestic awards slowed down and pricing became aggressive, we avoided low-margin bids and focused on international markets, where we are winning at healthy margins. However, in international market, we are very selective in terms of geography and are actively pursuing only in certain countries where we have a strong track record, execution bandwidth, and right partners. Q2 financial year 2027 order wins and pipelines.
In Q2, we won two orders, worth over INR 985 crores, including taxes, as announced in September 2026. We won a 534-MW project in Rajasthan. It is a balance-of-systems order from leading Indian IPP, who is a new customer for us. We won a 616-MW project in South Africa. It constitutes two battery storage projects of 308 MW each on a turnkey basis from a leading Middle East-based developers and repeat customer. This is our second-largest utility scale battery projects. We have received the LOA. These wins add to the contract we signed in June 2026 for the West Minya projects in Egypt. This is a 1,000-MW AC solar plant with 600 MWh of storage, worth about $560 million, which we will execute through our 50/50 joint ventures with Hassan Allam Construction. We expect it to start contributing to revenue this year.
Our work under the five-year framework agreement with the Adani Group also continues as planned. Our floating solar projects at Tilaiya in Jharkhand, one of the largest in India for the NTPC-DVC joint venture, is nearing completion. Power evacuation will begin once the related transmission line is ready. This experience positions us well for upcoming floating solar tenders from NTPC, DVC and DVC alone, and several state governments. Looking ahead, our solar bid pipeline, excluding battery storage, has grown to 34 GW from 27.7 GW last quarters. About 74% of this is in India and 26% overseas. Battery storage bids are in addition to this. We see bidding opportunities worth about INR 45,000 crores -INR 50,000 crores across solar and storage in the second half of this year. Now coming to projects from Reliance Group. Our work with our promoters, the Reliance Group, continues to deepen.
As Reliance has publicly announced, it is building one of the world's largest integrated renewable energy hubs in Kutch, Gujarat, combining solar power with battery storage at very large scale. We are working closely with Reliance on technical design and execution readiness. International business. Our international business is now on a strong footing. We recently completed four projects in South Africa, Spain, and Italy, giving robust margins. Our international order book now stands at INR 5,538 crores across Egypt and South Africa. Execution starts in the second half, and international revenue is expected to rise significantly in H2. Now coming to our operation and maintenance business. Our O&M business continues to grow strongly. Our portfolio has reached a record 18.9 GW, up from 13.5 GW in March. O&M revenue grew about 55% to INR 99 crores in Q2, and 48% to INR 183 crores in the first half.
This business gives us a steady recurring income with low overheads. Outlook for FY 2027. We are maintaining our guidance of up to 10% revenue growth for FY 2027. We are confident for three reasons. First, eight projects in India and overseas will move into execution in the second half. Second, execution will commence on our international order book of over INR 5,500 crores, with the West Minya projects in Egypt as the key contributors. Third, we have done this before. In Q4 FY 2025, we delivered revenue of over INR 2,500 crores in a single quarter. We expect Q3 to be clearly better than the first half and Q4 to be our stronger quarters. We expect EPC gross margin of 8%-10%, depending on the mix of turnkey and balance-of-systems projects, and O&M gross margins of around 20%.
We expect our order book to remain above INR 10,000 crores at the end of financial year 2027. We believe success in this business is not just about winning orders. It is about completing projects without negative surprises. As the industry consolidates, we believe this discipline will set us apart. With that, I will hand over to Ajit for the financial performance. Ajit, over to you, please.
Thank you, C.K. sir, and good morning, everyone. Revenue from operations for Q2 FY 2027 was INR 1,527 crores, compared with INR 1,749 crores in Q2 FY 2026, and INR 1,590 crores in Q1 FY 2027. Domestic EPC contributed INR 1,366 crores, international EPC INR 62 crores, and O&M INR 99 crores. First half revenue was INR 3,118 crores compared with INR 3,510 crores last year. As C.K. sir explained, the decline was predominantly due to lower international revenue as older projects were towards flag end of completion and new ones are yet to start. Domestic EPC revenue grew about 13% in the first half, and O&M revenue grew about 55% in Q2. Gross profit for the quarter was INR 140 crores. Gross margin improved to 9.2% from 8.9% in Q2 FY 2026. For the first half, gross margin was about 9.5%.
