Pace Digitek Limited (PACEDIGITK) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Pace Digitech Q2 F527 Oarnings Conference Call, hosted by Antics Talk Broking Limited. As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is now being recorded. I now hand the conference over to Mr. Ishin Verma from Antique Stock Broking Limited for opening remarks. Thank you, and over to you, sir.

Thank you, Anam. Good afternoon, everyone.

On behalf of Antique Stock Broking, I welcome you all to the 2QF527 post-results conference call of Pace Digitech Limited. We have with us today from the management, Mr. Rajiv, whole-time director, Mr. Rajavindan. PFO, and Mr. Rajiv, Head of Investor Relations. We will begin with the brief opening remarks from the management, followed by the Q&A session. Thank you, and over to you, sir.

Good afternoon, everyone, and thank you for joining Pace Digitech Limited Q2 and H1 FY27 conference call. I am Rajiv, old-time director. Along with my team, we would like to take you guys through the key developments and key figures for this financial year. So, on behalf of PACE, I would like to welcome all the shareholders, investors, and analysts on this call. I hope you had the opportunity to review our financial results and our investor presentation, which we have uploaded in the exchanges. We have delivered a strong performance in the first half of FY27 with growth across both our energy and telecom business. During this period, we have expanded our BESS manufacturing capacity. We have progressed in several of our battery energy storage projects, and we have reached a much better stage in all of these projects. I'd like to take you through some of the key developments for the first half of this financial year. Our energy business continues to be the growth driver for this company this year and the years to come. As the demand for BESs has increased multifold in the last one year and the years to come, we are seeing a growth opportunity of about 236 gigawatt-hour by FI32, of which we want to be the major contributors. So with this, we are seeing a good opportunity ahead of us, especially in the BESs segment. During our H1 of FY27, we have commissioned about 875 megawatt-hour of BEST capacity at our project sites. Standing today, we have delivered about 1.8 gigawatt-hour of BEST to our customers, and we have commissioned about 1 gigawatt-hour at our own project sites. Our execution has spread across different types of contracts, including best supply, EPC, build-on-operate projects. This gives us the ability to participate across different stages of energy storage value chain, from manufacturing to supply and to long-term developer projects. During the first half, we have also secured significant orders in the energy segment, including Best EPC Orders from NLC India, DVC, VSES Rajdani Power, and Best Supply Orders from NGSL and more other customers. These orders demonstrate our ability to participate in large utility-scale storage projects across different business models. A small key update regarding our manufacturing expansion. In August 2026, we have expanded from 2.5 to 5 gigawatt hour capacity, and we have also produced about 844 megawatt hour of best capacity in this first half of the year. That, in numbers, the capacity which – that is about 94% of the capacity which we produced in the whole year of last financial year, we have produced in this first half of this financial year. So we are doing great progress in our best capacity, and our productions are running at full capacity standing today of 5 gigawattas. We have also successfully developed our in-house BSS container facility, and we have also commenced the production of BSS containers standing today, and we will reach full capacity of production by November or December of this financial year. And with this BSS fabrication facility, we will be able to produce about 50% of the capacity of our best that we are manufacturing in-house. We have also successfully commenced production of our 261 kilowatt-hour C&I cabinets, And we have made sample productions to a couple of our customers, and we are expecting much bigger orders in the C&I market in the days to come.

A small note on the telecom business.

We have successfully commissioned more than 8,000 sites of BSNL, which is one of our largest projects that we have won in the telecom business. And these 8,000 sites have also gotten into the O&M phase, which we have for the next five years. During H1 of FI27, we have also secured additional telecom orders, especially in the BSNL and in the BharatNet OFC projects. And we have a couple of more projects in pipeline expected to win later this financial year. Standing today, our order book, our executable order book stands at 10,735 crores compared to 8,528 crores in energy and 2,208 crores in telecom. During H1, F527, we have secured inflows of about 2,437 crores, of which 2,173 crores comes from our energy, and 265 crores comes from our telecom business. So, I'd like to hand it over to our CFO to take you through the numbers.

Thank you, Rajesh. Good afternoon, everyone. Now, I would like to take you through the financial and operational performance for the quarter and off-year ended, that is, September, 2026. So, starting with the consolidated financial performance, the revenue from operations for Q2 stood at 808 crores, registering a growth of 51.5% year-on-year and 45.5% quarter-on-quarter. For H1 FY27, the revenue stood at 1,364 crores, representing a growth of 51.4% over H1 FY26. The energy segment contributed to about 80% of the revenue, while telecom contributed 20% to the overall top line. The growth of this top line is supported through higher execution of energy segment, including the best supplies in the project deployment, including the EPC activities. The telecom revenue was supported majorly by BSNL supplies and ongoing O&M operations, including the maintenance of the 4G network of BSNL.

