Diamond Power Infrastructure Limited (DIACABS) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Diamond Cable Q2FY27 and H1FY27 Earnings Conference Call hosted by Monarch Network Capital Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Alok Shah from Monarch Network Capital. Thank you and over to you, sir.

Yeah, thank you, Isaac. Good morning to everyone. We welcome you for Diamond Powers Q2FI27 and H1FI27 Earnings Concord. Today, we are joined by Mr. Amit Bhattnagar, Head Corporate Strategy, and Mr. Khuldig Thakkar, the Chief Financial Officer, to take us through the numbers and the performance here on. Without taking much of your time, I would hand over the call to Bhattnagar, sir. Over to you, sir.

Good morning, everyone, and thank you for joining the Diamond Power Arming School for the second quarter in the first half of financial year 26-27. I'm Amit Patnagar, and with me on the call are Mr. Umesh Chaya, old-time director, Mr. Kundit Pekkar, CFO, Mr. Ashwani Sharath, the chief operating officer, and the members of the senior management team. We will keep the opening remarks a little short so that we have ample time for your questions. Let me start with the headline. This was Diamond Power's first 1000 crore quarter. Revenue from operations for Q2 was Rs.1032 crores, up 135% over the same quarter last year, and up 50% sequentially. IRIDA including other income was 133 crores, up 189%, at a margin of 10.9%. Profit after tax was 108 crores against 28 crores a year ago, i.e. 3.9 times. Earning per share for the quarter was 1.87 rupees. For the half-year revenue was 1722 crores, EBITDA at 218 crores and PAT at 166 crores. I would ask you to hold two numbers in mind. First is, in six months, we have delivered 90% of last year's full-year revenue. Second, our H1 profit of 166 crore is already higher than the rupees 158 crores we earned in the whole year in the financial year 26. You will see eight consecutive quarters of growth. Two years ago, in the Q2 F25, we reported a revenue of 307 crore and a pack of 6 crore. This quarter, revenue is 3.4 times, that and the pad is 18 times. The scale of the company has changed every single year and is still changing. Three things drove the quarter and I want to be specific about each. First, the product mix. Growth came from medium voltage cables at 11 and 33 and from 66 kV EHV and from AL 59 conductors. The segments where qualification matters and fewer manufacturers compete. Cables were 40% of the revenue, conductors was 31% and the remaining was data center cable. Secondly, a new product line that did not exist in quarter one. Data center cables from our newly commissioned copper cable line contributed 242 crores or 23% of the quarter's revenue supplied through EPC contractors building hyperscale campuses including L&T, Orion Grove, Sterling Winston and Bluestar. Three months ago, the line was zero. Copper capacity of 1500 tons a month is live and is being scaled to 2400. I want to dwell on September for a moment, because it shows what this platform can do once it is funded. The QIP funds came into the company in August. In September, the very next month, we achieved record production of 575 crores plus GST. Of that, our team made and delivered 240 crores of data center cables in a single month. That is a historic month of production and sale for the company. And it was done with these lines, the same people, and the systems you already have in place. Third, operating leverage. Employee and other expenses came down to 5.7% of revenue from 8.2% a year ago. That is why EBITDA margin expended on 240 basis points even though the contribution margin has a percentage move from 18.7 to 16.9. The reason for that percentage move is simple. Higher LME prices increase the revenue base. Our contracts carry price variation clauses, so the absolute contribution per ton is protected. We manage the business on rupee per ton and per kilometer and not on a percentage of metal. I want to be careful about one thing here, because this is a quarter in which every cable company in India has reported a big top line number, and a good part of that is metal. On LME, aluminium is roughly a fifth of a quarter, only a year ago, and the copper is up around 40%. And because our contracts pass through metal through, the revenue lines carry that inflation. So the honest question for any cable company this quarter is, how much of the growth is metal, and how much is real? Remember, diamond power's major input is aluminium. If you read the analytics updates from the listed peers, you will see the answer for the industry. Our revenue grew by 135%. Metal and price variation passed through account for a Perhaps a third of that. The rest is real. On actual production, kilometers of cables and tons of conductors made and dispatched. Our growth is well above 60-70% year on euro basis. Conductor dispatches were 6850 kilometers in the quarter. A data center line alone, which did not exist a year ago, there were 240 