KPI Green Energy Limited (KPIGREEN) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the KPI Green Energy Limited 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 and then zero on your touch-tone phone. Please note, this conference is being recorded. I now hand the conference over to Mr. Binayi Sardha from Ernst & Young. Thank you. And over to you, sir.

Thank you, Sagar. Good evening, everyone. Welcome to the Q2 FY27 earnings conference call of KPI Green Energy Limited. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. It must review in conjunction with our business risk that could cause future results, performance, or achievement to differ significantly from what is expressed and implied by such forward looking statements. To take us through the results and answer your questions today, we have the senior management team from the company represented by Mr. Soil Lagoya, whole-time director, Mr. Gavri Srivastap, whole-time director, Mr. Elaine Stryber, Nino Best, and Mr. Kapil Kipalani, Bruce CFO. We'll have the opening remarks from the management, followed by our question and answer session. On that note, let me hand over the call to Mr. Kapil Kristalani. Over to you, sir. Good evening, everyone.

A very warm welcome to KPI Green Energy Limited Q2 and H1 F527 Unlinked Conference Corps. At the outset, on behalf of the board and entire management team, I would also like to thank our shareholders, investors, vendors, customers, employees, and partners. Let me begin with the broader industry environment. India's power and renewable energy sector has entered a multi-year Structural growth phase, supported by rising electricity demand, greater electrification, manufacturing-led growth, electric mobility, data center, and countries focused on energy security. India has already crossed 300 gigawatt of non-fossil capacity and is on track on the target of 500 gigawatt by 2030. The policy is therefore expanding beyond Stand-alone solar and wind, the next phase of the sector will increasingly be led by hybrid RTC and FDRE projects, battery, energy storage, floating solar, energy trading, and renewable solutions for commercial and industrial users. Policy measures such as Renewable Purchase Obligation, ISTS Waiver, PM, Surya, Sarovar, Yodhana, and others are emphasizing on firm renewable power. And strengthening the economic and bankability of these solutions. As more solar is added to the grid, the need to shift surplus daytime power to evening and peak demand hours will become increasingly important, making storage a critical part of India's energy architecture. Again, this backdrop, KPI Green Energy is building an integrated renewable energy platform across solar, wind, hybrid, floating solar, and battery storage. Our business model blends the quicker execution and capital-like nature of EPC with the stable, long-term contracted revenues generated by our IPP assets. During the period under review, we continue to translate our pipeline into operating capacity at an accelerated pace. Our total renewable portfolio stands at approximately 8.33 GHz. Comprising 3.02 gigahertz of installed capacity and 5.3 gigahertz under execution. The portfolio remains well diversified with 3.22 gigahertz under IPP and 5.11 gigahertz under EPC. In H1 FY27, we energized an additional 317 MW under the 677 MW GUNL hybrid IPP project, taking cumulative capacity to 511 MW and 50 MW under the 350 MW GUNL solar IPP project, taking it to 301 MW. We also commissioned 269 MW of solar capacity for Kohl India's Khavra project and 128 MW solar project for Mahajanko in Maharashtra. Our execution pipeline has also strengthened further. We secured an EPC order of approximately 2,000 crore for a 500 MW solar project from NACOP Purja Private Limited in Rajasthan. Battery energy storage is becoming an important goal pillar for us. Our best portfolio stands at 565 MW. 1-1-3-0 MWh for which battery energy storage purchase agreement have been executed. In parallel, Sundrops Energia, which is the subsidiary of KPI, is developing an integrated energy storage campus in Gujarat with best assembly plan to commence first and then cell manufacturing to follow in phased manner. This will help us build greater control over technology, supply chain, working capital, and project economics over time. We are also expanding and strengthening our operating platform through selective strategic initiatives, including Sundrop Energia's acquisition of DEC and Mavericks Green Energy Ltd. In addition, KPA Green entered into a binding offer to acquire 100% of Alphanar Energy Private Ltd. and Nectra Wind Private Ltd. at an enterprise value of up. Approximately 2,410 crore. The two companies together own 507.9 MW of operational wind assets in Gujarat's Kach corridor backed by 25-year power purchase agreement with Seki and approximately 21 years of the remaining contract life on a capacity-weighted basis. Upon completion of this acquisition, it is expected to further increase the KPI Green's installed IPP portfolio, and we will exit FY27 March with a installed capacity of IPP at around 2.1 Giga Watt. This substantially increases our IPP portfolio, the installed capacity of IPP. From about four years back, which was almost negligible, to 2.1 GHz by March 27. So, four years, we have been able to achieve such large IPP installation as well as through acquisitions. Our strategic priorities remain clear. We will continue to secure land and evacuation infrastructure ahead of project requirements, deepen our in-house engineering and execution capabilities. We have land bank currently at 88.07 acres and evacuation access at approximately 5.2 gigahertz. Turning to our financial performance, consolidated total income for Q2 FY27 increased by 16% year-on-year to 7,41 crore, compared with 6,41 crore in Q2 FY26. Evita has increased by 22% year-on-year to 283 crore compared to 232 crore in corresponding Q2 FY26, impacted by higher energization of IPP, which increases the depreciation and finance costs. For the time being, the revenue from the IPP gets stabilized. Cash profit for the quarter stood at 182 crore. For H1, FY27, total income stood at 1451 crore, EBITDA at 545 crore, profit at 187 crore, and cash profit at total 355 crore for H1. Looking ahead, our priorities are disciplined execution of the existing order book. Our order book stands at about 5,700 crore, timely commissioning of IVP capacity, financial closure for the projects and the bids at hand, delivery of contracted BAS portfolio, and development of integrated battery energy storage. Before I conclude, I would also like to inform you of a change in our statutory order currently from this quarter. The Statue Auditor has now BDO, which is the top six large audit firm. As KPI Energy, KPI Green Energy grows in scale, the oversight of an auditor with a global network, deep sector experience, and robust audit methodology further strengthens the quality of our financial reporting and confidence of our investors. With that, I thank you once again for joining us today. We will also now be taking questions. I have with me Rajesh Srivastava, who is the ED of our company, and Sorel Sir, who is the WTD, and we also have the CEO of our BES program, which is Erase.