We expect EPC gross margin of 8%-10%, depending on the project mix. Turnkey projects have lower percentage margins but higher absolute profits, while balance-of-systems projects have better gross margin. O&M gross margin was about 23% this quarter, and we expect it to settle at around 20%. Operational EBITDA, which is gross profit minus recurring overheads, was INR 56 crore, a margin of 3.7%. This compares with INR 62 crore at 3.5% in Q2 FY 2026. Recurring overheads were INR 84 crore, about 11% lower than INR 94 crore a year ago. Reported EBITDA, including other income, was INR 66 crore, compared with INR 96 crore in Q1. Profit before tax and profit after tax were both INR 17 crore, compared with a loss of INR 478 crore in Q2 FY 2026, and a profit of INR 53 crore in Q1.
First half profit after tax was INR 70 crore compared with a loss of INR 439 crore in H1 FY 2026. It is worth noting that the loss in the previous year was primarily attributable to a one-time impact arising from the U.S. arbitration outcome and related provisions. On an operating basis, first half operational EBITDA was INR 134 crore compared with INR 184 crore last year because of lower international revenue this year. Our recurring overheads have stayed within INR 79 crore-INR 84 crore a quarter. Most of the people we have added work on specific projects and their costs are included in project budgets. As revenue grows in the second half, overheads as a percentage of revenue should fall and operational EBITDA margins should improve. Now coming to balance sheet and working capital. We continue to operate with negative working capital.
Net working capital was negative by INR 301 crore as at 30th September 2026, compared with INR -260 crore at the end of Q1, and INR -329 crore in March. Receivables, including unbilled revenue, stood at INR 3,005 crore. Receivables days increased to 176 from 138 in March, and payable days increased to 164 from 135. Gross borrowings fell by INR 244 crore in the first half to INR 920 crore, as we repaid term loans as scheduled. With cash and bank balances of INR 319 crore, net debt was INR 601 crore, broadly unchanged from INR 589 crore in March. Shareholders' equity rose to INR 719 crore from INR 651 crore. Most of our existing term loans will be repaid over this year and next year. Our banking relationships continue to remain strong.
We have secured over INR 3,000 crore of new credit lines, including local lines in South Africa during the current year. Our lenders continue to support as we win orders. On claims and indemnity, we also continue to make steady progress on legacy claims. We have signed a settlement with a Chile customer. Part of the amount is expected to be paid by the customer once their transaction completes, and the balance will be claimed from the promoters in the next cycle. We expect to receive around INR 156 crore under indemnity in the current year from the promoters. To sum up, the first half was a transition period for our international business, while domestic EPC and O&M continued to grow. We are well-placed for a strong second half with an order book of nearly INR 12,500 crore, eight projects moving into execution, a growing O&M business.
With that, we can open the floor for questions. Thank you.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone 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 comes from the line of Sameer Dalal with Natverlal & Sons Stockbrokers. Please go ahead.
Good morning. Honestly, not very impressive results, and I wanted to ask you this question up front. We keep talking of the fact that we have a very strong order book, but the execution, for whatever reason, it may not be your problem, it may be the customer's not able to get the land or whatever he is supposed to do. But it keeps getting delayed, and because of which, what's happening is our profitability is getting affected. I know you've maintained your 10% top-line growth for the current year, which is what you had initially said. What is the reason for these delays? Are we going to constantly have this? Then, by the end of the third quarter, we say, "No, now we may not be able to achieve the number," because that sends projections off track, that sends our expectations off track.
What exactly is the problem? Why are the new projects, which you said the four in India and the four in the international market, not starting? What has been the delay for that?