crores of product in a single month. That is the difference between a company riding a metal cycle and a company adding capacity, qualifications, and customers. We are the latter. I would like you to adjust this on volumes, not on the rupee topics. One more point on cost. Since you will see it in the clear comparisons, Diamond Power does not spend 2 or 3% of sales on advertising and branding, as consumer-facing cable companies do. We sell business to business and business to electrical consultants to utilities, DPCs, data center builders, and industry and market for the long term period. Only quality speaks. The industry is presently going through a cycle where quality is considerably compromised under the pressure of maintaining margins and volumes in B2C due to entry of newer players for us. Quality is our brand, and that is why our employee and other expenses are 5.7% over revenue, and that is why our savings goes completely to the bottom line. Our other income is 18 crores, is treasury income on QIC funds, and the tax remains negligible because of any forward losses. The profit and loss tells half the story. The balance sheet tells the other half. And in some ways, it is more important to work in this quarter. At 31st March this year, our net worth was negative by 604 crores. At 30th September, it is positive by 764. Net debt of 527 crores has become net cash of 572 crores. Three events that made it happen. The QIP in July we completed and raised 1614 roads. Entirely, due to the fact that we have to bring down our minimum shareholding, the promoter's loans, as we mentioned in the last call, have been completely repaid, and most importantly, the profit which we are generating. The 12 crore of finance cost you see in this quarter is almost entirely healthy discounting and bank charges on a much larger volume of business, The cost of trade, not an actual debt. The resolution plan in September was prepaid for full 501 crores cash consideration a year ahead of September 2027 deadline, availing a prepayment discount of almost 9.5 crores. The company has exited the NCLT mechanism completely, all plan payments are complete, lender NOC release of charges are in process, and we are now eligible for a credit rating for fresh bank lines which are being tied up. Let me take you to our orders, customers, and the demand. Our form order book at 30th September stands at 3735 crores at quoted value and around 4300 crores at current market prices under the price escalation clause. More importantly, it keeps growing while we execute it. Order inflow in H1 was 2217 crores, against a revenue of 1722 crores, a book to build of 1.29 times after 1.63 times in financial 2026. The book is 46% conducted, including a 974 crore order of AL59 for 800 kV HPDC line. That is a landmark project which the company is doing. With this quantum of almost close to 1000 crores of HVDC, this will ensure that diamond power has all possible PQs which are required to reach out the Indian DBCV players in the global market. 36% of medium voltage cables and the balance is LTE and data-centered cables. The conductor status is unchanged from what I set out in the last quarter. The book is essentially of AL59, Eco-Conductor and HTLS. Through RTS Conductor Partnership building behind it. And we are deliberately not chasing ACSR damage. Key wins in and around the quarter include additional MV and LT cable orders from Adani Electricity Mumbai, our third consecutive year of supplying, 66 kV EHV cable for a ghetto project in Jamnagar, 1370 crores of 11 kV cables for PGVCL's coastal underground schemes, We served around 670 customers in the first half of 2027 across utilities, EPC players, data centers in the industry. Adani group entities are 43% of the order book, and we hold Adani's share of top line to a stated cap of 20 to 20% over time, with every Adani order placed at market price on a reverse auction basis. We have built a national marketing organization, we have put our city teams in place, we have put a key accounts group, we have now put a separate conductor desk, and more importantly, a separate export team, which is drawn from most of the successful competitors who compete in the export market. I can assure you, financial year 27-28 will contribute, a large contribution shall come from export. We have already put a very large distributor in place in UAE and Middle East. And also I can happily report to you that this quarter Adani sales are less than 30% of our top line. So we are on track to build our customer profile as we had promised to you. We continue to be very bullish on the medium voltage cable technology. Last quarter I said that diamond power is becoming a medium voltage and increasingly an extra high voltage cable company with a premium conductor franchising besides it. Q2 bears that 11 and 33 kV cables were 79% of our cable revenue outside data center and 33 kV alone were our largest product line. I want to spend a few minutes on why we remain bullish