So, we can start the questions now. Thank you very much. We will now begin with a question and answer question. Anyone who wishes to ask a question may press star and then one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, you may press star and then one now. Your first question comes from the line of Chandrasekhar, an individual investor. Please go ahead.

Hi, sir. Good afternoon.

Sorry to interrupt. Chandrasekhar, sir, you are sounding very muffled. If you are using a speakerphone, I request you to use handset, please.

Is my voice better now?

This is better, sir. Please.

Yeah. So my question is regarding royalty, sir. First thing. So, currently, royalty is, I mean, we have 2% of the royalty paid to promoters. And yes, capping was announced, but the capping is very, very high, literally. So, I mean, if we look at very broadly, so this seems to be like, you know, Promoter is taking money from the company as the royalty and pushing back to the company as preferential shares, so which is hurting minority shareholders. So, do you have any comments on this?

So, sir, royalty is a normal practice, which is generally promoters of the big groups take from their respective companies for the trademark and brand, which is created over the period of years. And what we can assure you is that all of this is approved from the shareholders and what the promoter is taking from the company. Even after that, the profitability of the company is best in class, and that's where we are.

Sir, but given the manufacturing sector, do you know any conglomerates taking 2% as a royalty? For example, Reliance, Tata, they don't even take that much. We are in manufacturing sector, right? Not even consumer sector.

So, Chandrasekhar, if you compare the royalty, Vedanta takes royalty.

No, Vedanta is a mining company. It's a difference.