Our employee expenses in Q2 stood at 37 crores

compared to 24 crores in Q2 FY26. And for H1, the employee expenses stood at 70 crores compared to 44 crores of the previous financial year. The increase in the employee costs is majorly driven by the growth in the business operations, and with additional manpower deployed across the energy projects and manufacturing operations, these investments are intended to support the growing scale of the operations of our business and the expanding order book. The EBITDA for Q2 increased to 159 crores compared to 94 crores in Q2 of the last financial year, registering a growth of 68.5% year-on-year. H1 EBITDA to debt 245 crores, registering a growth of 40.5% compared to the last financial year. The finance cost increased to 36 crores in Q2 compared to 28 crores in Q1. The finance cost also increased primarily due to the funding requirements for the built-on offset developer project and the increased working capital to support the increased capacity for BIS manufacturing. The PAT for Q2 increased by 43.3% to 97 crores and H1 profit, H1 PAT stood at 160 crores, which is again an increase of 30.4% year on year. This increases in line with our sales, keeping the margins constant. So moving to the balance sheet and the subsequent returns, say as on 30th September, the total equity is to that 2,428 crores compared to 2,252 crores, which is primarily due to the, say, addition of the PAT. The total borrowing stood at 1,371 crores as on 30th September, compared to 961 crores at the end of financial year 2026. Then the increase of 410 crores, the increase of the borrowing is primarily for the requirement of the built-own operate project expansion, and also the increased requirement of working capital. So to note, as on 30th September 2026, our built-own operate assets stood at 1,258 crores. So, which clearly states that our increased borrowing is to support the increased capacity required, increase the requirement of the built-on operating projects. The cash and bank balances to debt 515 crores, resulting in a net debt of 856 crores as on 38 September. The net debt-to-equity ratio stood at 0.35x compared to 0.09x as on 31st of March 2026. And as I explained, that the increase in this ratio is due to the increase in debt to support the built-in operate process. On the working capital front, the total receivables declined to 2,177 crores as of 30 September compared to 2,142 crores, say, in 31st of March, 2026. The reduction of this receivable, say, clearly reflects the improvement of overall receivable portion as we keep stating that we start collecting the retention portions of the older projects. The return on equity stood at 13.2%, while the return on capital employed stood at 12.6% for this H1. So, in terms of the CapEx plan, as Mr. Raji was explaining, we have expanded our capacity to 10 gigawatt hour, and also we are expanding it to 10 gigawatt hour by next quarter. Today, we are at 5 gigawatt hour, and also we have established our in-house continuous fabrication facility. Most of the capital requirements are already taken care of. The final lots of expenses to be incurred in the next two years' time. The overall approach remains to align the capital deployment with the project execution, the commissioning schedules, and the expected cash flow from these assets. Given our H-1 performance and the execution visibility, we have revised our FY27 revenue guidance upwards to 3,300 to 3,500 crores range against our yearly guidance of 3,200 to 3,400 crores. This revision is supported by the 51.4% revenue growth in H1 and our executable order book of 10,735 crores as of 30 September 2026. For FY28, we expect the revenue to be in the range of 4,000 to 4,200 as per the earlier guidelines. So, with this, I conclude my remarks and I will now hand over the call to the moderator for the Q&A session.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch-tone 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 Deepak Podar from Sapphire Capital. Please go ahead.

Thank you very much, sir, for this opportunity, and many congratulations for a good set of numbers. So, just first up, I wanted to understand on your margins. I mean, we have seen a very sharp improvement in your EBITDA margins. So, just wanted to know what led to this improvement, and how should we look at going forward?

So, what we do is that we maintain the EBITDA margin of about 17% to 19% over the last few quarters, and this also was seen in the last few quarters, not only last few years, also for the financial year, plus the off-yearly performance. This EBITDA margin is a mix of energy and telecom. So today, the last H1, what we have seen is that much of the services in telecom has contributed to the bigger aspect of this EBITDA margin. Considering the fact that bigger service revenues are recorded for telecom, it has a higher EBITDA margin, which has impacted the overall EBITDA margin. While we always said that energy EBITDA margins are lower than the telecom. So, the energy EBITDA margins stood at about 12% to 13%, while the telecom EBITDA percentages have been consistent in the range of 20%. Say, combined weighted average was higher in this quarter, whereas with the increased revenue from energy, this EBITDA margin will slightly come down and settle at a range of 16 to 17%.