on this industry as we were in August. I will take you through the important demand driver,

which we have discussed in the past and are now building out. First, the grid build-out. India is in its largest cover transmission investment cycle, and for us, that is the conductor business. What is 6% of the order books? Which is 17 and 18 crore, 1718 crore. In the last year, we have supplied over 40,000 kilometers of conductor to TBCV developers and to power grid. As I mentioned to you, the single largest order this year is HVDC 800 KV. And we have a long term backup arrangement with TBCV suppliers so that their winds flow to us. In the last... Water, the important thing we have done is because the number of TBCB players in the industry is growing substantially, we have now started a back-to-back arrangement which is pre-bid, which assures us that we get orders when the TBCB bid is awarded to a player. Second, I will talk about the renewable evacuation. The clearest example is Khavda in Kutch, the world's largest renewable park, where our AL-59 conductor carries the evacuation and our cables run inside the Adani solar park. Beyond Khavda, solar is now a product line for our own. 3.3 kV solar cables were 39 crores in Q2 and are 2.21 crores from order book position. From key developers like Tata Power. Solar, which we have now classified as a key account in the October, considering the fact that we are expecting very large order inflows from data power. We have now a dedicated servicing team for Wari, Acme, Cleanmax, Enrich. Demand from solar parks is strong enough that we are building a thousand kilometer a month single core 3.3 kV cable plant, which will get on stream in the next 18 months. Third demand driver is underground cabling. And this is where our NV cables go. Medium voltage cables are 1328 crore of our order book position, which is 36%. In Mumbai, Adani Electricity has placed a 152 crore LOA on us. Accordingly with that, we have PGVCR related contractors who have ordered almost 195 crores of these cables in the last quarter itself. Our 66KV underground program is also on track. We received one 54.5 crore EHV order for Jamnagar and further 66KV tendals are in pipeline and we are expecting a good inflow on 66KV in the next 90 days. More importantly, we have now started working in newer markets like the South and the East. In Bengal, we have seen more than 5,000 km of 33 kg tenders which are now coming up. I am sure with being a dominant player, we shall be focusing on that market in a big way. In short, diamond power is now more ahead of Adani and Western India and Northern India. And now the focus is Pan India. We desire to build a market which is equally segregated across the geographies in India. Coming to the fourth, which is the data center. As I mentioned to you, in last quarter, we have made a dedicated data center team, and I can proudly tell you that most of the leading consultants in the data center space, now Diamond Power is approved, and we are now the preferred vendor, considering the fact that we deliver 240 crores of data center cable in one single month in September. The fifth is the industrial capex. The Yamuna Expressway, Mundra Port, Delhi International Airport, NTPC Vigyachal, the Bio-CNG plant at Jar Jar for Reliance, these are some examples of the clients which we have worked on. Our recent 132kV supply to Siemens India, Dutukoran Port and Indian Oil Tanking is a validation of how we are now planning across the market and Dealing with very sensitive industries like port and refiaries. Our industrial names this quarter was ANS, JSW, SAIL, Bokaro Steel and Serum Corporation, Serum Institute of India. So, we are now across the spectrum, across the industry. Green hydrogen and offshore cables is something which we are now focusing upon. And I can assure you that we will be able to share with you some good news on these markets very shortly. We are also focusing on EHV cables in a very big way. And we are now focusing on exports. And especially exports in medium voltage and extra high voltage. We have already started building our Middle East market. And now we are working on free qualifications in Europe. Thank you. It is worth remembering that nine of the world's top cable manufacturers are manufacturers who make NV and EHV cable. Scale in this industry is one on medium and extra high voltage, where qualification and trust takes years to build, and that is precisely where we have spent the last three years building it. Now coming to our characteristics and what infrastructure we are building. This is what we call building the next diamond. I will spend some more time on this section than usual because two things are new since the last call. We have ordered a sixth CCV line and we have frozen the design of a polymer compound liquid integration, which will be the real differentiator between us. And any other cable company in the country. Let me start with polymers. Because this is the project investors have asked us most about. The insulation and sheathing compound is between 35 to 40 percent of the cost of a cable. More than that, the conductor material in most of the constructions. We already make our own PVC compound in-house. What we have never made and what no Indian cable manufacturer makes today is the cross-linked polyethylene polymers for cables above 66 KB. Most of the piers make compounds up to 33 KB. We are setting up an integrated polymer complex. Which is 170 crore of investment in a 1.5 lakh square foot building with no land cost because the land already we have. The combined capacity of the project will be 84,500 tons. The phase one is six combining lines which will cost us 78 crores, two PVC lines, two silent lines. One master base line and one peroxide base line with a capacity of 66,500 tons per year. They will make PVC, FR, FRLS chipping compound, bedding compounds, xylene xlp for 1.1 to 11 kV and peroxide for 73 kV. All of phase 1 output is captive. It replaces the compound we buy today. The PVC and Gatorless line commissioned first and the full phase is on steam to be commissioned between June and December 2027 progressively. Phase two is the masterpiece in the entire investment of CapEx which Diamond is making. It is a Swiss engineer reciprocating line. The same low-shear mixing platform that global compound makers use, making super clean peroxide XMP insulation for 66, 132, 220, and 400 kV lines. This is going to be 18,000 tons capacity. The line is bought with its know-how package, its formulation, and its cleanliness acceptance. It commissions in early 2028 after the pilot trial on our own raw materials. The most important part here is super clean. When we say super clean, the compound has zero impurities and there is nothing which is impure 100 less than 100 microns. In EHV cables, the electrical field concentration is very important and because the life of the cable is 40 years, utilities approve the compound and The compound itself is a brand and a prerequisite for making that cable from the end customer. And this is where diamond investment in the EHV compounding plant, the first of its kind and probably the sixth of its kind in the world, will make us a differentiator among everybody else. Presently, we have certain data which tells us that in this compound, the margin is more than 50 rupees a kg. And at our current volume, this will relieve an additional EBITDA of 120 crores. When we use it on a captive consumption basis and that is going to be a major impact on us. The project model shows a 30% post-tech IRR on a consolidated basis. This project is being funded by 78 crore funding from the GCP account of the QIP and 100 crores from internal equipment and a small Amount of debt, if we feel we need to get it. The other projects we are already running is the balancing equipment project, the doubling of the copper cable capacity. The fifth and sixth CCV line which is going to get commissioned. And these are very important projects because all these projects are very long term and we already have the equipment virtually in place. Our LV cable project as promised is going to be commissioned before April 20, 2017, which will get us a very large enroll into LV cables. Additionally, the single core cable project which targets the solar infrastructure is already on stream. On our last call, we indicated the financial year 2027, our revenue will be 4300 crores to 4500 crores. We are still standing by with that number. With 1722 crores delivered in H1, we have to get you 2580 crores in H2. The season itself is half as strong. As my new CFO Mr. Kundi Fakkar told me yesterday that most of the cable companies do 40% revenue in quarter 1 and 2 and 60% come in quarter 3 and 4. I am sure his analysis and our capacity and understanding will stand good. Diamond power is constantly now focusing on increasing the manpower bench strength. We have a new chief operating officer and a new CFO, both of whom have a fantastic industry experience. We have now started working on succession planning and a director's office has been made so that in the next five to seven years, we get our then-next to come on board and start being part of the decision-making process in the company. To sum up. A first thousand-year quarter, a half-year that has already out-earned all of last year, a balance sheet that has gone from negative net worth to a positive cash flow, a 3,735 crore order book position, and a capacity program that moves up step-by-step, voltage class-by-voltage class. I can only sum it up by saying, Diamond Power is a five-decade-year-old company, and it is at the best of the next decade. I want to thank our team and about 2,000 people at Vadodara and Diamond Power employees across the country and our shareholders for their existing confidence and the future confidence on us. Thank you very much for listening me out. Now we are open to questions.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. 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 Nishant Bagrecha with incorrect capital. Please go ahead.