Yeah, so mining, so, so, so, so just let me complete the answer back, maybe then you can further ask for a step. So, Vedanta is... Also, mining as well as manufacturing company. Okay. So, they are in copper, they are in manufacturing, they are in power. Okay. We are also in power. So, let's not get into that, whether it is mining or power. I don't want to get into other company's name also. But since you mentioned one, I mentioned additional one. So you took one name, which is the biggest conglomerate in India. So each of the conglomerate has this practice. Now, whether it is 1%, 2%, all this is debatable. And just to mention you, this royalty which the promoter takes is approved by shareholders, And the promoter has not voted for it as the same as a related party transaction for him. So the promoter cannot vote for it. So 75% of the shareholders, other than the promoters, have voted for it. That means there is something which is having a concurrence of 75% of shareholders. And then we don't need to explain it further.

Sir, but recently, when the capping was announced, did we have the voting again? Because I am the shareholder of KP Green Engineering, so I did not remember any voting for that.

Yeah, so Chandrasekharji, basically the capping is to reduce, not to increase. No, reduce only, but still. Yeah, so I am coming to that, sir. So when I have the approval to take as a promoter, let's say, X rupees, and if I'm recapping it to less than X, I don't need to go and request anyone. I need to go to board and inform that I want to reduce my royalty, and that is yet to be taken up in board. As and when we feel comfortable, we'll take it in the board.

Thank you. The next question comes from the line of CA Ashish Chinbill, an individual investor. Please go ahead.

Hi, good afternoon, sir. So, on the face of it, it may not look that we are performing very good since last two quarters, but the IPP part of the business has been growing very strong, and that is the one that interests me the most because of high and especially consistent with the margins and recurring cash profits. But my question is that the listed players are easily being valued around 8,000 crore to 10,000 crore per gigawatt. And we have around 1.84 gigawatt of... But the entire company, which also includes the best shareholding of some 75% and comparatively and our EPC business, but we are not trading anywhere close to that enterprise value. Do you have any comments on why the market is not giving us true value? Because EPC business, we all understand that it can't be valued richly because of one-time revenue and frequent need of booking new contracts. But our IPP business provides us good. Thank you.

Thank you for your question. See, obviously, you seem to be a concerned investor for the stock price. Now, see, at us, like we, management can only work well, do good execution, get good projects. And put our head down and do more and more for value addition and increasing the stakeholder value. Now, as you rightly know, I can comment on this that March 27th, we will be exiting at 2.1 gigahertz. Now, it is up to you how to value it. We agree that about 8,000 to 10,000 crore rupees per gigahertz is the valuation which market gives. And then sometimes markets are unreasonable on the higher side. Sometimes they are unreasonable on the downside. So this is up to market how they behave. We hope to be valued correctly. But till then, we will keep doing our job and keep creating value for the shareholders.

Okay, so a small second question is, I know that we have by February 27th for the Alphanar and the Nithra Wing projects. Can we expect an earlier completion of the deal, of the offer for the same?

So, RCC, maybe 15 days here and there, but not much. But this will surely be over by March 27th.

Thank you. The next question comes from the line of Aditya Kumar, an individual investor. Please go.

Namaskar sir.

Namaskar Aritra. Should I answer, Aditya Ji?

Ji, Binko, sir.

Yes. So, what we can assure you is that we are on a path to long-term sustainable growth of 25% year-on-year caregiver, which we have given as a target in our KP 3.0 event, as well as the presentation, which is on the website. Now, if you have heard the previous question, currently, we are not rightly valued. You may have to wait for us to be rightly valued. Till then, we are doing our job very nicely, and we are going to be the prominent IPP player in the next five years. We value your support.

I respect the value of words of Farooq Patel, sir. Thank you very much, sir.

Thank you, sir.

Thank you. The next question comes from the line of Surabhi Sarawgi with Nexom Group. Please go ahead.

Hello, am I audible?

Yes, Surabhi.

Sir, can you provide some guidance regarding topics for financial year 27 and 28?

Financial year 27, we will be about 500 crore profit, and for the next year, we will give guidance in Q4.

Okay, so 500 crore means that?

Yes, in the range of this.

Okay, thank you.

Thank you. The next question comes from the line of Vansh Munot, an investor. Please go ahead.

