Om Power Transmission Limited (OMPOWER) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Home Power Transmission Limited Q2 and H1 FY27 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, then zero on your touchstone phone. Please note that this conference is being recorded. I now have the conference to go to Sayyam Pokarna from TIL Advices. Thank you, and over to you, sir.

Thank you, Steve. Welcome, everyone. Good evening, and thanks for taking out the time to join us today in the Q2 and H1 FI27 earnings conference call of Home Power Transmission Limited. The investor presentation has already been uploaded on the stock exchange and on the company website. To take us through today's results, we have with us from the management team, Mr. Kalpesh Patel, Chairman and Executive Director, Mr. Kannu Patel, Managing Director, Mr. Fenil Patel, Chief Operating Officer, and Mr. Chetan Modi, Chief Financial Officer. We will start with a brief overview on the business performance from Mr. Patel, followed by opening remarks on financial performance by Mr. Modi, and then open the floor for a Q&A session. I would like to remind you all that anything and everything that is said on this call that can represent any outlook for the future and can be construed as a forward-looking statement must be viewed in conjunction with the risk and uncertainties that we face. These risk factors have been detailed in our prospectus document and in our follow-on annual report. I would also like to request all the participants to ask their questions in Hindi for the purpose of this call as the preferable language. With that said, I would now like to hand over the call to Kalpesh, sir. Over to you, sir.

Good evening and warm welcome to the quarter 2 H1 F527 Aghi Performance Call for Home Power Transmission Limited. I will cover the business environment, research order links, and review revenue visibility, and the work we are doing on building our capability. Chetan will then take you through the financial performance in detail. Project education in the second quarter and in the first half, F527 has been handy. The monsoon months are usually a slower period for site work in our industry. But our teams maintain the piece of education across product. And this is visible in our revenue booking during the period under review. Revenue from operation for the quarters tour at 128.29 CR, a growth of 56% over quarter F526. And got the first half tour at 249.93 CR, a growth of 46%. The business environment remains healthy. The transmission and distribution capex cycle in Gujarat and across the country continues to be strong, with utilities, investing in network, standarding, evocation of renewable capacity, reaping, growing rapidly, and the conversion of overhead distribution network into underground cabling in urban and high-density areas. On our last call, we had indicated that tender activity from ZECO was somewhat slow at the start of the financial year, and that we accept it to pick up as the year progressed. That has played out with a strong flow of orders in September and even more so in October. On the last call, we were also asked about the low share of underground cabling in our order. We have stated that a number of underground cabling tenders were in the pipeline and we accepted to recover this segment within a few months. I am happy to report that these are the materialized during the quarter. We received an 11-killion underground cabling order from BGVCL for Balanagar and 266 underground cabling order from DETA. More such orders are in the pipeline where we have submitted our bids or the tenders are about to open. In October, we also received an underground cabling order from UGVCL for Ambani. Both the UGVCL and UGVCL order are part of the much larger initiatives. The government of Gujarat is driving the Gujarat wire-free city mission. Under with the exciting overhead power card distribution network across the multiple corporations and multi-municipality in the state is to be converted into an underground cable network in a phased manner by 2030, with an initial provision of 500 crores for the first phase. Through these two orders, we are directly contributing to this mission, and we accept it to generate a steady flow of underground cabling tender from the Gujarat response over the coming years. Underground cabling is now a meaningful part of our order book again, and with the mission underway, we accept the segment to be a steady contributor going forward. Our closing order book has on 13th September 2026 tool at 65.99 crores. More importantly, the momentum in order has accelerated after the quarter close. In October alone, we have one order worth 273.21 crores. The include 220 KM transmission line order from GEDCO, Partly Jentra Package 2, and Choraniya Salazar, the 220 KM Kotara Samjani AIS succession order from GEDCO, and the UGVCL Ambali Underground cabling order I mentioned earlier. Adding the October leaves to our 13th September order book, our order book today stands at approximately 839 crores. Before adjusting the education during October, it is around 1.9 times our FY26 revenue and considered by higher than where we close the quarters. This order book gives us stronger revenue visibility for the remain for FY27 and well into the start of FY28. Our projects are typically educated over 12 to 24 months, and with the current order move and the pipeline of tender, under evolution, we are confident of delivering the growth. We have aim for FI27 and subsistence of the momentum reward. A worth of margin. A beta margin for the quarter was 15.2% higher than our steady-state range. This was an account of the business segment mix and project mix specific to this quarter. As we have said before, individual quarter can slow variance in either direction depending on which project are which stage of education. I would also like to highlight my Q project education. We have commissioned the 400KV GIS substation at Dolera, which is one of our largest projects to date. And the associated 400KV transmission line at Dolera, which involve Pipe Foundation and River Crossing work, are in the final stage of completion. The successful education of a foreign-based TV GIS substation establishes our credentials at this voltage class for GIS project, and we accept it to become the foundation for more GIS substation orders in the future. At the same time, we continue to work on moving of the value chain. ZEDCO is planning for 765 transmission network in Gujarat in a big way, and we intend to participate as those standards come up to building on our 400KB experience. We are also standardizing our capability to take on more complex projects such as GIS substation, Pye Foundation, and River Crossing Transmission Line, and HVDC. Over the medium to long term, the complex projects require specialized engineering and education skills, and we believe they will support both our growth and our marketing profile as our mix moves in the direction. To sum up, we have had a strong first half. Our order inflow has peaked up sharply, and our order book is at a level that gives us clear visibility. Our priority for the second half are kindly education, continuous discipline on working capital, and preparing for the next set of higher value products. With that, I owe over the Chetan to take your throw of the financial.