But this quarter itself, energy shares were quite high, right?

Yeah, right. But what has happened is that during this quarter, the services portion of the telecom was higher.

Okay. Okay. Okay. Okay. Got it. And Mr. My second question is on your car. I mean, volumes. The first quarter, I think your volume was about 90 containers. So just wanted to know, what was the volume in second quarter and how should one look at this volume in third and fourth?

So, we have maintained the same 2.5 gigawatt hours for the Q2 numbers, and Q2, we have done about 91 containers, which is sold, and another 10 containers, which is kept in stock. So, we have done about 100 containers for this Q2.

100. But are you targeting around 200 this quarter?

No, because, say, the increased capacity has come only in August, where the commercial production has started only in September. So, the next quarter, we would expect a higher number.

So, any number? I mean, this 200, which you have mentioned, are you targeting that in third quarter and fourth quarter?

Yes, third quarter, we are targeting slightly less than 200.

I got it. And just one last thing, on your backward integration, now this will, in-house container will now form 50%, right? Post this commissioning, maybe by year end or January. So can you throw some light that how will it benefit your margins? I mean, in terms of basis point or percentage, how will it benefit you?

See, the cost of the containers is expected to come down by about 25%. In terms of this overall cost, it is expected to come down by 4% to 5%. So, that is what is expected.

So, can one expect 4% to 5% EBITDA margin improvement on your energy revenue?

So, this is on the gross level. If you consider the EBITDA level, we are expecting about 1.5% to 2%.

1.5% to 2% on your EBITDA level because of it.

Yes, correct.

That's very helpful, sir. I mean, that would wait from my side. I wish you all the best. Thank you.

Thank you.

Thank you. A reminder for all the participants that you may press star and 1 in order to ask a question. The next question comes from the line of Milan Deeb Jain from Green Portfolio. Please go ahead.

Hi, sir. Thank you for the opportunity, and I must congratulate you on the entire management and for good set of results. My first question is about on the container fabrication. In the last call, the management shared that the production of container would start in September 2026. Now the production is planned for November, and full production is planned for January 2027. So while there was a slight delay on this front, can you please share some more color on it?

Maybe I slightly correct the understanding. The container fabrication facility is already commissioned as per the target that we are, but the commercial production will start only from now, but means now that this thing is going on, the plant is already commissioned.

Okay, I got that. Thank you. My other question was around the CNI batteries. So you have developed like 261 kilowatt hour of CNI cabinets and completed customer times. So, what's the order book for CNI particularly look like as of now, and how much revenue do you expect in the next morning to use?

So, see, as of now, we have supplied sample quantities, sample numbers to our customers in India and in some countries abroad. But the production orders and the bigger orders would come sometime end of Q3 or in Q4. But standing today, we have developed the product, and the product is ready for production. And we have also produced and supplied sample quantities to customers.

So how do you see it ramping up in a year or two? Could you share some more quantitative guidance on that?

So we are targeting about 30% of our revenues at least to come from C&I in the next financial year.

30% of energy revenue, right?

Yeah, it's 30% of energy revenues.

Okay, sir. And the margins will be better in the CIA?

Yes, yes. In C&I product, C&I product margins are much better than the grid scale best products.

Got it, sir. My other question was about the Saudi Arabia. So, after the small shipment of container to Saudi Arabia was done in Cuba National. So, have you received any further orders from that point and what is the size of orders from Saudi in the near term?

So, the order book that we have is completed and we that's a sample container that we are given. So, with this, with the performance of our system, we expect IRP to have increased order book from this particular region, which is expected to come, which is not there as on date.

Okay, sir. Just one last question was about the finance cost, which rose in Q2 from $283 million in Q1 to $356 million. And the long-term borrowings went up to 6067 million to 9449 million between March and September. So I just want to understand which projects was this new margin taken from and where do you see finance costs settling in in the coming quarters?