Yeah, so actually, my question is that why don't we look the opportunities for demerging the IPP entity as we know that Acme, Sotar, and Cleanmax are being valued correctly? And what is the main reason that our company is not being valued correctly by the markets? Like, for example, the previous investor just highlighted that 8,000 to 10,000 CR has been valued as 1 GW of IPP. Then why is our company not being valued correctly? Is there any some reason or some interrelated party transactions? Or what is the main reason if you can just highlight?

Manstai, what was your first question?

Yeah, I'm asking that why aren't we looking for opportunities for demerging?

Okay, demerging, yeah, yeah, yes, yes. So, once I, just to answer both of your questions, the first question is about demerging. I can assure you that we are working on various. strategies to grow. And just to give you perspective, this company has, as I rightly said, just about 10 minutes back when I was explaining our growth. In last four years, from nowhere, like almost zero IPP to today, we will be completing in March 2.1 year. So you can understand that when some company is in a growth stage, there are things which will take time to streamline. So, now, your question of becoming the ECMES or any other software, we will have to take time. Once we build IPP, then only we can have de-merger of EPC and IPP separate. But till we have enough sizing, we cannot expect. So, today, if you ask me, the easiest thing is to do an invite to get a valuation for this company. If I do InVit of my IPP, I'll be valued at what numbers earlier previous investors said. And I can easily enjoy that valuation by doing InVit and then do more IPP. But see, for InVit also, you need at least some size, 2 giga-out, 3 giga-out. So we are in a growth phase. And as investors, as all of you have supported us in previous years, that made us grow where we are today. So it will take a little time before we can unleash all of this. We have shown our commitment by announcing what we want to do, what we have done in this year in KT 3.0. Just to answer some of the things which we have done, we have brought in strong words in our board. We have got Sunil Maheshwari, one of the known person in the education area and civil background. So then Rajesh Sivasa is on the call. He has come in from the earlier background of large companies, recruiting large projects for Adani and Ambani and Arithabilla. So all of this is happening. We have brought in BDO for more transparency and more financial prudence. Now, we are doing the right things, and we are executing also very well. So, the market will take its own course. We cannot answer why we are valued less or high. We can only tell you that we are doing all the right things. And it is up to you as investors to be with us and support us.

Yeah, so actually I have been with the company for the past five years, so I have had handsome returns, but the last two, two and a half years has been painful for many investors, new investors, and myself as well.

Once you can also understand how the markets have performed in the last two, two and a half years, everybody is not rightly valued in the last two, two and a half years. So it's not like something is specifically being done, special treatment to KPI by investors or markets. All power companies are not doing well because of markets is not well. Maybe the flavor is not there today of renewables, but I can tell you that investors are turning to renewables, And you can see the momentum. We can see that. And once the capital allocation is done by big investors, you can see the history being repeated. And we thank you for your support.

Thank you. The next question comes from Draina Pajai Yassam, an individual investor. Please go ahead.

Hello. Hi, everyone. Hope you can hear me.

Hello. You are slightly muffled. May I request you to use my handset?

Yeah, I am using my handset. Is it okay, right? This is my handset. So, as you mentioned earlier, this year also we will be making around 500 crores profit. So, that will be the call which when we come back to the call. Did you say that we will be only making 500 crores profit for this year?

I can't hear you properly, Ajay. What is the question? Can you repeat?

So, earlier, one of the investors asked that you will be making 500 crores of profit this financial year. So, last year also, we made around 500 crores of profit, right? So, this year also, we will be with the same thing or we will go higher?

As of now, I can guide you for about 500 crores. We can hope to surpass that and achieve more. Because generally, H2 has been much better than H1 in past also. So we can exceed the target given to us, but the guidance currently will be about 500.

Okay, understood. My second question is that whatever the bidding we are doing for wind sorted things, will it go for AP Energy for the EPC contract?