Yeah, thanks, Sameer. If you look at the UOV positions at hand at the start of the year, we had pretty robust order books in hand. Having said that, there were three projects, one large-size project from Coal India that we announced and two projects from NTPC. Normally, when the projects are being announced in the Q4 or Q1 of the following years, around 70% of the revenues you consider in the following years. That means your contributions from the book before new orders could have been much larger, right? Unfortunately, the Coal India and two NTPC projects, because of the PPA not being signed with the utilities
The final NTP did not come to us, which we expected that the execution of these projects could have been started in the, let's say, mid of the Q2. That's region one. The four projects in international market, that NTP was supposed to be somewhere around, let's say, August. There, for two projects, we were expecting the major revenue to of course, come from Q3 and Q4, and some revenue in Q2. Those NTP also were delayed because of their financing arrangements and other things. Fortunately, one large size order which had come from Egypt, Minya, they are the short gestation project and the project is moving, the NTP has come, and the work has started. With this, historically, if you look at our performance in the last financial year also, with respect to that, we are at the right pace.
But yes, that's why I do agree with you with the large orders in hand.
Ladies and gentlemen, the management line has been disconnected. Please be on hold while we quickly get them reconnected. Ladies and gentlemen, the management line has been reconnected. Please go ahead.
I was just telling that had these new projects been started sometimes in the middle of the quarter two, the results could have been better. But having faced this delay in the Q1 results, I have already given the guidance that probably Q2 will not be as promising. It will be in the range of the Q1 only, and we are here. We are here, we are in the range of Q1 only. Going forward, I am pretty sure that the international revenue will keep on adding. Domestic four projects may take some time, another maybe one to two months, but the substantial revenue from the new projects, the PSU projects, will come in Q4.
Okay. The second question comes on costing. One thing that we have noticed is that the cost is continually moving up. Now, we had talked about the fact that we can maintain our cost at the current level, and as the top line grows, the operating leverage will play out at the central office, right? At the headquarter. But we are seeing that this is continually rising. Now, where do you see it stabilizing for FY 2027 and FY 2028 from INR 300 crores-INR 320 crores that you all do? Where do you see it going over the next maybe two years?
I think if you see the recurring overheads, if you are talking about that, then the cost is almost flat. There is not significant movement on either side, neither lower nor higher. As a percentage of revenue, because the revenue was lower in the current quarter and in the last quarter also, so as a percentage of revenue, it looks high. It was around 4.5%. And the moment revenue will increase, this cost will remain same, and we expect it to be in the range of around 4.5% for the current year.
Fair enough. But no, once you said you are waiting for the Reliance orders. So my question is, once the Reliance orders come in, would you need to hire a lot more people at the offices? Would that push the cost up? And of course, the question that eventually lies is by when do we expect Reliance to actually give the orders which we can start executing?
Majority of the cost will be at the site, which will be part of direct cost from the Reliance orders also. There will not be any significant increase in overhead cost.
If you can just give us a particular date, then that is the last question I have.
No. Basically, this we discussed last time also. From the overhead side, the employees cost and all, and the other expenditures is only part of the project cost, which would be part of the overall project cost. To that extent, some addition will be there at head office, but proportionately, it will not increase our burden because the revenue also will be coming. When the project will come, I will maintain the same status because the site readiness work is going on. Post-monsoon, the work is supposed to be started. It is just onto the final leg of the finalization of some of the technologies on the tracking side and all. I am not in a position to give you much details, but I can tell you that now this is almost at the fag end of the planning process and the work.
Some good news you will hear out soon. That is what I can tell you at this stage.
Okay. Thank you very much.
Thank you. Next question comes on the line of Disha from Sapphire Capital. Please go ahead.
Hello. Am I audible? Hello.
Yes, you are. Please go ahead.
Yes. Thank you so much for this opportunity. Couple of questions. So obviously as the first part of the opportunity
Ms. Disha, please give me a. Sorry for interrupting. The management line has been disconnected. I will quickly get them reconnected. Just give me a moment. Ladies and gentlemen, the management line has been reconnected. Please go ahead.
Hello.
Ms. Disha, please go ahead. Thank you.
Yes. Okay. So couple of questions. Firstly, so we have still maintained our growth guidance at 10%. So that would mean that we need around a INR 2,600 sort of quarterly run rate for the next two quarters. So first question being, do we see any risk in execution for us to achieve these targets? And how are you looking at execution for Q3 and Q4? Like what numbers are we targeting? Because that will give us better clarity.