What I would like to see is that because the borrowings are specifically for the built-in operate projects. So the built-in operate project stands at about 1,300 crores. Against the borrowing of 950 crores, the long-term borrowings. So, the 950 crores of long-term borrowings has been spent to create the asset of 1,300 crores. So, we should see. So, it's basically to build our, say, the assets for the built-owned off-rate project. And this particular asset has been commissioned for about 50%, I would say, 50% of the asset is commissioned. And the complete project is expected to get completed by December of January of 2027, with which the revenue from this asset will start flowing in. The revenue from this asset is about 197 crores per annum, which is expected to, say, come for closing all these borrowings. So, the asset is, the borrowing is supported with the fixed asset that we have created. And, sorry, the increase in finance cost is again because of the same reason.

Okay. So, sir, do you mean in the coming quarter we could see finance costs going back again to the Q1?

This particular loan, the specific loan that we are talking about is expected to go down, but we have other projects in place. There are another three built-in operate projects, which is just kick-started. So for that, again, there will be a borrowing for about 70% of the overall assets. So by the end of March, 2027, we expect the borrowing addition for about another 1,100 crores. So which will be adding a back-to-back asset for about another 1,600 crores.

Okay, so that is very helpful. Just one small question from my side. I want to understand what the progress has been made with the Megmeet on making their products in India and pairing them with your best. Can you share some more color on me, basically?

Yes, so we are working on products, best products, and power products for data centers with Megmeet, and the product development is still in progress. So commercial orders will still further take some time, but we are still in the development of the product.

Okay, so could you share some timeline of this expectation of completion of the product phase?

So this, I think, would take another one more year to have this product commercially ready.

Okay, and sir, can you just guide on the potential you could expect on it, if that's possible?

There is a huge, very huge demand for data centers and data center power itself by itself will be a big opportunity for across India and across the world. So with this product, we are seeing a good entry of our power and best products into the data center segment.

All right. So, that's very helpful. I must congratulate the entire management again and wish you all the best for the coming orders. Thank you.

Thank you. Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two per participant. The next question comes from the line of Khushi Rathod from Anandrati Institutional Equities. Please go ahead.

This is Shweta. Your congratulations on a very good set of numbers.

Thank you. Thank you, Shweta.

Sir, two questions. One on the standalone business level. We see a sharp decrease in the EBITDA margins. Any color to that if you would like to highlight? I want to understand why there's a sharp decrease, especially when the telecom services business is up this quarter.

Yes, for the standalone pay-to-date, there's a decline in the EBITDA margin because we have started two different projects. One is a project from Mahaj & Co. for the supply and erection of solar panels. The other one is the project with Bondada, which is again a built-on balance of systems order of solar. So, these two projects we have started wherein the initial expenses are higher than the revenues, but the subsequent project milestones will have a better margin. But the initial margin, which is in terms of the mobilization of the resources and the Initial supplies were at a lower EBITDA margin. So that's the major reason for a lower EBITDA margin for sales visitate.

Got it. And when we look at the segmental EBIT, there's a sharp decrease again for the energy business. X of other income, if you could, you know, give us the number. I think the skew is happening due to other income there.

Yeah. Again, as I stated, the energy margins are lower than telecom. Telecom, we enjoy better margins with the projects that water we have got some two years back. The EBITDA margins ranges between 20 to 23 percent, while the O&M margins are at about again 25 percent. So, these two have bettered the margins in terms of a blended number. But when I come to the energy projects, as I stated, the initial two projects that we have kick-started as a lower EBITDA margin because of the initial mobility issues. And specific to the best project, again, it is considering the fact that we have just started our next capacity. The initial cost in terms of the production was slightly higher. And moreover, the lithium-ion sell prices have increased in the last quarter. And this quarter, again, it has reduced, but last quarter, we have seen an increase for about, I would say, 20% increase in the last quarter. So, this has, again, impacted our energy project margin because we use our own product for the project. So, that's the major reason for the dip in the energy margin, but it is expected to slightly come up in the Q3 Because lithium-ion prices have now started coming down and it has stabilized likely.

Understood. Is there any impact do we see with the change in the China's policy towards technology transfers with respect to our own cell R&D, as well as the cell import that we are doing currently from China?

So, on the cell import, yes, from January 2027, there is a reduction or elimination of export rebate, but what we expect is that the reduction in lithium-ion prices will get offset with the reduction in this export rebate. So, about 6% of the export rebate is getting cut from January 2027, so this is one major highlight. And on the technology transfer, yes, there is a restriction for solar, but there is nothing for this battery energy storage system technology to come in India.

Also, we are exploring the technology transfers beyond China and in other countries. So, we are not completely dependent on China for the technology transfer.

Okay. So do we, Toshi, any cost increases or any timeline changes with respect to our own, you know, backward integration for BESS?

