Triveni Turbine Limited (TRITURBINE) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Triveni Turbine Q2F527 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star than zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gavin Deesa from CDR India. Thank you, and over to you, Mr. Deesa.

Thank you. Good day, everyone, and a warm welcome to all of you participating in the Q2 and H1 FY27 earnings conference call of Luvini Turbine Limited. We have with us today on this call, Mr. Nikhil Sauni, Vice Chairman and Managing Director, Mr. S.N. Prasad, the Chief Executive Officer, Mr. Lalit Agrawal, the Chief Financial Officer, Mr. Manikandran Rajendran, Chief Marketing Officer, and Mr. Shreyas Sharma, Head of Investor Relations and Value Creation. I would now like to hand over to Shreya to share some opening remarks. Over to you, Shreya.

Thank you, Gavin. Good day, everyone, and thank you for joining us for the company's Q2 and H1 FY27 earnings score. I hope you all had a chance to review the results and the company presentation uploaded on the exchanges and on our website earlier. Our discussion on the call will follow that presentation. Before we begin, I would like to remind you that some of the statements made today may be forward-looking in nature and are covered by the disclaimer of the earnings presentation. Joining me on the call is the senior leadership team who will take you through the key business development and the performance for this quarter. After the remarks, we will open the floor for the questions. With that, let me hand it over to our Vice Chairman and Managing Director, Mr. Nikhil Sohani. Over to you, Mr. Sohani.

Thank you very much, Rhea. Thank you, Gavin. A very good afternoon, ladies and gentlemen, and welcome to the Q2 earnings call for Thriveni Turbines Limited. As we indicated in the Q1 earnings call of this financial year, the performance in Q2 was similar to that of the first quarter, and it played out broadly in line with our expectations. For the second quarter, revenue from operations stood at 4.91 billion rupees, 3% lower year-on-year. A strong domestic growth of 51.8% to 3.4 billion rupees was offset by a 46.6% decline in export revenue to 1.51 billion. Export constituted 30% of revenue against 55% in Q2 FY26, reflecting the higher domestic contribution during the quarter. Product revenue grew 4.4% to 3.43 billion rupees, while the aftermarket revenue declined to 16.7% to 1.48 billion rupees. The EBITDA for the quarter was 858 million at a margin of 17.5% against the 26.3%. of the previous quarter of the previous year. Profit before tax was down 39.2% at 757 million rupees at a margin of 15.4% against 24.6% in the previous year. Profit after tax was down 41.7% at 533 million rupees at a margin of 10.4%. Sequentially, revenue grew by 11% over Q1 FY27, while margins remain broadly at Q1 levels consistent with what we had outlined earlier in the previous conference call. For the half-year, the revenue from operations grew at 6.4 percent. Domestic sales grew by over 40%, while exports were lower by 24%. All of this, of course, ladies and gentlemen, has led to a decline in our reported EBITDA margins, PBT margins, and PAT margins, driven by a mix between domestic and export. As well as the mix between the product sales as well as aftermarket, both of which have been lower in the current quarter as well as a half year compared with the previous year. While we look forward, and as I projected in our previous conference call, this is a reflection of our order book. Our order book is with you. As you see, we have an expanded inquiry book and order book for the export market segment, as well as our aftermarket order book and inquiry book is quite robust. So we do anticipate a reversion to our mean, which would mean that the performance in Q3 and Q4 would be substantially better, Q4 more than Q3. On the order booking front, we recorded our highest ever quarterly order booking of 7.64 billion rupees in the second quarter, as compared to 6.52 billion rupees in the second quarter of FY26, a growth of 17.2%. This was led by exports and the product business. Export order booking grew by 49%, over 49%, accounting for 48% of the total order book, as against 38% in the second quarter of last year. While product order booking grew by 32.5% to Rs. 6.01 billion. During the quarter, we made inroads in the combined cycle gas turbine segment, as well as boiler feed water pump segment for thermal power plants. These are both marquee orders, and it places the company well for future orders in the space. I would very much like to get into details of our visibility into newer market segments and into certain geographies in the question and answers after my opening remarks. The aftermarket order booking was lower by 17.8% and contributed to 21% of our order booking, while the domestic order booking was marginally lower by 2.5% at 3.79 billion rupees. For the half-year as well, our order booking was up 12.2% at 13.33 billion rupees, and this has shown... This is a reflection of strong international performance across the North American, European, Southeast Asian, and Turkish markets. Our export order booking has grown by 51.6% to 7.52 billion rupees and accounts for 56% of our total order booking, as against 42% in the half-year of the previous financial year. While aftermarket order booking grew 12.3% and maintains its 29% share in our order booking. Domestic order booking was lower by 16%. With exports and aftermarket now making up a larger portion of incoming orders, our business mix continues to strengthen, improving the quality of our order book. The closing order book stands at 10.5% higher than at the same point of the previous financial year, giving us confidence in the growth in the coming quarters, and this stands at 24.53 billion rupees. Export order booking and the closing order book is up 30%, 29.3%, and accounted for 59.2% of the closing order book compared to 50% a year ago. The aftermarket business as well continued its strong momentum with the closing order book more than doubling to 105.4. which is on a year-to-year basis, which is 6.39 billion rupees on the back of contract wins in thermal, renewable, combined cycle, utility, as well as certain niche segments of geothermal and other value addition services that we provide. This contributes now to 26% of our closing order book against 14% of a year to go. The company has undertaken quite unique opportunities in the refurbishment space, securing contracts for gas turbine refurbishment on a long-term contract basis. While the potential of these businesses in our international gas turbine contracts could be up to between $80 million to $90 million, this would play out over a four- to five-year period. And we would account for only that aspect of what can be built in the current financial year from those contracts in that financial year. This is a unique opportunity for the company to be able to provide gas turbine services and parts to leading utility turbine, leading power suppliers, and we are confident, along with our partners in the gas turbine space, that we will be able to fulfill this. The company itself actually has a strategy to push further into gas turbine services and into parts, as well as into potential development of small gas turbines, which we will continue to do with our focus on research and development and on the breakdown cycle. We will be working with our partners, academic as well as industrial partners, and we'll have a short time frame for development of product, but more importantly, the services will continue to grow in the short term. The company itself is well-positioned to leverage its capabilities both on the geographic basis as well as on a product segment basis. And we're confident that our strategic order with NTPC, which should be commissioned within the fourth quarter of this financial year, will provide greater confidence into newer market segments for the company. That particular order, which constitutes a part of our domestic product billing for the current quarter, It will diminish in the quarters to come. The amount of billing left on that order is approximately 15% of the order value, and it will be spread equally between Q3 and Q4 and will not impact margins, as we will have a significantly larger contribution of exports and aftermarket to the billing in those quarters. It was the inquiry book. Thank you. Overall, the market for electrification is extremely robust, with newer market segments of Of electric vehicles and transportation as well as data centers adding to the entire requirement for electrification. The industrial requirement for power remains equally robust with high commodity prices, which you can see with not only a rise in our material cost, but that has also led to a bargaining of demand from these segments. Overall, our research and development and growth of the business in terms of personnel continues to be robust. We are confident of our growth in order booking in the quarters to come, which will exhibit not only on a year-and-year basis between FY26 and FY27, but the visibility that we have for order booking in FY28 also does give us confidence towards the growth for this business in the quarters and years to come. Our new product and new technology developments also give us confidence that over the medium term, we will be able to strengthen our product portfolio to be able to be more diversified in a product stream to be able to cater to various different applications and solutions which our customers demand. Overall, ladies and gentlemen, Q2 has been disappointing, but it was as expected from a margin as well as growth perspective. The company has its orders in hand as well as its inventory, which you can see from the balance sheet, and it will be able to execute within the next few quarters to be able to exhibit the growth or the marginal growth that we do expect on a year-and-year basis for the company between FY26 and FY27. FY28 should provide us with a greater avenue for growth as we move forward. I would like, maybe we could take some questions now and I'll get the management in to give more clarity around certain areas of order booking and growth, as well as revenue billing in the current quarters as we take questions. Back to you at the moderator.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 or be touched on telephone. If you wish to remove a cell phone in 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 when the question queue assembles. The first question comes from the line of Amit Anwani, PL Capital. Please, for better.