Madam, based on our guidance, we still maintain up to 10% growth in the revenue this financial year. I have already told earlier, the Q1 was little subdued. Q2 also, because of various factors, non-moving, PPA absence, all those factors have affected new projects not to get started. But Q3 and Q4, because the international projects have already taken off, I am expecting their traction to increase more. For sure, the Q3 and Q4 will not be in the proportion of 2,600, but Q3 will be better than Q2, and Q4 will be heavily loaded.
We do not see any risks to the execution, right?
No. Basically, we are pretty confident of our ability to execute the projects. Why it has impacted is basically some of the projects have not started. Our team is in place, who understand everything. Everything has been all planned. Now since the project has been launched, and there is a definite timelines. From the international project, the revenue has to increase. I am expecting the four stalled projects in India and few IPP projects in between that they have come, they are all on track. All projects are on track. None of the projects is getting delayed because of our ability to not execute the projects. What I say that, out of the four projects in India and few more projects, if they come and they are at the faster track, they should be contributing towards the quarter four.
Unfortunately, this is not only with us. The entire EPC community and the whole Indian industry in the solar sectors have been impacted because of the reasons. The two reasons, one that I have told you in my opening remarks also, that the curtailment in the Rajasthan and Gujarat that have slowed down the inflow from the IPPs and even for the PSU. The requirement of an obligation of the BESS systems to be installed. The BESS is now mandated to be with the domestics Indian mix kind of things, but we do not have the cell production capacity. This mismatch and understanding, people are quoting any crazy prices. Few of the orders you must have seen, they have been all terminated. The contractors could not execute the jobs.
The developers are also becoming very careful that you can have the wish list for any number of things, but Indian industries will not support. Although the pipeline, the requirement, the development plan is already in place, but on overall execution sites, all these technologies and other things are taking time, which is not specific to Sterling and Wilson alone, but it is specific to the industries.
Right. For these international EPC projects, do we see a major margin differential between the domestic and the international projects? If so, what is the differential?
For domestic market, margin is always under pressure from the fact that in all the solars and the BESS projects, there is no entry barriers. Anybody and the outside some of the business infrastructure projects also they feel that solar being vanilla projects, they can earn a lot of money. Without understanding the efficacies of technologies, the supply chain disruptions and all, they are entering into the market and they are quoting any price. Therefore, we have seen that despite the fact that good amount of contracts have been finalized in H1, but none of the government tenders we are there. Because from our appetite point of view, it has gone below the cost. Then people have taken. God knows how they are going to execute, but we have been keeping away from those kind of decisions.
What I said that India, this kind of entry barrier problems and all, and not much opportunity in the other sectors being seen. People are coming and jumping left, right. That has created the margin. Of course, for us also, we have to sustain, therefore, the margin that we expected in domestic market would be lowering down because you have to take a business call and you have to survive. But not to the extent that people are doing. Then strategically, we have to move from domestic to international market. Therefore, you could see that despite the fact that we thought that this year will be around 70/30, domestic, international, but we are even more. We have skewed towards international. Why international margin is more? Because the market is stable. People understand all those things.
With healthy competitions and award or turnkey projects in terms of percentage, even if it is slightly lower, as per the Indian old condition. But since it is a turnkey project, our absolute number will be more than the domestic margin. Therefore, the contribution will be much more.
Okay. As the execution also scales up in the second half, can we expect for this entire EBITDA margins to be in the range of 4%-4.5%?
Yes. I think that is the minimum requirement that we have to maintain, right?
Yes.
That is sure.
Okay. What about those O&M revenue are we expecting for this entire year?
10%, 20%, in the range of 20%. Internal estimate.
No, revenue you are asking.
No, revenue. Okay, sorry.
O&M revenue we expect in the current year should be more than INR 400 crore.
Okay. And sir, this Egypt project that you mentioned that we are starting to expect revenues from this year itself. By when exactly do we expect this revenue to come in, by Q3, or be more skewed towards Q4? What sort of amount are we planning to book for this year, for the next year? What are the margins for this project?
The Minya project is the project for, let's say, around 14 months. The NTP has started. Let's say 40% of the time to go for this financial year. In the similar proportions to Q4 would be heavily loaded for the supply to commence. I am expecting that good margin to come from this project. Q1 and Q2 next financial would be the completion dates. That is the reason why I say that the Q3, Q4 of this financial because of Minya definitely would be loaded. Margin is a pretty good margin. We are around, on the overall turnkey app, it is more than 8%.