No, we are keeping the same timelines on. We are still working on that. As I see, also it's already stated in the previous call. The R&D center is working towards technology transfer, supply chain built up, and also the alternative technologies available, including the technologies available from the other countries. So R&D center is studying, but still we are in the same state as compared to the last quarter. Maybe in the subsequent quarter, we may have some sort of visibility.

And the expansion to 10 gigawatt is also in line. And I think in this quarter, we would complete the setup of 5 gigawatt expansion.

Thank you. I'll join back in the queue for more questions this time. Thank you so much for that.

Thank you. The next question comes from the line of Parash Chhera from Purple One Vortex Ventures LLP. Please go ahead.

Yeah, good morning, sir, and congratulations for a strong set of results. Sir, I just wanted to understand, either in terms of EBITDA or PATH margins, or let's say PATH margins, for FY28, now, do we expect these PATH margins to sustain in the region of 11.5% to 12%?

For the FY28, we expect that the path margins to remain at about 10%. It is not going to be 11-12. 11-12 is, as we stated, it is because of the projects, the turnkey projects of telecom, which is completed in this financial year. But for the next financial year, where energy is going to play a bigger role, the path margins will be kept at about 10%.

Okay, so the benefits from this container manufacturing will not add to this one. It's already factored in.

Yes, it's already factored, but what is going to happen is that, say, the top line of the business will increase with the increased capacity. So, in terms of the absolute numbers, PAT will have a significant improvement, but the margins will have a slight reduction.

Okay, and even in the CNI, so the blended EBITDA margin is used at about 16% to 17% for energy. Now, even when CNI is quite a significant proportion, the blended margins are expected about 16% to 17%?

No, with CNI's addition, the blended margin will increase further at least by 1% or 2%. But, again, so standing today, we are still working on the utility, the bigger, best products. So, we cannot, you know, answer on the C&I side. But, yes, with the C&I business growing, yes, the margins will improve at least by 1% or 2%.

And, therefore, the price margins will not be impacted?

It will improve. Definitely will improve. With higher C&I products with contribution to the revenue, yes, FAT numbers will also improve.

But as of now, you are guiding for about 10%.

Yes, yes. About 10 to 11%, that is our guidance, standing today. So, as the C&I business comes in and more of the fabrication and other backward integration happens, these numbers will increase.

Right. On the lithium sale prices front, are we still struggling, and how is the utility market faring out now?

So, the lithium mine prices have increased in the last quarter, but this quarter has again started coming down. Maybe we are trying to see that it will be simplised at this particular range, and the tenders that we have started bidding for the last three to four months' time is with the new prices. So, we expect that this price will get stabilized. That's what we expect. Understood, sir.

Sir, in terms of your cash flow from operations, you know, the first half has been negative largely due to this financial lease receivables, which will be, I believe, your build-on-operate model.

Yeah, right.

What is the project IRR and the return on equity on this build-on-operate model?

So, the project IRR is about 10% and the equity IRR is about 15%.

Okay. And when do you expect this, considering operating cash flow from operations to turn positive, sir?

See, I would record you to see in the way that if you see my cash flow from operations, as you also rightly stated, removing the, say, finance lease receivables, which is only for the accounting entry, we keep it as a finance lease receivables. So, removing that, we are already positive in terms of the cash flow from operations.

And, sir, you said about the build-on operates, the revenue will start going in from next year. What, one term did you mention? I just missed that.

From the project that we are doing today, it is 197 crores. But there are another two projects which we are getting commissioned by March 27th, Which, again, will increase the revenue from these built-on operate projects by another 200 crores. So, FY28, we expect somewhere around 325 to 375 crores as a revenue from this particular built-on operate projects.

Right, sir. And going forward, sir, your focus, is that towards more manufacturing supplies and CNI, you know, sector or utility still continues to be a utility plus built on operates?

So, our core business is manufacturing and projects. So, we will continue to concentrate on manufacturing, on selling the product directly to the third-party customers. And the second priority is to do the projects, our own projects. Built-on-operate is a need of the hire when we enter into the best segment. So we have entered into it. But considering the capital-intensive nature, so we have given a pass for the built-on-operate projects. Unless otherwise we get some extra investment, the built-on-operate projects are of not much interest to us. Our core priority is to manufacture and sell the product and do the EPC. So, these are the two main priorities, say, other than this built-on-off rate, which is, again, the least priority for us.

And your EBITDA margins on manufacturing versus CPC would be, sir?