So, this will be a BOM contract, and nobody better than KP Energy can win the EPCs in India, and we have done our work before deciding our KP 3.0 restructuring of business. We don't want to lose out on the business. If I have to create hybrid projects with wind capacity, I cannot be on the mercy of some of the other competitors. There is no single listed player in India better than KP Energy for wind. So this will continue. But what we will do is we are restricting. There will be no cross orders. Okay. So, there will be no order from KP Energy back to us. If KP Energy does a power project for someone, like hybrid project, which is having wind as lead, and if they have to do something in solar, they will go out and give it to outsiders, and no inter-company solar projects will be given to each other. And to complete wind projects on time without execution risk, we will have to give the orders from KPI Green to KPI Energy on it. Beyond business.

Thank you. The next question comes from the Lion of Raj Pujara with Guju Traders. Please go ahead.

Yes, good afternoon, and congratulations to the team. So, as you discussed regarding the SunDrop and the BESS capacity of 565 MW, I just wanted to ask, like, how will be the funds raised and how will it get split between the BESS manufacturing and project build-out? Because you already are aware, like, how is going the – how actually the group is going to build the capex and debt hold up while the profit is falling from the higher depreciation and interest? Because the IPO has been slipping away and there are no certain DHRP filing timelines. So, thank you.

Thank you, Bradvai. So, basically, what I can give you guidance is that we have sufficient equity to be raised to complete the projects on the manufacturing side of BES as well as BES IPP. We have already done the financial process for some of our BES IPP projects. And the relevant equity will be infused by a promoter as well as the other means to do pre-IPO at Sundrops. And we are well on course to list Sundrops in next about 18 to 24 months.

Thank you.

Thank you. The next follow-up question comes from the Lion of CA, Ashish Jindal, an individual investor. Please go ahead.

So my follow-up was on listing of Sandro Ponli, because Farukhsar in an interview with Hindu Business Line said that it may be listed in the next 10 to 12 months, I guess.

We hope to complete the listing under 18 months about from now. Okay. We have just completed a small pre-IQ round, which was long committed to the investor. We did not want to do a smaller round, but there was a push from the investor from many months. So we obliged him and he did the transition. So, you will see more and more pre-IPO rounds, and we will complete the IPO in the next 18 months.

Okay. Thank you.

Thank you. Your next question comes from the line of Aditya Kumar, an individual investor.

Hello, sir. I have a question. My question is, sir, the last year we have acquired acquisition, if we look at 507 megawatts, it is quite low. So, KPI Green, what is the cost that will increment? Sir, we will have 400 crods. We will generate revenue from this project. So, what is the cost that we will complete in this project?

Should I answer, Aditya Bhai?

Yes, sir.

So, Aditya, basically, one megawatt of wind, if you today go and execute, IPP cost will be about 7.5 to 8 crore rupees per megawatt. Now, 508 megawatt of wind operational asset. Should be valued in a normal sense at about 3,750 crore to 4,000 crore. Now, we have bought this at 2,400 crore, and it may go down further to $3 million here and there. Now, please understand that there are some issues which the existing builder and developer is not able to solve. And who better can do this other than KP? Because we are a highly influenced and a very well execution company in Gujarat. And this project also falls in Gujarat, Bhuj. And we, I don't know, Aditya, you know Parukbhai well, since you said that you hear him. So, Parukbhai is a PhD in wind, right? For some reason, he has got a doctorate, sorry, not PhD, because he was able to get wind clarity in Gujarat. So, we will be able to expect the best out of this project, and we hope to see 350 to 400 crore of revenue from this project.

Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Beneswartha for closing comments.

Thank you, everyone, for joining today's call. We hope that discussion has addressed your questions and provided useful insights. On behalf of all participants, I would also like to thank the management team for the time and for addressing the questions for each. So if you have any further queries, please feel free to reach out to us using the contact details provided in the Investor Presentation. Thank you once again and have a good day.

Thank you. On behalf of KPI Green Energy Limited, that concludes this conference. Thank you, everyone, for joining us on Umanau with Connected Alliance.