Thanks for the opportunity. The first question pertains to the domestic order inflow. If we see the trend, last two financial years, the number is like 1,100 odd crores. Even for H1, the number is 580 odd crores. So, what are the underlying reasons here in terms of the kind of muted numbers in Dometico, and if you could broadly highlight which sectors are really lagging, and the inquiry book for the...

Okay. So, I'm going to ask Mani to comment on the domestic market as well, but what you should recognize is that we actually see a growth in the domestic market, principally driven by the metal segment. It's just that our market share in that market segment has actually come down. So, when we look at it on a year-and-year basis, our market share has come down, but there's been growth in the market. And this is despite the lower inquiry books that may exist for the domestic segment. But we're confident, given not only the number of thermal power plants that are going to be – that are under-ordering, and therefore the requirement for boiler feed pump drives, which is our market segment, as well as the growth in the commodity, as well as process cogeneration segments, That the demand in the domestic market is consistent. Mani, would you like to add on the domestic market?

Yeah, yeah. Okay, good afternoon. Now, to address to your questions, if you see, as compared to Q1, the Q2 domestic has, in fact, gone up by twice, two times. The domestic order booking for Q2 is much higher than Q1. So, we had this Q1, yes, the number was low, because we found many of these sectors like Cement and steel, in terms of order of finalization, it was getting delayed. But going forward, we see the domestic to pick up, but we don't see much of a concern in that. Having said that, the international has performed well as compared to last year. So on a comparative basis, you are seeing domestic to be lower with vis-a-vis exports.

Mani, why don't you talk a little bit more about the entire market, how are you seeing it?

Yeah, in terms of market, this year on our order booking front, we've been very good in terms of Q2, highest order booking for the quarter. And we also see a similar sentiment in terms of order finalization going forward in Q3 across the market. International, starting from Southeast Asia, we see good opportunities in Europe and in US. In the last five weeks itself, there has been a constant amount of order book, which we have been able to do in the international market. Also, we see good numbers in the aftermarket as well as products in the domestic segment. So Q3 looks very promising in terms of order booking as we proceed on the success of Q2.