So, EBITDA margins on the manufacturing is about, say, currently because of the initial higher cost. The EBITDA margins were about 8 to 10 percent, but it is expected to go up to 13 to 15 percent over the period of time when we stabilize our operations.

Okay, and on the EPC bit?

EPC bit, it would be about 7 to 10 percent.

Okay, understood. So then your EBITDA margin on the energy when you said 16 to 17 percent, how was that, sir?

So, if you consult it, because we have our own product supplying to our own project, so we have margins at both the legs. We have a product margin, we have an EPC margin separately. When you blend these two, it will be about 15%.

Understood. Fair enough. And just last question, while the peak debt you mentioned, you will have another 1100 crores on top of what we already have. Will that be the peak debt by the end of FI 27 or is the debt expected to go up further?

No, that's the peak debt that is expected by FI 27. And as I stated, it will be again supported by the built-on operate assets, which will again increase by 1,600 crores.

So, the further we grow built-on operate projects, I think this debt would increase because for every built-on operate project, we take a debt of about 70%. Other than that, we don't see an increase. So, the further we increase more into more projects and build-on operates, this rate would increase.

And these projects, you said, are about 10% project higher and about 15% return on equity. Yes, right. Fair enough, sir. Thank you so much. I will come back. Thank you.

Thank you. A reminder for all the participants that you may press star and 1 in order to ask a question. The next question comes from the line of Kevil Shah from Sanctum Wealth PMS. Please go ahead.

Hello, yeah, thanks for the opportunity. Sir, coming back to the cash flow bit, so this first half, we are negative 549 crores. So by the end of this full year, do we expect that this cash flow will turn positive for full year FI 27 on consolidated base?

Sir, as I was, say, answering the other participants, so when we come to the consolidated cash flow from operation, I would like, I would request you to consider the cash flow from operation Excluding the finance lease receivables, because finance lease receivables is nothing but the assets built up. Only for the accounting treatment, it is called as finance lease receivables. So, if you exclude that, our cash flow from operation is already positive. The same trend is expected to be there in the year-end also.

Okay, sir, in terms of the best overall macro, so how is the bidding competition environment right now? So, is it improving or still there is competition like there was before?

So, it has improved a lot, I would say, compared to the scenario six months before where there are much bigger players, a lot of players bidding. And today, we see standard names of six to eight participants for every bidding compared to 25 to 30 participants in the bidding before some six months time. So, today, I would say it has come to a consistent level where only selected names are participating in the bidding.

Okay. So, there would not be any kind of pressure on the margin or realization side because of the competition. Is that a fair statement to me?

There is a pressure on the margins, but not as before, because if you see our order book, we have not added much of the projects six months back because of the heavy competition that we had. And as I also stated that built-on operate projects, we are not bidding. There is an intense competition. But today, we keep our required margins, and only then we bid. If we don't get our required margin, we don't bid lower than that. That's what the call that we take.

So, this required threshold margin would be, sir, that would be keeping the minimum threshold for bidding?

It varies from bid to bid, right? It depends on the type of combination of products and EPC and the build-on operates. So, it varies from bid to bid. We take that call before bidding. All of these projects go for reverse options. So, before the reverse option, we tend to decide, okay, this is our threshold, and we don't go beyond it. We try to maintain our blended, like we mentioned earlier, a blended bid of 16% to 17% and a pat of 10% to 11%, and that's how we make sure that these projects, we don't go lower than that.

Okay, so in terms of competition, so the new players or smaller players which had added to the competition a few quarters back there, the competition would be decreasing. But is there any increased competition coming from large players like, say, Adani or Suslon? Are these incrementally, you're seeing them competing with you guys for the bidding?

So, like I mentioned earlier, right, the demand for BES has increased multifold. This financial year, capacity would be about 30 to 35 gigawatt hour, which we are expecting to increase about 236 gigawatt hour by FI32. So, there is enough demand for this, for all the big players executing. We have an advantage because we have the manufacturing readily available and we are running at full capacity. So, that is an added advantage for us. But we see enough demand being there even with bigger competition.

Okay. So, this 10 gigawatt capacity for best that will reach, so in, say, one quarter itself, will it be running at almost full capacity utilization?

Yeah, so it will come to full capacity, say, by end of Q4. Starting Q4 will be the production of this complete 10 gigawatt, but full capacity of 10 gigawatt probably will take one quarter to reach.