Yeah, good morning, everyone. So, thank you for the opportunity. Firstly, congratulations to the entire team on crossing the 100 crore quarterly revenue milestone. Sir, I have a couple of questions. Firstly, on the order book and the execution visibility. So, in your outstanding order book currently centered around 3,735 crore. So, could you please provide some color on the order inflows, momentum, and the inquiry pipeline cross MB and EHV cables, conductors, and data center cables? I mean, also, how much of your FI28 revenue target is already backed by the existing orders or a visible pipeline?

So, as we mentioned to you, the market value of our existing orders is around 4,300 crores, and we are targeting to do almost 2,500 crores till March. So, the remaining is obviously for the next financial year. On an average, our order intake is between 350 to 400 crores. And always the H2 and H3 and H4 is the period when the order inflow increases considerably because all the budgeted tenders of the government get finalized in quarter 2 and in the beginning of quarter 3 and that inflow comes to us through the EPC contractors. So, we are confident that by the time we end Q3, we will have 50% of next year's target in.

And by the time we end Q4, we will have the next year's order book with us.

And just to follow up on this, as you mentioned, the data center cable contributed almost to 40% plus in Q2, which is accounting for a meaningful share of a quarterly revenue. So it is largely driven by the execution of a large project or are you seeing this evolve into a sustained business opportunity? I mean, what kind of revenue potential do you see, particularly from this data center segment over the next two to three years? And are you increasingly engaging directly with hyperscalers and data center developers?

See two things. One is in the current year, I'm expecting to do 750 crores out of my top line from data center customers, for which I think I already have the orders from there. Number two, we've been tracking data center across the country. My director of marketing told me last week that there are 66 cities in India where data centers are coming up. Starting from 20 megawatts and going up to now in terms of gigawatts. So we have instructed our teams across the country that now you have a great pre-qualification, you have approvals in place. We need to scan every data center across the country. So starting from 40 megawatts to gigawatts, the entire market we are scanning. Since 66 cities, as for the last data available with us, there are more than 230 developers who are developing these data centers. And let me assure you that we are at the back of every potential opportunity.

Sure, sir. Secondly, my question is on the competition. So again, with the several established cable players stepping up investments in particularly in the MV and EHV capacities. So I think the competition is likely to intensify over the next three to five years, right? So what sustainable competitive advantage do you believe we can build in this space and particularly in the terms of technology like customer approvals, your manufacturing capabilities and also the cost competitiveness? So, what are your concerns on the competition?