Understood. Sir, you talked about some unique opportunities. One was... The contract secured for the gas turbine, and second, you also spoke about the development of small gas turbines. So, first on the gas turbine contract, what is the kind of size and which megawatt gas turbines, more color in terms of pipeline here, and which geographical markets we are going to penetrate this market. And second, on small gas turbine, by what are the timelines? Have we already started working here? And again, till what megawatt we are going to look, which market, some color on these both aspects will have.

The gas turbine development on the product side is not for power generation. It will be more for a thrust application. We'll come up with more clarity as we go down the path, but it is a multi-year product development cycle. It positions Triveni as an OEM, which we aim to benefit and leverage from our refurbishment business. The refurbishment and aftermarket side is, of course, as you know, a very lucrative market and something where we wish to participate. The current contract, which you talk about, is from our South African subsidiary in that SADC region with one of the largest utility providers there. The contract itself is for part upgrade and part replacement, and this we will do with our European partner who will be providing us components and technology as well as certain... knowledge and IP along the way. We're quite confident that this is a segment that, once it opens up and allows us to actually cater and provide these services to other parts of the world. We'll have to wait and see how we actually leverage it. The size of the contract, like I said, is based on the total market. The total potential of this is somewhere in the region between $80 million to $90 million, and it will play out over four to five years. The actual requirement will be based on once overhauls are done and the requirement is assessed. So, it will be in that region. The contract, like I said, is part supply and manufacturing. So, yeah, inflation.

So lastly, what should we expect in terms of growth now for FOLIA? Will it be like mid-single digit, approaching double digit? And second, you said there would be mean revision to margins and NPPC order, only 15% is left. So is there any loss we are expecting in this order by the time it gets closed by 4Q? And is it fair to assume that H2 margins will be upward of 18-19%?

Well, actually, we have been already accounting for losses on the NTPC order. We will have to put in claims later, but those will only be beneficial to the company. So as of right now, we've taken a conservative viewpoint from the perspective of accounting. And so that's already been accounted for in whichever manner it is. It's marginally a loss. As far as growth goes, yes, we anticipate some growth in this financial year. That's just driven by the fact that our commitments to execute what we have to execute for our customers. The product mix will obviously mean that the margins will be significantly healthier in H2, and when we look at it on a year-and-year basis, between FY26 and FY27, we would anticipate a growth in profitability. But it will not be significant, I have to point out.

Thank you, sir.

Thank you.

A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Harshit Patel with Equal Security. Please go ahead.

Thank you very much for the opportunity, sir. So, my first question is on the deferment of export dispatches. I think in the first quarter, FI27 earnings call, you had expected that most of these deferents, which were due to freight-related issues, this will be executed within the first half of FI27. Would you be able to share how much of that research scope is still pending and what kind of export run rate we could see for the second half of our cycle?

Oh, well, the deferments were 2Q3, Q4. The total quantum, I don't think I'm going to be able to share immediately right now, but your insinuation is correct that the second half will have much higher export as a percentage of revenue than H1. Prasad, do you want to add on this?

Yeah, you're right, because the department is to Q3, because there's a transportation thing getting eased, because the majority of these are into the Middle East customers. So these all will be seeing in Q3, Q4.

Understood. Secondly, on our product inquiry book, I think it stood at about 18 gigawatts at the end of FY26, with domestic at about 7 gigawatts and exports at about 11. And you had also mentioned that the North America was about 15 to 20% of the inquiry pipeline. It would be helpful if you can share the updated numbers as on first half of FY26.

You know, we're not fully ready to share it right now. I think you'll have to get Priyandath to Shriya to share the details. But broadly, the numbers is about flat in terms of the inquiry book. The U.S. market has gone up quite substantially in terms of the inquiry visibility, which is, again, split between data center combined cycle operations as well as other industrial. And what we're finding as a very new segment in the U.S. is sort of novel energy storage projects, carbon capture. And I think these provide a very appropriate market for Sriveni because it goes more in the electrification side as well as green power, which I think is more sustainable from a demand perspective than short-term power generation. I think at the same time, we've seen, like I said, a decline in inquiries from the central South American market. You've had a growth in the sort of flat Southeast Asian market. Europe has been largely flat as well, and India has been flat from inquiry base also. I think, Prasad, do you want to add anything on the inquiry?

On the inquiry pipeline, especially now, as we mentioned that, domestic inquiry pipeline more or less at a stable level, whereas international inquiry pipeline, we started seeing a good traction more or less at around the same levels what we reported earlier.

So it changes from geography to geography, but in general, there is a very strong theme towards electrification. And energy, both for industry as well as for independent power production.

Thank you very much for answering my questions. I will just agree.

Thank you. Next question comes from the line of Chirag Muchala with Centrum Broking.

Please go ahead.