Okay, sir. And sir, you have revised the guidance for this financial year. For next year, it has remained flat. So, it integrally translates to lesser expected growth in FY28. So, is it like you would later on look at it or you are just contending the revenue expectation in this year?

No, so we, since we saw the increase in this financial year, we revised the guidance for this financial year. Next year's guidance, we have not revised it as on today, but we are definitely seeing a much better guidance than what we have provided.

Okay, sir, I'll get back into it. Thank you so much for answering. Thank you.

Thank you. The next question comes from the line of Miraj Yajir from Pransh Business Ventures, Private Limited. Please go ahead.

Hi. Hi, sir. I just wanted to continue the last answer that we gave, which is the 10

gigawatt is going to get operational by the Q4 of this year. So assuming, and you don't want to build more of the EO, so assuming a 2.2 gigawatt of that capacity goes there.

Then also, 5,000 to 6,000 crores will be the minimum turnover that you

will be reaching just from the best sales. So, not sure how the 4,000, your current guidance of FY2028 stands.

So, what we expect is that there will be a mix of orders that we wanted to do, because, say, there will be a lot of, say, heavy working capital requirements for 10 gigawatt hours. So, what we want to do is that we wanted to have a mix of product sales to the EPC. Three, the job work. We want to do a quantum of job work for about 20% of the capacity, which is going to have a sort of reduction in the working capital. In the same time, say, maintaining the margin. So, job work is something which we are trying to have about 20%. And also, say, as we stated, that once we have some sort of investors in place, we will again start bidding for the built-on operate project, which we are again keeping a sort of, say, 10% to 15% of the capacity for the built-on operate projects. So, this is what we have considered to build the revenue projection.

Also, if you see that the revenue realization is different, if it was 100% of direct product sale, your number of 5,000 to 6,000 crores is correct, but then most of our product goes into projects, EPC projects or build-on-operate projects, which run for a period of two years. So the realization of revenue is for a duration of two years. So that is why it is not about 5,000 to 6,000 like you mentioned. But yes, if you do 100% capacity of only product sale, yes, we would reach that revenue.

Okay, understood. But just on the job work, if you are going to do the job work, why you in the earlier reply said that 10% fat margin? Because job work will have significant margin. So, if someone is giving you the sell, and then you are just doing the job work

of putting into the best container, like two-pack, and that thing, so they have

such significant higher margins, so you will be able to maintain it on that time. See, when somebody is giving the job work, it comes from the bigger players, and usually what happens, they all go with the exact costing of what we do today. We tend to get the same level of EBITDA and same level of fat in the job work. We don't get much beyond because even the finance cost, they tend to take to that side. So, we expect that the margin levels are protected with the job work, not an increased margin. Say, we expect maybe EBITDA margin of additional 1%, not more than that. And can you walk through the five BO projects? What stage is it?

I'm sorry to interrupt you, sir. We may request that you return to the question queue for follow-up questions, as there are several participants waiting for their term. The next question comes from the line of Sam from RRJ Company. Please go ahead. Sir, you're not audible. The next question comes from the line of Kapil Agrawal from Daksha & Associates. Please go ahead.

Yeah. Am I audible?

Yes.

Yeah. So, my question is regarding the debtors and trade payable stage. Actually, it seems elevated. So, can you explain and how we look, how we see that after a year or two, how it will pan out?

See, standing as on 30th September, you can see that our receivables have, you are talking about the debtors, right?

Our receivables and the payables both.

Yeah. So, standing today as on 30th September, you can see that our receivables have come down. The receivables are higher as on 31st of March, 2026, majorly because of the reason that we had much of telecom revenues in the last preceding two years, where telecom has a portion of retention for the defect liability period, which is for about 5% to 10% for different sets of projects. Whereas energy sector projects doesn't have such a long gestation period of retention. Retention comes for a period of 90 max 180 days. So when we change our mix from bigger of telecom to a bigger of revenue from energy, this particular working capital cycle, we expect it to ease down for us, say, over a period of time. So, compared to the FY26, FY27 would be better, and again, FY28 would have the same state of receivables, because the energy is going to have a, say, net working capital cycle of about 90 to 120 days. That is what is expected from energy segment. So, this is expected to ease down over a period of time with the energy revenue growing up and contributing to the overall top line. And the receivables from telecom for the older projects comes down because now we started achieving the milestones and the retentions have started coming down, say, progressively.

Okay, and where we see like for March 26, the data days are approximately 286 days, we can say. So, where it will be settled in, we can say FY27 or FY28 5a.