Thank you.

On year-on-year basis, EBITDA margin was 15.25% compared to 11.29% in Q2 FI 26 and 12.15% in Q1 FI 27. As Karpester mentioned, margin for the quarter was elevated by the business segment and project niche in this particular quarter. Profit after tax for the quarter stood at 13.85 CR, growth of the 116.7% year-on-year basis, with a paid margin of 10.7% against the 7.7% in Q2FY26 and 8.5% in Q1FY27. Earning first tax for the quarter was 4.04% compared to 2.54% in Q2FY26 and on the expanded share capital after the IPO. H1FI27 performance for the first half, revenue from operations stood at 249.93 crores, a growth of 46.3% over the 170.88 crores in H1FI26. EBITDA was 34.34 crores, up 61.4% at a margin of 13.74% compared to 12.45% in H1FI26. Profit after-tax Rs 24.37 crore, upward by 65.3% with a profit margin with an after-tax margin at 9.7% against the 8.6%. Unhing per share for the half-year was 7.24 against 5.92. Moving to the balance sheet, net worth as of 30 September 26 stood at 283.43 crores compared to 136.94 crore at March 26. Reflecting the IPO proceeds and profit for the half-year. Gross borrowing reduced to 24.06 crores from 47.67 crores at March 26th as we prepaid the group's 25 crores of borrowing from IPO proceeds. Against this, we hold the cash, bank balance, and the liquid investment of 38.34 crores. So the company is in the net cash risk position. That two equity stands at 0.08x compared to the 0.35x at March 26th on an expanded equity base. Working capital and cash flow front on working capital, trade receivables stood at Rs. 237.06 crores against the Rs. 221.42 crores at March 26, and increased about the 7% in the receivable on a half-year revenue base, that is at the 46% higher than last year, thus indicating much better control over the cash flows. Trade payables reduced to 88.11 crores from 123.55 crores, coinciding with the deployment of IPO proceeds towards the working capital, availing the cash discounts in procurement wherever appropriate. As a result, net cash used in operating activities for the half year was 38.20 crores negative, which mainly reflects the 35.98 crores reduction in the trade payables. Our collection cycle with the PSU customers remains on terms we described on our last call. Of the net IPO proceeds, 119.32 crores, 108.56 crores had been utilized as on 30th September 26th, 25 crores towards the prepayment of borrowings, 55 crores towards the long-term working capital requirement, 28.11 crores towards general corporate purposes, and 0.46 crores towards capital expenditure. The balance of the roof is 10.75 crores. EMR for the capital expenditure on machinery and equipment will be deployed in line with the project requirements. To summarize, the first half has delivered strong growth in the revenue and profits, and the balance sheet has been strengthened by the IPO and its net cash-rich position, and the order book at this point gives us good visibility for the second half. With that, we open the floor for the questions. Thank you.

Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Participants are requested to ask their question in Hindi.

Ladies and gentlemen, we will wait for a moment while the question queue assembles.

The first question comes from the line of Raunag Bajpayee with Wealthmine Advisory. Please go ahead.

Hello, sir. Am I ordering? Yes, sir. Sir, my first question was, any update on 765kb get-go and HVDC project in terms of timeline? What kind of timeline are we expecting? Also, you had mentioned a crore order book. So, can you comment on that?