Thank you. Ms. Disha, please rejoin the queue for more questions. A reminder to all the participants, please restrict yourself to two questions. Next question comes on the line of Faisal Hawa with H.G. Hawa & Co. Please go ahead.
Sir, when do we see the overall our banking situation coming back to normal where we can issue BGs at will and our credit rating also improving? That's one. Second question is, how much orders can we expect from Reliance Industries in the coming financial year and also from Adani Enterprises in the coming financial year for Khavda?
I will come for the order positions, and then Ajit will address the banking position. As you are aware that we have into the framework arrangement with Adani for five years. First year was around 1.2 GW, and the RFQ for the next 1.2 GW has already come to us day before yesterday. We are expecting that this order, as per the framework arrangement, should be getting closed soon. Maybe this month or maybe early next month. That is on to the Adani side. Reliance side, it's premature to tell you that how much order will come, but we believe we would be the preferred EPC partners, and we are expecting the large chunk of order to come through us. Unless it comes to us, I can't commit you. It's going to start soon.
On the banking side, Ajit, if you can just—
On the credit line side, last year we have added from the banking system around INR 1,800 crore new credit lines, and in the current year, we have added till now around INR 2,800 crore new credit lines. Basically put together, if you see last year and current year, we have added around INR 4,600 crore new credit lines from banking system, and over and above more than INR 700 crore from surety bonds also we got. We are sitting on pretty good position in terms of our working capital requirement for non-fund based limits. Bankers are supporting. In the current year, we got three new sanctions from Indian banks and one new sanction from a South African bank for Egypt project. We are pretty much on very comfortable position in terms of our bank guarantee requirement and LC requirement.
Our current utilization of the credit lines is around 70%. That gives a lot of comfort to manage bank guarantees and LCs. In terms of cost and credit rating, credit rating is under renewal as of now. But since last year, we have taken that write-off, so we could not get the credit rating upgrade earlier. The moment we will probably have Reliance orders or any other large positive news, definitely will go back to the rating agencies for review of the rating.
Sir, you did talk about the competition underbidding in most of the solar projects. Do you see this competition now weakening and overall their financial situation not being so good that they may not be able to, or they may be blacklisted by many agencies? They may not be able to participate in many more contracts and overall the competitive intensity going down, or you feel that more such players will come in now?
No. First, we are waiting for the consolidation to happen. What is happening now, the financial qualification requirement for all such solar projects is not very stringent. Now what we see the trend getting reversed is that from all the PSU companies, the large size project orders that are coming, they are coming with the modules. Therefore, the project cost is in the high range. There I am expecting that the small players will not be competing. Then we have a better opportunity to get into. So that would be the kind of scenario in maybe the Q3 and Q4. The next and huge pipeline that, as I have already told, is projected. So the consolidation for sure will happen. On the existing orders that they are bagging, you must be tracking the news in the market. Few of them have been already terminated.
Few, I mean, these orders that they had bagged at the, we will say 50% discounted price from the battery cost. The battery cost was, let us say around $75, $80 per kilowatt hours. Their tender price was around $45. Then, it was a non-moving kind of orders. Therefore, the order was terminated. There are a few orders which have been again getting annulled because even despite the fact that they have taken at the low price, but it still is not coming for the hybrid tariff appetite for the developers. Therefore, some of the new schemes are being launched to import under the ALMM schemes, then you see that if you get the custom benefits so that the hybrid tariff price will come under these things. All those things are, frankly speaking, disturbing this market and all those things.
I think all this consolidation for sure it will happen, but this fiscal will probably continue like this, in my opinion. But consolidation has to happen, otherwise it will be a serious problem for the industries. Government is working on this. As I have already told that for the green corridors, the government has taken a lot of actions. On the debt side, the cell productions, if not in maybe Q3, Q4, but the Q1 of the next financial many large players are doing. Your domestic cell capacity in the module side, they are increasing. So now it is at 35 GW. It may reach up to 100 GW by these things. That would be the time when I say that the price level also will get consolidated.