Yeah, thank you. Thanks for the opportunity. Sir, the first question is on the combined cycle power plant order that we received in this quarter. So, sir, is it for the same data center opportunity that we have been speaking about for the last two quarters and from the USA market, if you can just highlight more in detail and also if this is our maiden order from that segment, then going forward, what kind of addressable opportunity opens up for us?

The addressable market opportunity is large. There is a segment of our order book, which is an inquiry book, which is driven around combined cycle. You see, for us, at the end of the day, we would be quoting to EPCs or boiler manufacturers who would be the integrators to projects. Sometimes for simple cycle to combined cycle conversion, we would be quoting directly to the client, which is a matter, which is this order in particular. And I think this is 2 into 25 megawatts? Yes, 2 into 25. This 50-megawatt capacity, and on a three-to-one basis, that could mean that it's a 150-megawatt gas turbine power plant, which would be in front of this steam turbine requirement. We think that that requirement places us very well. The application is unique, and it allows us to compete in a market where the gas turbine OEMs have held a very strong stranglehold. We see this as a market, but very frankly, the gas turbine, combined cycle market overall, as part of our inquiry book, Prasad, I don't know what you'd say, but I think it'd be less than 5% of the entire inquiry book. Yes, less than 5%, but as you're right, we'll tend. We will open the doors further. It opens the doors. You rightly say, we're not looking at very rapid growth in this market, I would have to say. It's a tough market to enter. It will have a lot of challenges along the way, but we think that this provides us as well as clients' confidence and our ability to be able to execute in this space.

Okay, and sir, so just to follow up on that, is it from the USA market, and in terms of per megawatt realization, will it be similar to had this order been of a steam turbine of 2 into 25 megawatt?

No, no, we are talking about steam turbines only. We don't make gas turbines. This would, this would, this would be.

No, no, correct, correct, correct, but in terms, since it's a combined cycle, so just wanted to know that had it been a normal steam turbine order, and here the per megawatt relation would be similar?

It is a normal steam turbine order. This was already a pre-existing gas turbine, and the steam turbine was added, it was an add-on. But it follows the average pricing that we follow in the export market, which is quite lucrative and has margins, as you can see, which are significantly higher and multiples of the domestic margin.

Correct, sir. Correct. And second is on, sir, the boiler feed water pump plus drive turbine order that we have received from domestic market in this supercritical power plant. So, sir, here what would our total scope of work be? So, while I am assuming drive turbines is something that we will give, but boiler feed water pump, is it also a product that we have developed or will it be outsourced from somebody? And in that case, what would be the in-house manufacturing share of Triveni in this order value?

So, as you know, a steam turbine, when we talk about it, is a package. You know, when we sell a steam turbine by itself for power generating applications, we have generators, we have gearboxes, louver systems, you know, the other packages that we don't manufacture. So, you're very right. A boiler feed pump drive essentially has two basic rotating equipments there. One is a steam turbine, and it's coupled to a pump. We are not a pump manufacturer, and we will not be a pump manufacturer. So the package is either integrated by the EPC, or it could be packaged by the pump manufacturer, or it could be packaged by the steam turbine manufacturer. So depending on order to order and the scope and the liability that we wish to take along with the customer and the margin profile, we determine that based on order to order. So some orders that we've taken have been only supply of the turbine. Some orders that we take are packaged with the pump at Treveni's purchase order, and some of them are packaged by the pump manufacturer where we would actually send the pump to them. Alignment, et cetera, is essentially what has to happen from a perspective of quality assurance for these packages. Prasad, anything you want to add here?

Yeah, yeah. This is based on type of the order. So here, majority of the times, the customers, the EPCs may package it as a case-to-case case.

But this is a large market. As you know, there's a very strong growth in the thermal power generating segment in the country, and you have all the large utility power producers expanding capacity quite significantly.

Okay, okay. Thank you, sir.

Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes on the line of Mohit Surana with Munak Network Capital Limited. Please go ahead.

Thank you for the opportunity. So my first question is with respect to your response to the first question regarding the domestic market. You said the domestic market share has slightly come down for the company, but overall the market has grown. Can you shed some light on how the competitive intensity has evolved and are you facing pressure from internal players or are there some import that is happening in India which is also impacting? And any kind of, you know, comments on the pricing pressure, negotiation cycles, or the compromise on the order profitability. That is my first question.

No, our principal competition is with the largest steam turbine manufacturer globally who has Indian operations. So the competitive nature has not changed. The intensity is the same as it has been. It's just when demand comes up in certain market segments, the market share and historical base is different. And so therefore, the intensity varies from where demand comes from quarter to quarter. We think it sort of averages out over some period of time, but it's nothing for us to be more concerned with than previously. It's the same as what it has been. We compete intensely. The pricing is much lower than in global markets, but we respect them as competitors.

Understood, sir. So in your presentation, you have shown the more than 100 megawatt segment. That has grown very strongly compared to the less than 100 megawatt segment where we are present. Any strategy thinking of moving up the value chain and manufacture the larger capacity turbines so as to cater to that market which is growing much stronger than what you're currently catering to?