So, you will see two, three things. One is, we have, we had day one conviction that the future lies in MV and EHV QI. And that is where we are putting our money in. So, when we did the QIP in August, we had five lines, CCV lines. And as you know, that the standard delivery period of a line is almost two years. We have already ordered our sixth line and you will see that we have managed that the delivery is within one year because we had an opportunity to buy it out from an existing order which was given by an international player. Similarly, we are now focused on two, three things. One is we are doing a very major backward integration on polymers. Now that is going to 35 to 40% of the cost of a medium and extra high voltage cable is polymer. If I am assuming that the polymer manufacturers, because I have data of almost 5 players, one which is the Indian player, is making between 13 to 14% net profit on his MV and EHV compounding business. And the four other global players are making unbelievable profit, more than 20%. Even if I assume to get my scale, I'm going to pass on 3 to 5% of my polymer benefit to my customer, and I'm left with 10% additional profit on the polymer part, I'm looking at increasing my EBITDA by 3.5% once my polymer project is implemented. That is number one. Number two. With 11 medium voltage cable lines, I already have the scale. And I already have the capacity to consume the polymer which I am making. See, in every product, there is a minimum break even which is required for the industry. If you want to really make XLP compounds of the scale and type which we are now wanting to make, you should have minimum 10 operational lines. Otherwise, you will have to sell your compound to others. So that first mover advantage we have already put in place. I'm sure there are competitors who are going to add the line. It will take two, three years to reach the number I already have. And by that time, I would have doubled my numbers. So diamond power from 2028 to 2032 is in pipeline by the next. The fourth quarter of the year when we talk to you, we will share with you our roadmap of 2028 to 2032, and I can assure you, we will always be ahead of every other cable company in the country when it comes to medium voltage and capabilities and capabilities.

Sir, just on this capacity expansion, you have indicated earlier that you have planned to add five new family lines every year from 2028. So, what is the incremental capix and revenue potential for lines, and how do you ensure that the capacity additions are supported by nuclear demand, particularly in the second decision?

Nishant, we, as I mentioned to you, we will come in detail on that at the end of quarter four, because Presently, we are negotiating with the global players, the quantum of lines we want, the numbers we want, obviously, we want a very good price, and we want an assured delivery. So, once we are out with a plan, we will share it with you.

Thank you, Anupra Bantam.

Thank you, and I'll... Vishal, one thing, one thing, I'm sure, I'm sure I have seen a note which you released regarding our numbers for the quarter too. I think we've done better than what you projected.

The next question comes from the line of Vidit Trivedi with Asian Market Securities. Please go ahead.

Hi, sir. Thank you for the opportunity and congratulations on great set of numbers. My first question is pertaining to the data center cables. So, could you please elaborate on the nature of this business, particularly on the proportion of repeat orders versus the project-based orders, and second, can you call out the margin difference in the conventional cables and data center cables?

First and foremost, data center cables are not anything different than what normal cables are, but they are mostly single-code cables. They are made with aluminium or copper depending on the intensity of the power which data center will require. They are usually 33 kV cables and in some cases 1.1 kV cables depending on the construction and nature of the data center where it is. In some cases data centers are also transmitting power through STLS cables and some of them are using 400 kV and 220 kV class compounds also. So, this is one on the nature of cables. Coming to the margin, well, the only extra margin you can get is because the pre-qualification terms and conditions are very stringent and data center consultants and data center companies are very finicky and very choosy on whom to approve or whom not to approve. So, obviously, there is a, because there is a, there is a. Entry barrier there. So this entry barrier leaves at least 2% extra margin for you.

Good, it's very helpful. Secondly, the tax part, so, you know, given that the companies currently have significant carry-forward tax losses resulting in a negligible tax outgo, so could you quantify the tax yield available and indicate us how long we expect this to continue benefiting from these accumulated losses, and in which financial year do you expect the company to start paying normal corporate taxes?

As on 31st March, our carry forward loss was 1,432 crores. Going forward, the manner in which we are growing and the projections we have done, I think quarter 1 of 2029, we will have to start paying tax.

Thanks a lot, sir. That's helpful. All the best and Diwali greetings to the team.

Thank you.

The next question comes from the line of Natasha Jain with Philip Capital. Please go ahead.

Thank you so much, sir, and congratulations on a good set of numbers. So my first question is, can you just quantify, so in terms of a 100 rupee sales value, what 84 rupees is your raw mat, and of that, could you just split the metal cost, PVC cost, and any others?

So it depends on the nature of the cable. If it is a medium voltage and extra voltage cable, the metal is 40% or in some cases even 35% and the polymer is 35%. If it is a LV cable, then polymer is 20% and metal is 45 to 50%. So there is no single formula to say that what is the percent. It depends purely on the construction of the cable.

Got it. And sir, when you say these percentages, you mean it as a percentage of raw material, right? Or do you mean it as a percentage of sales? Got it.

No, no. Percentage of raw materials.