So, there is 765 value of amount. Minimum 24 months to 36 months.

Okay, sir. Understood. Also, sir, in this quarter, our margin is approximately 280 points. And you said it's a myth of project. So, can we understand like what the segment contributed to the higher margins and can we expect the similar margin in second half of the year?

So, as explained in our earlier call as well, we operate in the majorly four segments, transmission line, substation, underground cable link, and operation maintenance. When the transmission line is our needs and expertise. So, in this particular H1 and Quarta 2, 79% of the revenue mix comes from the transmission line vertical and a substation vertical is 17%. So, which are about the higher contribution margin segments. Hence, there is a reflected in the improvement in the EBITDA margin and PED margins. Alongside that, we are also operating an under-execution of the Fast-Track project, Dholera, which is also a specialized job, so that has also contributed the better markets.

So, can we expect like 14 to 15 percent margin range for the second half?

So, on a yearly basis, our margin profile remains steady between around 12 to 13 percent at EBITDA level and Fed margin between 8 to 9 percent. So, that will depend on the project mix and business segment mix on a particular timeline.

Okay, sir. Understood. Also, in the similar line, I think our H1 to H2 split remains 35 to 65% roughly. And so far, in H1, we have done 250 crores. So, can we expect the full year to close somewhere in the range of upwards of 720 to 730 crores since our guidance was 50%, We will maintain the 50% growth year-on-year.

So, overall, compared to last year's financials, we will maintain a 50% growth.

Okay, sir. Understood. And any light on being cash flow positive in near-term, what are we targeting?

Okay. Please come again, sir.

Sorry, sir. You are not audible. Can you please repeat the question? Yeah, so in terms of being cash flow from operation positive, in terms of working capital, so like what is our target and what are we going forward with?

So, sir, if you see our financial statement, we find that our cash flow is being deployed in the working capital in terms of the receivable and trade payables only, right? So, historically, if you see on from the March 23, we had a receivable days of around 176 days, which is being on the reducing basis from March 24, it was further reduced to 140, then March 25, it was further reduced to 120 days. So, and in March 26th, it comes around around 180 days. So, depending on the project duration, which is ranges from the 12 months to 12, 24 months, our cash flow for operation will be collected within the project duration cycle. So, of course, the cash flow will now come in the positive way going forward.

Okay, sir. That is it from my side. Thank you so much and all the rest going well.

Thank you. Thank you. The next question comes from the line of Tejas Khandelwal with Prudent Equity. Please go ahead.

Oh, yeah. Yeah. Hi, sir. Am I audible?

Yes, sir.

So, I was going through the result and the first half revenue shown growth, but our disables are not improving. They are now 45% of the total revenue. So, why is that and what is our collection plan?

Yeah. So, sir, let me give you the detailed rationale for this. So, as I just mentioned, our receivable days has a trend of our project mix duration, which has been reflected in our receivable days. If you see as on March 23, our receivable days was 176 days. On March 24, it was 140 days. At March 25, it was 118 days. And then now again at the March 26, it is 118 days. So it is once. So depending on the company's average project duration is from the 12 months to 24 months. So, given the 24 months completion, which is being the collection, which is being reflected in our collection patent, our retention gets released after two years. So, when the company is at the advanced stage of the execution, so our retention gets accumulated, which gets released on timely basis.

Okay, okay, okay, understood. In September 26th, we are at the advance.

We have majority of our projects are running in the last 3 to 4 billion patterns. So, that's why retention accumulation is there. So, that's why receivables temporarily spike up, but it will normalize subsequently when we do the closure of the project.

Okay, sir. Understood. And, sir, our employee cost has been deducing. So, why is that?

So, sir, if you see, as I mentioned, we have four business verticals. Out of that, operation maintenance vertical segment is an operation manpower supply job. So, if you see, its contribution in terms of revenue has been reduced to 3% in this H1. So, that employee benefit cost, which is pertaining to this vertical, has correspondingly been reduced. So, hence, we are maintaining the same margin.

And so, what do we expect from O&M segment going forward?

So, in terms of margin EBITDA level, O&M is a lesser contribution margin profile. So, if we found, so we will participate in the O&M segment, if we find that the margin profile is less for the company requirement.

Oh, okay, sir. Okay, understood. And, sir, our borrowing has reduced, but the finance cost has been on the rise. So, what is the reason behind that?