You know, we have certain orders already which have been given by global OEMs to do certain manufacturing for them in this space. Do we actually become OEMs in the larger megawatt space? We haven't really disclosed anything as yet. It hasn't been taken up by the board. If market opportunities on a sustained basis remain, we may do it strategically. Otherwise, we would approach it opportunistically as a one-off. I think, in general, the... The value that the Triveni turbine provides to its customers is more distinct in the industrial, in the customized space. Once you move up to utility range turbines, they become more standardized and with customers who actually have a very standard set of requirements, which does not fully value the flexibility and the servicing that Triveni provides. Either way, we'd have to assess and see. Right now, it's not something that we have a clear strategy towards.

Understood, sir. So, coming to your drive turbine product, which is not, you know, captured by the McCoy report that is mentioned as a source in the presentation. The drive turbine industry, which was expected to go strongly, mainly from the Middle East region as well, now with the early indication of the U.S. sales intent to end the war. Do you think, I mean, are you getting some more inquiries from that market media list for our drive turbines, and how are you going to accelerate growth for this product going forward?

I think from the Middle East, which is API requirement would be for both power as well as drives, but I'll let Prasad and then Mani comment on the Middle East in specific.

Yeah.

Middle East, as you rightly said, now in the current scenario, we anticipate inquiry pipeline will increase, definitely, that both in power generation rather than drive turbines, we see Middle East as a power generation in those opportunities as well as some of the refurb opportunities what we are anticipating, inquiry pipeline will increase. When it comes to drive turbines, maybe India plays a bigger role in drive turbines, basically, as we are talking of the 80 gigawatt edition and all. So there, we have a boiler feed water drive turbine opportunities. So that is a thing. So, Mani, you would like to add some points?

Mani, are you there?

Yeah.

In terms of drive drivers, as Mr. Prasad said, we see these thermal power plants coming up in large numbers. So we see a lot of inquiries, and we have bid to EPC companies, and those will come for order finalization in Q4. We expect those. These are big, large ones for the ultra-power power plants. And in terms of the other ones for pumps compressors, We do see enquiries, the enquiry level has not gone down as compared to last year. However, in case of Middle East, due to the war-like situation in the H1, we saw some dips, but with the war threat coming down, we hope the enquiry pipeline will increase in Q3, Q4.

Understood. There are more questions, but maybe I'll fall in queue and ask later.

Thank you. Thank you. Next question comes from the line of Asalil Desai with Masterless Investment Managers. Please go by.

Thank you. Nikhil, hi. One question, if you can explain how this aftermarket order to execution cycle works, because last two, three quarters, we've seen the order inflows growing very, very strongly, but some of the revenues haven't kept pace at the same level. So, what is kind of the gap or what's constraining execution there?

Okay, so when you look at the order booking for the aftermarket segment, it constitutes three different segments by themselves. The first is spares, which is for the company's own installed base. The order delivery cycle there is at a maximum, I'm going to say, three to four months. Three to four months is what we take for the order to execution cycle for spares. The servicing is equally going to be a quarter or so in terms of the execution cycle. So that service is a provision of physical manpower. And the third is refurbishment. Now, refurbishment is a space which, of course, is what we pointed out is what's going to be growing faster for us, and it's a segment that has a much larger market for us to cater to, which is doing third-party services for rotating equipments, which could be lower-value additions such as overhaul or could be higher-value additions such as upgrades. Depending on the type of service that you provide in the refurbishment space, the time is significantly different. So it could be, I would say, anywhere between 5 to 6 months to 9 to 12 months, depending on the type of contract that you are doing within the refurbishment space. So, it's very difficult to generalize because we don't provide the breakup within our aftermarket as to what is the delivery cycle. But maybe let us think about it if we can provide more visibility to you. Because ultimately, the way that I would like investors to view the company is order booking gives you the visibility of revenue. On the product side, as we go higher in the megawatt scale, that execution cycle becomes a little bit more prolonged. As you would imagine, it takes more time to make a 100-megawatt turbine than it does to make a 20-megawatt turbine than it does to make a 5-megawatt turbine. At the same time, increasingly also in the refurbishment side, as we go into more refurbishment for more value addition, that delivery cycle will become a little bit longer. So we'll have to just think of some way to provide greater visibility as to how much revenue visibility does our order will give us. But you have to recognize that as we get... A significant amount of spares and servicing orders annually, that, of course, will be booked and bill in any particular year. Maybe, Prasad, you could give an indication as to how you look at book and bill within any financial year for revenue in that financial year, sir.

Yeah, as you rightly mentioned, that spares and service, majority of the things, I get into the same financial year, but the reform, based on the current whatever we are offering, is a high-value-add solutions to the customers. So that is taking normally around three-quarters sort of delivery cycles today what we are having. So going forward, so there, further complex projects if we take, probably that three-quarters to four-quarters will be the delivery cycles for that revenue recognition.

Typically, we take order book, like 80% of the order book can be in the beginning of a financial year, will be executed in that financial year. And then you have book and bill of the first quarter for product and for spares going up to Q3 and for refurbishment up to Q2. That's how we typically look at... Understood. Great. This was helpful.