The government policies versus the actual requirement will all be getting settled, and then that would be the healthy time where you can see that the things should be in the right directions. But till such times because of some of the industries, paralysis, I will say, some of the policies which are to be implemented, but the industry is not ready. All those things are impacted, everybody's. Few of them switch. They can keep on adding because of the IPO they are just waiting for, but we are not into the race. Therefore, fortunately, I will say that we are a very healthy order positions as on 1st April 2026. So for this financial year, at least, despite the fact that there are great many ups and downs, but we will be around the guidelines that are given to the market.
Is it now time that we forget about the Nigeria order?
I cannot say to forget about this, but yes, it is still cold because now election is going to happen and all those kind of things. So, the last update was that it was to be taken by the finance ministry. But if you know how these African countries work. Then the new government coming and all, and the tariff war. Every new day you take the news from our honorable U.S. president, every country, how they are affected. So this was a deal project from U.S. So, the project is still on. We are pursuing this. But I can't commit you the timeline at this moment for this project.
Thank you. Mr. Hawa, please rejoin the queue for more questions. A reminder to all the participants, please restrict yourself to two questions. Next question comes on the line of Jayesh Shroff with Cask Capital. Please go ahead.
Yeah. Hi. Thanks for taking my questions. My first question is, actually, if I am not wrong, last quarter we downgraded our guidance from 15% to between 10%-15%. And this quarter we are saying it is up to 10%. So it is actually a downgrade of guidance rather than maintaining your guidance. So I am surprised why management is saying that you are maintaining the guidance. And secondly, when you talk of up to 10%, it is between 0%-10%. So can you be a little more specific in terms of what does up to 10% mean? My second question is, also it is a small point, but why has our finance expenses increased this quarter in spite of slower execution?
No, second question, please repeat again. I am sorry, I could not. Second question, can you repeat, please?
Yeah. So why has our interest and finance cost increased this quarter in spite of lower execution compared to Q1?
Okay. On your revenue guidance, I have already explained the overall industry scenarios, right?
Yes.
The way the last year, the last fiscal, market was pretty stable. Because that means the cell were imported from Chinese cell were there, and everybody was up and running. So everything went well. Suddenly the implication of ALMM II came and your mismatch between the cell capacity in India and the plant that is being executed. On the desk side, the obligation of the desk installation came that was during the back end of the last fiscal. And still being not fully manufactured, still people are waiting, the market to get stabilized. Now, say India make, but then everything is coming from the outside India, mostly from China. We have a land border closed, that also is impacting. So with all those things, and then the developers are looking for the stringent guarantee and warranty condition.
Overall, if you see in the renewable sectors, other than maybe the wind, this kind of imbalances are happening, and that has impacted not primarily to the developers for their programs to be launched as they thought of, and then, of course, the EPC company that had to follow them. So to that extent, market is uncertain. What I say that with all the projects that we had in our hand, that they were contributing, let's say four projects, four new projects, they have not started. My expectation by that out of the four projects which were around 40% of our total order in hand as on April 1, 2026. So there is no reason that I could have not gone up to the 15%. Now, since the project in Q2 also they have not started because of the NTP not coming in. Therefore, I am not changing.
Maybe the support will come from the international projects, may be quite possible. But at this stage, what I say that, since the projects they have not started, possibility that we should be able to maintain around 10% of the revenue growth.
Okay. It is actually a downgrade of guidance from 10%-15% to 10%.
10%, our range was 10%-15%. I still say that 10%. It is not 0%, and not between 0% and 1%. It will be around 10%. Yeah.
Okay. This is ex Reliance, if I understand it correct.
For sure. For sure. Yes. Ex Reliance.
Okay. On the interest side?
Yeah, in terms of finance cost, the cost has increased primarily for two reasons. As I mentioned, we have availed some new credit lines during this year, so cost for that. Also the LC cost, we are now opening the LC for a little longer period, so that additional period for LC also is factored as interest cost. So that has led to our increase in interest cost. Although our gross borrowing, if you see, that is on reduction cycle, and we have reduced our gross borrowing. Although in terms of net debt, there is not much change. It is almost a steady level because our cash balance has come down.