So, finance cost also consists of the bank guarantee commission. So, in our case, whenever there is an increase in the, we are increasing our top line, there is increase in the top line, we have to, when we are awarded with the tender from the, our customers like Edco, we are supposed to provide the 10% as a performance bank guarantee of the contract value. So, for that 10% in performance guarantee, we get this bank guarantee issued from our banker for which we issue, for which we are supposed to pay the bank guarantee commission. So, this finance cost has been the same in form of the Bank Guarantee Commission, so that's why it's been reflecting in the, showing the, supporting the growth of the business model.

Okay, okay, but what kind of quarterly rent rate in finance cost can we see over the next two years?

Sorry?

What kind of quarterly rent rate in finance cost can we expect?

So, of course, sir, there has been improvement in our rating from the crucial. So, we are expecting, so, the company currently expects having the borrowing cost of between 9 to 10 percent. So, going forward, it will also improve. So, it will around range from the around 8 percent.

Eight percent. Okay. And so what is our current order loop execution timeline and then bid pipeline?

The current execution timeline of the project is 12 to 24 months as well as earlier mentioned because that would remain ideal for all the projects. What was the other question?

Oh, the order of bid pipeline.

So, as of March 26th, we have outstanding unexecuted order book of 621 crore, which we are expecting to complete by June 27th.

Yeah, but I am asking, what is the bid pipeline?

Sir, 1600 to bid pipeline, 1600.

1600 crore. Yes. Okay, okay. Okay, sir. Thank you so much.

That was from my head.

Thank you. The next question comes from the line of Yashree Gandhi with Molecule Ventures. Please go ahead.

Hello. Am I audible?

Yes, ma'am. Yes, ma'am.

The new underground cabling orders have received for 220 crores for distribution network conversion. Can we compare the margins from EHP transmission lines or it will be lower or higher side? Thank you.

ROW is in utility scope itself. So, all the PFU tenders which we have received from JETCO, the ROW is in their scope.

Okay. And for the JETCO orders of 765KV projects, are we independently sufficient and qualified enough that we have to do a JV for that?

We would be individually be sufficient enough to qualify for the upcoming 765KV tenders for JETCO.

Okay. And apart from that, what opening order book do you expect for you to give like a 40-50% kind of growth? So, what kind of order opening order book do you expect by the end of financial year?

We are expecting around in the range of 1,000 to 1,200 crore.

Okay, sir. Thank you.

Thank you. The next question comes from the line of Arjun Binay Tamdeh, where today we are crashed. Please go ahead.

Good afternoon, sir. My only question is, what is your vision FY2030? So, what kind of sales are you targeting? What kind of margins are you targeting? How are you going to repayment, deleverage the books, repayment of the order?

So, for our FY20-30 vision, right, we just don't want to talk about numbers. What we're talking about is at a much higher scale, going up our building our capabilities in 765, as earlier mentioned as well. So we have started to participate in both Power Grid tenders and Jetco tenders as well, which will enable us to book our order book and book the revenue as well till FY30. Moreover, we have also started participating in the GIS tender, which will enable in the higher tender cost or higher order value as a single project. And now talking about the numbers which are targeting till FY30, the FY30 we are targeting around 2,500 crores.

That's great. Amazing. And in the substation segment, AIS and GIS, what is the revenue mix percentage from AIS and GIS?

So as of now, since GIS only we have just commissioned one substation, the revenue mix is pretty low on the GIS side. Subsequently, in the upcoming years, we'll build our order book with GIS standards, and that will result into a higher percentage of GIS revenue.

That's good.

That's awesome.

Thank you so much. All the best.

Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question comes from the line of Akshay Darji with Self-Shine Industries. Please go ahead.

Good afternoon, sir. I have a question on order pipeline. Like you mentioned, it's 1600 crore. So, what is the expected timeline to convert into order win? About 3 to 4 months. 3 to 4 months. And my second question is on trade receivables. It's around 237 crore as mentioned. So, out of this, like how much is retention money and how much is the normal? Like that 20% is retention. So, 237 crore, how much is retention money and how much is the normal receivables?

So, sir, as I mentioned, spike of the receivable days is on account of the advanced execution stage of the overall project sites. So, retention has been accumulated that. So, that is contributing 45% of the total receivables as of September 26th.

Okay, 45% is the customer. Yes. So for this project, we are having

the last billing pattern, last it took 4 months, so it has been accumulated accordingly.