Thank you very much. Thank you. Next question comes on the line of Arun with Unified Capital. Please go ahead.

Hi, thanks for taking the question. Just following up from the last quarter when you had mentioned that there were certain lower margin orders in the first quarter of FI26 due to competitive environment at that time, which were taken at that time. So because of the execution of that in the first quarter of this financial year, there was a drag in the margin per se. So are these orders completely executed now? So is the draft completely gone?

So, there was one major order, which is a very large order, which is a strategic order with NTPC, which was at a low to negative margin. We already tried to clarify that earlier in this call. Apart from that, domestic orders typically tend to be around the same margin range, which is significantly lower than an export margin. So, actually, the export to export and aftermarket as a percentage of sales is what drives their margin. And we see that reverting, like I said, in H2, significantly more in Q4 than Q3. But we're quite confident that, very frankly, margins – the company, from a margin perspective, is fine. It's what we see in the market is what it is. There were some disruptions and commodity price increases that we saw in Q1, which will get normalized by the time we get to Q4, which will provide better visibility for FY28. We follow a conservative principle on... On accounting for warranty and other contingencies, and so we were consistent on those costs which we take, and they're fine as far as the company is concerned. We've had some tax refunds which we haven't accounted for, so because we'll just wait for the time to expire. I think in general, from the margin perspective, the company is all right. There is, of course, competitive intensity in the market that we operate in. I think at this point in time, we're driven more to ensure that we can get a larger install base to grow our top line, to grow our references in the higher megawatt space. The margins would also be impacted with our new product entry, which we are launching. Our advanced platforms, which will have a significantly better cost to our current platform, and we see as those get rolled out that they'll impact margins in the coming quarters positively.

Sure, sir. Just one more thing. On the U.S. data center order, there was an expectation that it will come by in this financial year, the first data center order. So, you'll still maintain that expectation, sir?

No, we already talked about that. We got that in this quarter in Q2, which is a combined cycle operation.

So, that's for the data center application.

Yeah, but in general, we're quite agnostic as to the end use. It doesn't make a difference to us who the end user is. The applications are what is more interesting. So this is a combined cycle operation. The end user is a data center.

Perfect. Thank you so much.

Thank you. Next question comes from the line of Julie Baviskel with Ashika Institutional Equities. Please go ahead.

Hello.

Hello, Ali. Yes. Thank you.

So, I just wanted to know on the order booking side. So, this time, order booking was a record this quarter. So, is the 7 to 8 billion per quarter a reasonable steady state run rate going into the F528? Or does this quarter include any lumpy large orders that won't repeat?

No, there are no lumpy large orders. I think you have two, three factors that you have to keep in mind. One is that our inquiry book suggests growth, and so therefore we're responding to the market, and our market share remains reasonably consistent, and so we participate in that to that extent. You also have had certain commodity price increases. So even though the megawatt size of the market has grown, so has the price market grown also. As you look at the steady run rate, we respond to the market as demand comes up. And so it's difficult for me to say what to expect, but I feel that there's nothing wrong in what you're assuming.

Okay, okay. And another question is, how do you see the steam turbine market evolving, given the rising gas turbine and combined cycle demand globally? So, does 3-rated turbines see this as a reason to strategically diversify, whether that's a deeper into combined cycle, BFW type packages, or any other adjacent segment? So, I just wanted to know your perspective on it.

No, we're very much a steam turbine company, and we will make sure that we are consistent in terms of being able to deliver better value with our focus in this segment. The refurbishment, the aftermarket segment can have different strategies, but at this point in time, we are a single product company, and even our carbon dioxide turbines and other carbon dioxide-based work is based on a similar principles of turbo machinery that we manufacture. So it's consistent from a manufacturing research development perspective. We'll stick around that line. We may move a little bit more into solution orientation to provide greater value to the customer and move up that value chain as long as we don't take on more liability and become ETC. So our fear is that we don't want to change the nature of our balance sheet. We remain focused in trying to be able to capture greater market share in the higher megawatt segment, penetrate more global markets, Develop new applications that we would be able to cater to. But I think all in all, there's ample growth for us if we look at from the medium term within the steam turbine space before we actually have to get a significant amount more revenue from new technologies, which will have to come about. We will eventually have to find newer revenue streams, which we keep talking about our development. But by the time that they contribute significantly to our turnover, it's still going to be three, four years away.

Okay. Thank you. Thank you so much.

Thank you.

Next question comes from the line of Mohit Surana with Monarch Network, Capital Limited. Please go ahead.

Thank you for the opportunity again. Sir, with respect to our top-line growth for this financial year, our first half year growing by roughly 6-7% on the top-line. Considering our H2 will be very strong, can you give some indication on what kind of growth we can expect for this year as a whole? And also a bit of margins, if you can give some indication on how much should be the margins for the foliar, and on a normalized basis, what can we expect? Can it go back to the 20% plus kind of level?