Got it. And so my second question is on the EHV side. So could you tell us what's the market size currently and what is the market size that you are eyeing here? And also give us some sense in terms of margins, how different is the EHV margin both domestically and if one had to export versus say a LV or NV or even HV which is lower than your EHV?

So, to give you an example of the EHV market, last year, Gujarat Energy Transmission Company purchased 900 crores of EHV cables, and this year, in the first seven months, they have floated tenders of 3200 crores, and another 900 crores we closed this month. Right? So, this is one utility, how the preference is changing from overhead to underground. Now, if you want me to put a number to it, it is very difficult because I do not actually have the number. Our assessment is that we want our extra high voltage cable to get into double digit in the quarter three and quarter four of our top line.

That is our target.

Got it. Understood, sir. That's helpful. And could you just talk about slightly about the margin differential in EHV versus a normal cable portfolio, non-EHV?

So EHV cable is always a single core cable, and medium voltage 33 and below 1.1 are usually multi-core cables. So when you are making multi-core cables, the expense of making those cables probably, if you consider, Per kilometer or per lakh is more than single core cable. Number one. Number two, the technology and the entry barriers and the type of people you require to make EHV cables. Obviously, it's an expertise product. So, the differential is usually 5 to 6 percent between a medium voltage in EHV cable and almost 10 percent between LV and EHV cable.

I'm just going to say that's extremely helpful. And my third question is on the polymer size. So you, could you also talk about the, you know, the polymer import market size and what is the plan to capture? Eventually, are we even planning to export or just use it for our own purpose?

So as I mentioned to you that the capacity we are building is meant for 100% captive consumption.

Got it. And could you just give us a little bit of sizing in terms of the screen polymer market?

No, we have not looked at it because we are making it with our intention of doing a backward this thing. So we have not gotten to prediction of the market. What we have focused is what is the margin the players are getting and how much EBITDA we can add to our books. And based on that, we have taken this decision. And when we are seeing completely a 10% difference, 10% additional margin we can make

on the polymer side, it's a no-brainer for us.

Fair enough. And, sir, one last question on export. So, while you've touched that you've started an export team and already doing it in Middle East, could you talk about where are we in terms of U.S., which leg of the entire value chain are we there, and what are we going to export a little bit on that?

We have already made our application for UL approval for medium voltage cables when it comes to the US market. And we have already done, we have already sent our samples for type testing when it comes to the Europe market. We have created a dedicated team within the organization comprising of people who are coming from marketing, operations, production, quality assurance. So that we have actually quantified what is required to be qualified completely without any hurdles when it comes to the export market. And I can tell you, before the end of March 2027,

most of the pre-qualification would have been overcome.

Great. So that's great to know. And lastly, these export cables, would they be more copper cables?

So, it again depends on the market you are targeting. If you are targeting Africa, it is aluminum fuel. If you are targeting Europe and US, it is copper fuel.

Got it. Sir, this is extremely helpful. Thank you and all the very best and wish you happy to go to your team. Thank you.

The next question comes from the line of Archan Lohade with Nuwama Holdings. Please go ahead.

Yeah, good morning. This is Achal Lohadeh from Nuwama Institution. The first question with respect to the MV Cable, if you could help us understand in terms of the market size and what has been the growth in the first half in your estimate for MV Cable?

As we have already stated in the earlier call, there are basically five to six fundamental Drivers which are growing demand invigable, the first being renewable, the second being disaster management, third being vertical urbanization and underground cabling projects, fourth is data center, fifth is the railways. And if you split my order book position, you will see that almost 90% orders are coming from these segments, and just 10% orders are coming from the traditional industry segment. So till 2022, we had demand from power plants and petrochemical and steel industry, which still continues. But these five segments, which I mentioned to you, are now equally big and comparable to the market segment of 25,000 to 30,000 crores, which was there in the year 2022 with the traditional industry. So, if you as you will see the numbers for medium and X5 voltage dribbles in terms of growth will get captured and will outshine every other segment of the dribble industry. And I can tell you, I can tell you with confidence that it will be even faster growth than optical fibers when it comes to the medium voltage and X5 voltage.

Got it. But in your estimate, first off, what would have been the growth for the industry, you know, as per your estimate, sir?

I am not estimating anything because everybody's numbers are not out. But I can tell you that almost, I can tell you about the type of inquiries we are getting, right? We have presently 32,000 crore work of enquiries which are live to be finalized in the next. 90 days by various customers across the country. You said 32,000 crores worth of inquiries which needs to be finalized by various clients with orders under pipeline which will go to some or the other cable players.

And these are across cables, right? Across sides of cables, right?

Across medium voltage and extra voltage.

Got it. The second question, with respect to the polymer, you know, what is the typical asset turn in this business if somebody was to set up for third party? What would be the asset turn in this business, sir?