Okay. And last one question, like investment property has increased from 3 crore to 5 crore. So can you explain the nature of addition?

So, nature of addition is a commercial property that we let it out on the rent. So, as the company has to provide the bank guarantee to our customers for the execution of our achievement of our growth in the revenue, so that's why we keep on investing our additional funds in these immobile properties so that we can get a better collateral availability with our bankers.

Okay, that's all. Thank you. Thank you. Thank you.

Participants who wish to ask a question may press star and 1. The next question comes from the line of Gyaneshwar, an individual investor. Please go ahead.

Hello, sir. Am I audible?

Yes, sir. So, my question is, is there any bid in the bid pipeline?

Yes, we have started bidding for 765 kb for power grid tenders as well. So, there are substantial amount of 765 kb tenders in our bid pipeline.

Okay, and second thing is that, I observe that we are expanding state-wise, but in other states, there is no tender win until now.

That means, the one-one tender has continued. So, what is going

on?

So, in the near future, you will see the tenders from other states as well. Apart from Gujarat, there are a few tenders which have started, Which I have already bidded in states like Delhi and Madhya Pradesh as well. So, considering the, yeah, considering if we win the tenders, we will recently find out the different state expansion as well.

And the question is that, this dollar is our market project. When will it be complete?

Sir, in the dollar, there are two packages, package 2 and package 3. There are two providers that I have. Package 2 will complete in December and in Cappet 3 will be completed until March.

Okay, thank you.

Thank you. The next question comes from the line of Arjun Minetambe with Aurevia Kresht. Please go ahead.

My other question was that, like in FY26, I observed that in the first three quarters, 2020-20% of the revenue was clocked. And in the last quarter, we received 40% of the revenue. So, if I want to calculate the revenue of this year, it will be 640 crores. So, is that your actual prediction of FY27 revenues? It is more than it is, it is less than it is, it is less than it is.

Sir, the three of us are the revenue growth, 30%.

So, sir, if you see our debt-to-equity ratio, it is 0.08x already.

Okay, okay. And our cost of debt is around how much?

So, it is currently it is between 9 to 10%. But now considering the improvement in the refill rating, which is BBB plus, we are expecting around 8% going forward. So, that will also So, improve our overall boring capacity and the boring cost as well.

Thank you so much. Thank you.

Thank you.

Thank you. Participants who wish to ask a question, may press star and one. The next question comes from the line of Akshay Darji with Celtshine Industries. Please go ahead. Mr. Akshay, your line has been unmuted. Please go ahead with your question.

Yeah, hi. It's a follow-up question. Like, 237, 45% retention. So, the leftover, the 130 crore, how much is the amount of 6 months older?

So, sir, if you see, 84% of the data are consisting of less than 6 months only, aging bucket. Okay.

Yeah, so that includes retention in terms of the not due category as well as our regular billing as well.

Okay. And like last question, like we are planning for the main board IPO, like for the main, to move to the main board.

Sir, we are already on the main board platform.

Oh, sorry, sorry, sorry.

Yeah, thank you. Thank you.

Thank you. The next question is a follow-up question from the line of Arjun Vinay Tambay. Please go ahead.

Uh, say, FY13.

Considering the new entry to 765 KV segment as well for OPTLs, we are hoping for the similar margin raise itself, which we have maintained till now.

Uh, like, 12 to 13% on a yearly basis? Yes. So, uh, considering 14 to 15% would be highly optimistic and not, like, Right?

Yes, so that depends on quarter to quarter and the project mix as well as we earlier mentioned. And it depends usually on the project mix and the stage of the current project.

But like you said, the majority of the revenue comes from the last quarter. And since this quarter's revenue mix is good, we get 16%. So, in Q3 and Q4, ideally, we can vision towards 13% and 14%.

Yes, we can vision towards it, depends, as I mentioned earlier, right, that it always depends on the project mix. So, we'll also have the new projects which are coming in, in the next two quarters, which will start the execution. So, it depends on that as well.

Project mix as well as the business segment.

If we get a specialized job, so we may have to better margins as well.

Okay. And on what basis we have orders? Like we have said that this is a low margin business. So why are we into this segment?

Thank you.

A reminder to all participants that you may press star and 1 to ask a question.

Thank you.

As there are no further questions from the participants, with that, we conclude today's conference call. On behalf of Ohm Power Transmission Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.