I think that we gave an indication of this earlier in the call as well, where we're looking at growth for the full year FY27 over FY26, and the profitability should be robust and higher than FY26 as well. This is, of course, going to be a mix of operating income performance as well as other income performance. But when we look at it on a consolidated basis, EBITDA – Should we roughly, roughly consistent with last year? Yeah, around that. We'll be around that only. NTPC would have taken a little bit of a hit on the entire, the entire base. But, you know, there are certain things that we have to still execute in Q3, Q4, which could have better implication on margins. In general, yes, you would see a reversion to the higher margin level, as I've already indicated, based on our product mix execution.

Right. But, sir, in terms of growth for the full year, on H2, we can expect somewhere around 25% plus kind of growth for the H2?

I've given you the indication. You can work it out. I've given you the indication. I'm sure you'll be able to work it out.

Sure. And, sir, regarding these NTPC orders, I mean, this was the first one-of-a-kind order that we are executing right now. Are we getting indications of more orders going forward from NTPC for these kind of products going forward for long-duration energy storage?

Well, there have been cost increases, etc., so we have to look at ultimately what is the viability of solutions like this. We also need to commission it to ensure that we're able to get the recorded performance that we've committed. So it's a little early. Of course, everyone's interested in new technologies and diversification of what is a very definitive market, which is energy storage. We think that this is one of many solutions. The question is how you can perform from a life cycle cost basis. It's a little premature. Maybe we can answer this after Q4.

All right, sir. Thank you. That's all from my end.

Thank you. Thank you.

Next question comes from the line of Mahit Shah with Banyan Tree Advisors. Please go ahead.

Yeah, good afternoon. Thanks for the opportunity. I just had a couple of questions. Firstly, I think earlier on the call, you were mentioning that there was a decline in our domestic market share. So could you just help us understand what has driven that decline? Was it mainly because of some kind of order deferment or? Or that existing competitors were winning orders, or was there any entry by new players, and specifically in which capacity band, or was it under the sub-30 MW segment, or the 3200 MW segmented Beirut market share?

Yeah, that was the first question. So do you want me to give all your questions, and I can answer them all together?

Sure. The second question was mainly on the U.S. subsidiaries. So, just to say over the next, say, five years, what would be the strategy for the U.S. business? Do you see it as primarily an aftermarket operation or will you soon move into manufacturing and serving new turbines locally? And just in the aftermarket segment, what specifically differentiates Treveni from other manufacturers or other service providers and how durable is that advantage? Thank you.

So I'll start with the reverse of your questions. The fact is that we're an OEM, so when we provide third-party services as an OEM, we bring a different technology lens to the solution, as well as the capabilities and the pricing that we are able to offer is amortized over a greater degree of sales. So we're more cost-competitive and we're more flexible and we're able to provide that, which I think distinguishes OEM providers of third-party services. The U.S. market, you see, we'll have to respond to the investments that we made in the U.S. market and the return on equity and capital employed out of that before we actually look at changing the nature of the business from focusing on the aftermarket segment. As you know, the U.S. market has possibly the largest capital stock in any country in the world, and so we want to keep to the requirements that they have for servicing aftermarket for their install bases there. Will we do packaging? We have the flexibility to do packaging. It's a question that will we respond to any tariff and potential tariff. We have the potential to do so. At this current point in time, we think that we would be servicing most of America via India from a product perspective. The aftermarket will be provided locally. But right now, we don't have any way to look at that differently apart from saying that we will view fresh investments from a perspective of return on capital employed and ensure that we achieve what are the margins that we anticipate for the company as a whole. On the domestic market share, it's driven by segment demand. So in certain segments, like I said, in steel, our competitor has a higher market share, and historically, it keeps that. So it's just a response to where the market comes from. It's not to say that we're not making entries into that space. We will, and we will get market share because it is a market that we compete in. Right, and are these larger turbines? There are no new competitors in this space. We don't see the intensity changing in any manner.

Right, right. And the market is...

I'm sorry, and your question?

Yeah, sorry, is the loss in market share in the sub-30 megawatt segment of the larger turbines?

I think it's a larger turbine, a larger turbine, 40-50 megawatts.

Sure, and if I could just squeeze in one brief question. According to you, what is going to be the main driver for the export market? Is it going to be the Middle East market? Is it going to be the Europe market, the US market? You could just provide a brief long-term view.

Oh, in my particular income, it's going to be a decarbonization, actually, requirement for turbines, which is both pushed by efficiency, as well as new applications for both energy generation, energy storage. That's what the long-term growth of the market will be, if I look at five, seven years down the line. But in the meantime, you'll have industrial requirements. You'll have a lot of other requirements as well.

Sure. Thank you.

Thank you. Next question comes from the line of Prolin B. Nandu with Edelweiss Public Alternatives. Please come in.

Yeah, thank you for taking my question. On this, the order that you have won on the combined cycle in U.S., which is related to data center, I wanted to understand what was the model for Brandy of how did we win this order? Did we do it through some other player in terms of partner or was it directly through a customer? And also, is the US market or the combined cycle market reaching the stage wherein we could see, at least on the pipeline side, more and more such orders coming in, right? More in terms of the timing of the combined cycle orders or combined cycle projects are going to get executed. So what is your sense on the timing side and what was the modus operandi of winning this order?