So, we can see that about, it can settle down at the range of 150 days is something, around 150 days is something which we can consider.

So, it will be 50% of current, of FY26, we are seeing, huh?

Yes, right.

And what about the payable days? For March 26th, our payable day is quite high, it's 603 days. So, what is the reason, why such kind of long payables are pending?

It's not, it's to be considered this way, that the payables are compared, because we have payables for both materials and services, And moreover, normally what we do is that when we say 10% of the retentions from the customer, we will have the same 10% of the retentions with the vendors also. So, and that is the reason that our payables are increasing. And also, it includes certain provisioning requirements as per the standards. And again, as I explained with the energy turnover coming in, this payable again will get reduced. We expect that the payable cycle time for about two to three months time. Means when I say 180 days is the receivable timeline, the payable days would be 60 to 90 days. So the net working capital we expect about 90 to 120 days.

No, but right now you are saying 50 to 90 days payable and right now it's 600 days payable. So it's 6x of your expectation. So how 500 day payable we will reduce? Can you explain, Malab? I'm not able to understand that.

So, as you stated, the retentions of the projects have started coming in. So, when we receive the retentions from the customers, we also release the retentions for the payables.

But if you see that our debtors have been reduced from 267 crore to 1792 crore from March to September. But our payables, there is no much difference in payables. It's around 2100 in March also and in September also. So, there is no such reduction in payables.

So, I would request you to see the consolidated payable, which is, I would say that... I'm saying consolidated payable. Yeah, so consolidated payable was about 1,800 crores, which got reduced to 1,500 crores in September. So, as I stated, if you see the receivables and payables, it will have a similar reduction.

Okay, okay. So, you want to say, like, if it will be 3, we can say 90 days, then it will be, we can say, Malab, it will be settled down at 300 crore only, from 1500 crore, apparently. So, 1200 crore kind of retention is there, including?

So, it will come down to about 800 to 900 crore, the payables.

800 to 900 crore. Okay. Thank you. Thank you.

Thank you. The next question comes from the line of Ishan Varma from Antique Store Broking Limited. Please go ahead.

Hi, sir. Thank you for taking my question. Can you give some color on the current best system pricing for the grid scale versus the C&I and versus the imported best?

See, the best pricing as of now, the Indian domestic manufacturing price, we are competing We are communicating directly with the Chinese imports and the landed price of the Chinese bits is almost in line with our manufacturing cost plus the margins. So the sale price of our bits is almost competitive with the Chinese landed prices after the transportation after the customs duty. Is this the answer you expect from your question?

No, and C&I, I think C&I, like we said, C&I margins are better than the full-scale best products that we are selling now, but these margins, we would start seeing once, you know, commercial bigger sales happen.

Okay, and now with the container manufacturing in-house, how have we seen the reduction in the overall system cost or like the improvement in lead times, and what portion of our best bill of material is still imported?

So, the container fabrication is expected to reduce or, say, increase or, say, improve our EBITDA margins and reduce our cost by about 4% to 4%, that I would say. And, yes, it will also significantly improve the lead time, which is, again, taken care. And as we also explained that 50% of our capacity would be met with the container fabrication and balance anyway would get imported. This is the answer to your first question. And second thing, we are again trying to localize much of the components. And in the next two quarters, we wanted to have the lithium-ion cells and the BMS imported and balance everything. That's all, we wanted to have it localized in India. So that's the target that we are working with.

Okay, got it.

And lastly, sir, just if you can share some update on the four What are PLI application status,

like any timelines or KPEGs for that?

The PLI tendering, I think it is expected by mid of November, and as we also explained that our CAPEX plan for the self-manufacturing is on, and our R&D center is studying the required And one thing settled down, we expect to kickstart in the next financial year.

Okay. Got it. Thank you. Those were my questions. Thank you.

Thank you. Ladies and gentlemen, we will take this as the last question for today. I now hand over to the management for closing comments. Over to you, sir.

Yeah, so I think thank you, everyone. Thank you for this call and for a very good session. And I think as a closing remark, we would say that we are looking, our rest of the financial year and years to come look very, very good. And especially with the growth in the energy segment, we are seeing a much, much better growth of our company and much better growth in our revenues. And we are very strong with our guidance, and we are very confident about our guidance, whatever we have provided. And we are targeting to expand further into the energy business and grow the energy business to a much better state. And I would like to thank all of you for joining this call, and thank you.

Thank you. On behalf of Pace Vigitech Limited and Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.