Thank you. Thank you.

No, that is the revenue from, you know, the 170 crores investment. And total, I think you said 270 crores? No, total 170 crores. Total 170 crores. So this 170 crores KPES can give what kind of revenue if you were to sell it outside?

Around 800 crores.

100 crores. If you could help us, you know, with respect to the second quarter number, if I see the revenue growth was 135%, but the margin improvement is only 70 basis points. So, are there any one-off costs which kind of, you know, impacted the profit numbers? Because, you know, you should have had even bigger operating margin improvement, right, sir?

No, it's because all the contracts are price escalation based, and the time lag of getting the escalation is 30 days prior to the date of dispatch. So if I am dispatching something in September, I will get the price of August. If I am selling something in August, I will get the price of July. So when your metal prices are falling, the lag impacts your... Contribution between, it depends on the level at which it is falling, but always there is a plus minus of 1% on your EBITDA, on the basis of this aluminium prices, and that is the impact you see. But if you compare it with the original contribution, which was envisaged when we took the order, means that the contribution remains constant.

That's basically coffee as kind of a contract.

Sir, one minute. Mr. Kundi, I would like to say.

Yeah, because sales price has gone up, so denominator is higher, and that's how in percentage terms, it is seen as lower figure, but in absolute value, we are making the same value.

So, it's more like a conductor business, right? So, where it is more of a per ton kind of a margin, and not like a cable where the margins tend to be percentage-wise similar. Is that right?

No, it is percentage-wise, but when you are talking about EBITDA, it is a differential number.

And in the growing prices of commodity, the percentage may be seen lower because the absolute value of the revenue goes up. But when the prices go down, the reverse will be happening. The margin percentage will go up. But absolute value still remains more or less stable.

Got it. And just one last question with respect to, you know, the conductor-to-cable mix, you know, in terms of the damage. What would that be as of now, and how would that change, let's say, for FI28?

So it is broadly around 31%, 30-31%. And it will not change. This is what we are envisaging for the current year. And for the next year, because the cable business will grow faster than the conductor business, we are expecting it to be 25-75.

Got it. Thank you, and wish you all the best.

Participants in the interest of time and fairness to others, please restrict yourselves to two questions. For any more questions, you may rejoin the queue. The next question comes from the line of Abhishek Basu Malik with Alpha Street Intelligence. Please go ahead.

Hi, first of all, congratulations on a great set of numbers. I had, you know, one quick question. You have, you know, you're talking about a big quantum jump in revenue over the next three to four years. So, one is, you know, what is the kind of tactics that you think will be needed for the next three, four years? And secondly, what are the big risks that you can see that can actually create problems in terms of not able to reach that, you know, reach the goal that you have for yourself of 10,000 crores of top line?

Good morning, everyone. That to reach that top line, we already have our capex and infrastructure in place. Now whatever additional amount of capex we are doing, which is broadly around 366 crores, over 6-7 projects, they are all projects aimed at increasing the margin. Right? It is backward integration, it is getting additional value added products. So, if you say plain vanilla to increase the top line, I don't think except the balancing equipment 73-75 crore, rest is not going to add to the volume. What we are focusing and investing on is where we can go and add our EBITDA margin. That is the first thing. Now, coming to the risk, well, every business has a risk, especially when it comes to infrastructure business, which is the power, road, or Businesses which at the end of the day are 60-70% dominated by government or controlled by government, there is always a geopolitical risk which is associated. But as you see things now, is there any alternative to power? Fortunately, we are in a space where There is no other alternative. And as things are moving ahead and fossil fuels are getting costlier, more and more focus is getting into new energy, more and more focus is getting into methods by which the traditional source of energies, which can be fuels, which can be other ways are now getting converted into greener energy. And at the end of the day, everything is getting converted to electricity. And the most important thing is that we are the people who carry the power, right? If we don't carry it to the customers, all this investment which is happening across every segment of the electrical industry will not be there. So, to that extent, our segment of the industry, which is cables, is irreplaceable when it comes to the growth driver or growth engine of the entire country. So we are not seeing any major risk which can Turn the apple cart overnight.

I would like to add that the geopolitical risk is having a positive impact on our industry. Just because as the crude prices go up, more and more new energy is getting traction. So, Government of India or elsewhere, if you see, the focus is on new energy, and when we talk of new energy, the solar, wind capacity comes up very fast compared to the thermal, and evacuation needs to be planned very quickly. So, the demand for cable and all the equipments related to that are likely to continue, and the geopolitical risk is actually fueling it further. Thank you.

The next question comes from the line of Kriti Tripathi with NVS Brokerage. Please go ahead.