Yeah, so actually, I don't think it's necessary to go into how we won the order. It's a normal sales process that we run. One is not more unique than the next. We have a mixture of agents, we have our own personnel, and we have our institutional relationships that we follow. So there's nothing very unique about this particular order. Like I said, I don't think the data center market actually represents a very large part of our inquiry book. So we're following a theme of both behind the meter and front of the meter electrification and requirements. The requirements that I think Mani spoke about in terms of the wins that they've had even in the first five weeks of this current quarter, be it from the United States, have actually been for energy storage projects. Those energy storage end users' data centers, that's not fully disclosed to us also. So, you know, a lot of sites are kept confidential, et cetera, until detailed engineering comes about. So there's a degree of confidentiality that we can't really talk about also in terms of end use of where the market is. But I feel that the level of technology that is going into the electrification globally will mean that if there has to be a redundancy of capacity, it will happen for older capacities, which are more inefficient. So these capacities are always going to be much more efficient. And so we're confident that these will come up in whichever manner.

Understood. Thanks for that. The second question would be on the US pipeline and why you have touched upon it, right? That in one of the previous answers, you mentioned that US pipeline is very healthy and growing, right? And one of the drivers you mentioned is the energy storage, right? Where the pipeline is coming from. But apart from that, what are the other segments in US where we are seeing very healthy pipeline? Is it coming from API? Is it coming from refurbishment of some of the larger turbines? So just some qualitative color on how healthy and why is the US pipeline healthy and where is this positivity coming from? That would be helpful.

The positivity is coming from general electrification. You also have energy requirements from industry, which is also quite robust. We did get orders in this current quarter as well from the U.S. for industrial applications for process cogeneration requirement. So that is also at the same pricing. The fact is that right now, internal efficiency is not as high in the – efficiency upgrades are not as high in the demand – in terms of demand as fresh new CapEx for more electricity production. So we're just driving the coattails on increased demand on generally more energy requirement. The mix is going to change from – because you have requirements coming from geothermal markets to industrial energy requirement to electrification. IPP is driven by a variety of different segments, be it combined cycle or energy storage. So we're seeing this. I see it's also geographically split. It's pretty much around the U.S. I have to confess that on the refurbishment side, our visibility into the market is more limited. We're hopeful as the quarters pick up that we'll be able to get more, get more. We have yet more visibility in inquiry book in the U.S. on the refurbishment side than which is our principal reason for the investment in the U.S. But we're quite confident that it's quite diversified both sector-wise as well as within the U.S. geographically in terms of how it represents our inquiry book at this point in time.

Sure. Anything on U.S. and specifically in API segment, anything that you want to comment on there?

No, I mean, I see the API segment is not a significant part of our U.S. demand.

Thank you. Thank you so much. That's it from my side.

Thank you. Thank you. Next question comes from the line of Ken Mendoza with LIC Mitchell. Please go ahead.

Hi, welcome. I just wanted to, if you could qualify your earlier statement on, we expect to make some advancements in solutions as well, right? What sort of investments we've made there, as it's contributing to us today, and what do we do different, or what do we do more here?

So, you're talking about, what did I mean about moving to a more solution orientation? Is that the question? So, for example, projects that we're doing with NTPC, in my mind, is a solution orientation around energy storage. The product, the supply and scope of the business has taken on a role of a mini EPC, but the learnings around that are that ultimately, if you can get closer to customers in terms of demand, we are able to then actually drive demand more than we can just as a pure steam turbine manufacturer. So that was the point of what we meant. There is no additional capital utilization from an R&D perspective. Yes, you need to be able to integrate the solution better and be able to do better vendor engineering and better cycle engineering so that you're able to take guarantees on the entire scope. So it will naturally be a little bit more working capital intensive because the scope is larger, and therefore the payment terms will be different. As we go down, we have to ensure that if we do go this route, that we keep the financial discipline that is necessary and only provide solutions to where we are able to have a technology leadership so that we can retain the margins, retain the cost structure, and retain the return metrics that are necessary. So that is the view that we were taking so that we're able to drive demand more. That is the point of being more solution-oriented in the way that we approach it.

On the system, apart from the NTPC project, there is nothing similar currently, which we are pursuing.

No, but there are lots of conversations that we're having. So, there are lots of conversations that we're having around the area of, let's say, energy storage itself is a very broad space, where we can be able to add value to our customers while actually ensuring that we don't take excessive risk. is the way that we'd like to do it. You have certain applications which would be around the steam turbine itself and expanding scope where we can provide a better solution to our customers and then be able to partner with them and their growth. Because, you see, ultimately what we want to see is it shouldn't be one-off. It should be a validation of our capabilities, but then be able to scale a market also by itself.

Thank you very much,

ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I now hand the conference over to the management for closing comments.

Thank you very much. Thank you for joining, ladies and gentlemen. I look forward to speaking to you again at our Q3. I hope you all had a happy Diwali, and I wish you a happy New Year as well. Thank you very much.

Thank you. On behalf of Travani and Tobai, that concludes this conference. Thank you for joining us. You may now disconnect your lines.