Okay. Just one last thing. I know a lot of questions have been asked on the Reliance order. I think Mr. Thakur talked of it being very imminent. Reliance also in its last conf call talked of starting the project post monsoon. So do you think that post this Jio IPO, we can see something from November onwards in terms of execution? At least will there be some execution in this quarter?
I don't think that the Jio IPO has any link with this. But in this quarter, the commencement, of course, is expected. So I say that the readiness for overall technology to be integrated in these schemes is at the final end. So you know how the Reliance works basically. Every single bit of decision is being taken very carefully to ensure that the ROI on the investment comes more than the industry expectation. So it is embarrassing for everybody that why it is taking times. But as per their announcement and their commitment that this financial year they will commission something, right? We have seen their annual statements. So they are committed to commission something, right? So keeping all those things in mind, we are also expecting the order to start coming soon. Things will happen now, this quarter for sure. Yeah.
Thank you. Mr. Shroff, please rejoin the queue for more questions. A reminder to all the participants, you may please restrict yourself to two questions. Next question comes on the line of Nilesh Doshi with Prospero Tree AMC. Please go ahead.
Hello, am I audible, sir?
Very good. Very fine.
Thank you. Thank you, sir, for the opportunity. I have two questions. One is related to the O&M business. Sir, we have an O&M portfolio of 18.9 GW . I would like to understand that is the complete portfolio under the fees model or we have some obligation pertaining to the EPC project or EPC obligation, and what is the O&M charge per megawatt for the domestic as well as the international project? We are mentioning that our GP guidance for the O&M project is 20%. Does it mean the O&M are really raw material intensive or labor intensive? Naturally, if the GP is only 20%, the EBITDA or EBIT margin may be much more lower than that margin. Sir, last question, do the company receive the O&M charges upfront and how do we recognize the revenue every quarter?
What is the minimum period of O&M contract, sir? These are all questions related to the O&M only, sir.
Okay, so great. Basically to your first question, with the mix of the order book in O&M is now almost 50/50. When you say 18 GW , 50% is through our own EPC. That means we have the EPC contract. We signed the contract with two years or three years of O&M contract. Around 50% is from third party. Third party means our O&M business, they get the O&M contract from the other OEMs, from the other developers. Having said that, this is the mix of the order proportions. The O&M business is, of course, labor intensive. It's not basically raw material intensive. So we have to maintain certain spares that is sometimes high cost spares are being provided by the customers, and some consumables and other things we have to maintain.
On the costing of the O&M per megawatt, I think it would not be proper to reveal this fact here in this call, but just for you to understand that this is all basically depending upon the scope. So they all basically depend on the scope. Scope means somewhere we have the transmission line, somewhere we have the substation, somewhere we have other things. Then robotic cleanings, semi-robotic cleanings, manual cleanings, the water cleanings. All those things depend on the various pricing mechanics. With this, internationals being slightly better, of course, because our margin appetizing domestic, as I've told you, is almost 30%, 35%, 30% to 40% higher than the domestic market margins. There's no upside risk in the O&M business.
Except for sometimes there are certain obligations on the warranty and all, but they sometimes impact very minimally, not to the extent that basically the EPC business is sometimes getting impacted.
And one of the question you raised on this overheads. In O&M, overheads are very minimal.
Very minimal, yeah. Gross margin generally will convert to EBITDA with very minimal change.
So it means the labor cost is the part of the GP margin because you are considering the after this. Okay, sir. And once the EPC project is completed, O&M contract starts and we are charging extra, not that it is the including of the EPC cost. It is separate, and we are charging for each and every megawatt we are doing the O&M work.
Yeah. So contract is basically, as you were trying to understand, it is, let's say, rupees per megawatt peak. The contract composition is like this. Then you have the DBO for the billings. So once the project is commissioned and handed over, taking over is done. Certain obligation during the DLP is there, but that is part of the EPC contract. If something goes wrong, then the EPC contract is affected, not the O&M contract. O&M contract is very clean. It is there to only operate and maintain, and they are mostly the manpower intensive contract. So that's how this O&M contract is operated.
Thank you. Mr. Doshi, please rejoin the queue for more questions. Next question comes from the line of Saurabh Srivastava with Arista Consulting. Please come in.