Hello, sir. Congratulations on the strong set of numbers. Sir, as we have mentioned that 60% of our projected FI27 revenue of 4,300 crores is expected in H2. With margins now already expanding, so can we see EBITDA margins moving from 12.9% in Q2 to say 15% or higher in H2? And over the next 2-3 years, what kind of margin target have we set? 18-20% or above? So, one guidance on that. And lastly, sir, what is our capacity utilization in H1FA27 and what levels are we targeting for the next two figures? Thank you.

So EBITDA margins will always remain between 11 to 13%. Once our polymer gets on stream by December 2027, in the next year, we will like to give you a band of 14 to 16%. Till then, I don't think there's going to be a major change in EBITDA percentage, but the growth will get you more numbers.

So, return on investment, return on capital employed, that will really improve further.

Okay, and next question was on the capacity utilization cost.

So, capacity utilization is approximately 45% of what it will be when the entire balancing equipment is operationalized.

The next question comes from the line of Ajit Sethi with Eco-Quantum Solutions. Please go ahead.

Yeah, thank you for the opportunity and congratulations on a good set of numbers. So, I want to understand the total addressable market for the HDLS reconductoring in India in terms of surface kilometer and specifically the existing ACSR lines that can be replaced with HDLS and also what portion of this market is already covered by AL-15N conductors.

First and foremost, we have not made a single kg of ACSR conductor for last 5 years. So, we have a strong conviction that ACSR conductor has no future. Right? Our focus is on AL59 eco-conductors. Coming to SCLS conductors, well, this is basically a very specific segment of the market which it addresses. Thank you. 100% if 100 volts of 100 electrons of power is moving through a circuit and you want 120 to move, that is where STLS can be replaced. Today, the scenario in India is that all the lines are already 20 to 25% overloaded, right? So, STLS as for us and our internal understanding. Does not have a very bullish future, right? It is probably going to be 2-3% or 4% of the conductor market. The underground MV cable and EHV cable is the one which is competing with HTLS. And being underground, it ensures that the power theft, etc, it is one upon them. So we are not very, very bullish on the future of the FTLS cable. As per our data and understanding, this year, around 5000 crores worth of FTLS tenders have been floated there in the market. Around 2800 or 3000 have been awarded and the others will be awarded. But at Diamond Power, we are very clear. We have a two-member team to focus on HTLS, but we've also targeted that it will not be more than, it is a product where it is going to be less than 5% of our top line at its best.

And so my last question is on the legacy receivable side of 1000 crores. So in the last call, we have said that we are in the process of recovering 300 crores in FY27. So any update on that? How much receivables have been recovered?

We did not say that in 27. We said that 957 crores is the legacy receivable. We are positive on recovering 300 crores. Out of which around 116 crores is now quantified process of recovering that in terms of liaison, in terms of presenting it to the customer. To the extent of 116 crores, we have confirmation from customers that yes, that is payable. The remaining is going through reconciliation, arbitration process, negotiation process, and we are confident that we will recover this money. If you want a timeline, I'll put a timeline of 24 months.

The next question comes from the line of Sanjaya Satapati with ampersand capital. Please go ahead.

Yes, thanks a lot, sir, and fantastic show in terms of turnaround and top-line growth. And you have already given a lot of things about your margin trajectory. Just wanted to kind of add a little bit more on that margin. So most of your peers have gross margin in excess of something like 20-25%, 25%. So do you think you will be able to go closer to that?

Well, let me tell you that I have already given you what margin we will do. We will do between 11 to 13 percent EBITDA and once the polymer comes in between 14 to 16 percent EBITDA. Of late, we have seen that the market is facing serious quality issues. Right? There is a lot of undercutting which is being done in terms of consumption and quality of the product. We are medium voltage and extra voltage civil manufacturers. We are not spending any money on branding. Our competitors are spending between 2-3% of the top time on branding. We are spending on quality. And I can tell you that the realization which we are getting is the same realization everybody else is getting. We are ensuring that our quality will speak on a longer period of time. I can only tell you that the margin which we are having presently It's the most reasonable margin which you should expect from us.

Understood. And after the tax is concerned, till what time do you think you will have this schedule of not paying taxes?

Quarter 1 of 2029.

Understood. Thank you, sir.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Alok Shah for the closing remarks.

And thank you participants for joining in and for this early discussion. On behalf of Munaf Network, we will conclude this call. Amitkar, you would have any concluding remarks or we can conclude the call?

No, thank you very much. I think Mr. Kundit Kakkar would like to say something.

Just to add to that, in case your questions are not answered or we have not been able to do that because of time constraints, you can write to us and we will get them back to you one-to-one.

Yeah.

Thank you.

Thank you. Thank you, sir.

Ladies and gentlemen, on behalf of Monarch Net Worth Capital, India, that concludes this conference call. Thank you for joining us and you may now disconnect your lines.