Good morning, sir. So my question is regarding the O&M only. One thing—
Mr. Srivastava.
Yeah.
We have lost the line of the management. Please stay connected. I'll quickly get them reconnected.
Sure, sir.
Ladies and gentlemen, the management line has been reconnected. Please go ahead. Mr. Srivastava, please go ahead. Thank you.
Sir, it's regarding the O&M only. First of all, are we also bidding for the O&M in international circuit? First question. Second, is there any underbidding in the O&M in the domestic market also, sir?
No. The first question is, yes, we are bidding for international O&M business, and we have got one third party O&M business in Saudi Arabia last year. We are about to close few projects in the other geographies. I will not reveal the fact now, but yes, it is on the final list stage. We have our international division for O&M business as well. Your first part, as I have told you, that the business model is mixed from the own EPC versus third party. Third party PCs, because of our high credential in the O&M business. I have seen that here, normally you are approached by the client for the performance of the O&M team that we have and the ninja spirits.
We don't see major challenge in grabbing the orders, and that's how we have phenomenally it has grown from 11 GW, 12 GW to now 18.5 GW. This year, I am expecting another maybe 25% of this. By the year end, I am expecting it will go around 20 GW- 25 GW kind of things. That's how it runs.
Sir, what kind of revenue mix do you see a couple of years down the line of this O&M business in the total business, sir? Or rather say the total net profit, the total bottom line, sir.
That is not the right comparison because of the overall margin. If you compare the—
Or on whatever metric do you feel like. How this is—
What I say that—
What bottom—
—this is a steady business. Like you said, that now we are at around INR 200 crores. We will move up to INR 400 crores, right? In the beginning of next year. And 20% is the margin. So if you see that our project margins and on INR 400 crores, 20%, let us say it comes to 80%, INR 80 crores, right? So it will not be right to compare. But we can understand that on the business size of, let us say, INR 400 crores next year. So every year if you increase minimum 10% to 15% and to that extent the margin also will go up, right? But it will not be right comparison to say that in overall margin, it will be what?
Because the cost, let's say your EPC cost is, say INR 1.5 crore per megawatt peak, whereas the O&M cost comes to be INR 1,50,000 per megawatt peak, something like, depending upon the scope and all. It's a huge difference. It will not be the right comparison, but it will be the steady margins coming in from this operation.
In terms of net margins, Yes, sir. Please, sir.
I was telling in terms of revenue mix, as of now it's around 5% of our overall revenue.
Going forward, it may be in the 5%, it may increase to up to 10%.
10%, okay. 10%.
Because this will continuously increase and if EPC business remains stable, still O&M will continue to increase.
The reason for asking this, a lot of parks are coming in India also and people are developing, and as you rightly said that people are under-bidding. It may not be possible for many of them to continue. So there will be a lot of things open to you people going forward.
Absolutely.
That was the first reason. And sir, what sort of net margin do we settle down for this O&M business, roughly?
Gross margin is around 20%, and as I mentioned, overheads are not much in this business, so that ultimately transfers to the better number also.
Got it. And sir, my last question. Sir, what sort of international geographies are we looking for, the new geographies, sir?
One that wherever we have the O&M project from our own EPC, for sure that geography is our target. We started from Africa, and Africa first project is doing very good. The contract is also very unique. We have the bonus clause. If you perform better, if the yield and generation becomes better, then we get also the share of that profit. Year on year, we have been getting fantastic bonus from these orders. For Africa, like we understand this market, we have done the Zambia, Namibia, South Africa. Africa region is our focus. Then we are now into Saudi Arabia. Saudi Arabia is a huge, the capacity addition been happening, you may be knowing about. At right times, we have entered into this market. Gradually we will expand.
Now we are doing two own EPC projects, specifically one in Spain and other in Italy. That means we are open to the European markets as well. We have experience in Southeast Asia also, but primarily the regions we are known and we have our presence, that would be basically the regions for our choice.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question. With that, we conclude today's teleconference on behalf of Sterling and Wilson Renewable Energy Limited. That concludes this conference. Thank you for joining us. You may now disconnect your lines.