Triveni Turbine Limited (TRITURBINE) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the 320E Turbine Q1FI27 Earnings Conference Call. As a reminder, all participant lines will be in the listener-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 over to Mr. Gavin Deesa from CDR India. Thank you, and over to you, sir.

Thank you, Steve. Good day, everyone, and a warm welcome to all of you participating in the Q1 FY287 On-East Conference Hall of Raveni Turbine Limited. We have with us today on this call, Mr. Nikhil Soni, Vice Chairman and Managing Director, Mr. S.N. Brasad, the Chief Executive Officer, Mr. Sachin Parab, Chief Operating Officer, Mr. Lalit Agarwal, Chief Financial Officer, Mr. Manikandan Rajivarand, Chief Marketing Officer, and Ms. Shreya Sharma, Head of Investor Relations and Value Creation. I'd like to now hand over to Shreya Sharma to make it to share some opening remarks. Over to Shreya.

Thank you, Gavin. Good day, everyone, and thank you for joining us for the company's Q1FI27 earnings call. I hope you all have a chance to review the results and then accompanying 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 all 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 today is the senior leadership team who will take us through these key business developments and 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, Sria. Thank you, Gavin. A very good afternoon, ladies and gentlemen, and thank you for joining the Q1 FY27 earnings call for Triveni Turbine Limited. As we had anticipated, the quarter remained challenging. Revenue from operations came in at 4.43 billion rupees, up by 19.2% year-in-year. Domestic sales grew by 27.4% to 2.4 billion, and exports grew by 10.8 billion to 2.03 billion. Taking the export share in revenue to 48.8% against 49.3% in Q1 FY26, a reflection of the stronger domestic contribution this quarter. Profitability, however, was softer in the quarter. EBITDA stood at 797 million rupees at a margin of 18% against 25.8% and a profit before tax. of 697 million rupees was down 20.1% at a margin of 15.7% as opposed to 23.5% at the same quarter of the previous year. The execution in this quarter reflects the business environment and order intake of roughly a year ago. So the softer order mix of H1-FY26 has carried through to Q1-FY27. Thank you. We are optimistic on growth of both profit as well as revenue for the full-year FY27, which will, of course, be back-ended as suggested by the note. The balance sheet in this quarter has also improved, even though we are not reporting it. The difference between Q4 FY26 and Q1 FY27 is a reduction in receivables and, therefore, a reversion to negative working capital and an increase in the cash balance of the company. On the order booking front, the order booking for the quarter stood at 5.68 billion rupees, as compared to 5.36 billion in Q1 FY26, a growth of 6.1% year-over-year, an increase led entirely by exports and the aftermarket. Exports order booking grew 53.4% year-over-year, accounting for 68% of the total order booking, as against 47% in Q1 FY26. Reflecting continued traction and momentum. Can I ask someone to put it on mute? Because there's a reverb coming on the...

Yes, sir. You can proceed.

As I said, export order booking grew quite healthily and accounted for 68% of the total order booking as opposed to 47% in Q1. This reflects our continued traction and momentum across Southeast Asia, Africa, and Europe, and across segments such as biomass, waste-to-energy, in addition to the conventional segments. The share of aftermarket order booking increased to 39% of total order booking compared to 27% in Q1 FY26, a growth of 54%. Domestic and product order booking witnessed a slowdown during the quarter, lower by 35.4% and 11.6% respectively on a year-on-year basis. The higher share of exports and aftermarket orders reflects the continued strengthening of our business mix. It is improving the quality of our order book and shifting the portfolio towards better margin offerings, which should support the profitability as we execute those orders. The overall order book also witnessed an improvement. Our international expansion strategy coupled with continued innovation and entry into new product segments has yielded encouraging results. The closing order book stood at Rs21.8 billion as of the 30th of June as compared to Rs20.74 billion a year ago, reflecting a 5.1% year-to-year increase. Export order booking accounted for 57% of the closing order book. The aftermarket business also continued to gain strong momentum with closing orders increasing 115% year-over-year to $6.24 billion on the back of contract wins in the geothermal and utility segments and continued traction in the refurbishment and performance optimization solutions, which contributed 29% to the closing order book. This performance underscores the company's agility in operating across geographies and sectors, positioning as well to capitalize on emerging opportunities across geothermal, process industries, utility scale, refurbishment, and renewable thermal solutions. And the growing global emphasis on energy efficiency and decarbonization, coupled with renewable energy adoption and decentralized power generation, continues to generate and create strong and sustained demand for our products. Having said that, as we look forward, the inquiry generation in the international market has improved, while the domestic market has seen weakness. As you know, we report our inquiries on a six-monthly basis, and we will continue to do that next quarter. While we can internally see weakness, we are optimistic that the domestic market will show some signs of recovery in the coming months as well. During the quarter, our U.S. subsidiary continued to receive healthy inquiries as well, and that's a market which continues to grow in both inquiry book as well as our optimism towards future demand for both products and aftermarket services from a very large market. Our focus there remains on strengthening the local service and product capabilities and deepening our market presence and building a strong firm footprint in the Americas. As highlighted in our previous earnings calls, we continue to invest heavily into research and development, and we continue to develop newer product ranges and newer lines which can help expand our offering to our customers to ensure that we can utilize any heat or waste heat requirements that they may have to generate an effective return by either providing it for process requirements or towards generation of power. This includes the development of our organic Rankine cycle developments, and we are keen to expand this in the coming year. Going forward, we're well positioned to sustain growth, and this is coupled with our digital offerings. As of this current quarter, we have actually transitioned the role and position of our COO to that of business transformation to look at AI-specific initiatives. This is a further reinforcement of what we believe the company needs to focus on in the future, which is to be extremely agile and focused on productivity while still ensuring that we're able to cater to customer delight and ensuring our product relevance to our customer base. Therefore, while this current quarter has exhibited the situation of how geopolitical uncertainties can bring volatility in both dispatch and order booking, I am sure that you'll have more questions on why our margins have been what they are and where recovery would be. I'd rather take that in the question and answers than answer it right now. But suffice to say that the company is optimistic on the growth both in margins and absolute and on a percentage basis in the second half of this year. And as we look at the full year FY27, we are confident to exhibit top-line and bottom-line growth. So with that, ladies and gentlemen, I'm happy to take questions and answers.

Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchdown telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Amit Anwani with PL Capital. Please go ahead.

Hi, thank you. Thanks for the opportunity. My first question is, what was the impact of the PPC order? I assume probably there was an execution coming in in Q1 also. So was there an impact there and what was the quantum? That is my first question. And second, in terms of, you have written about the, I think, cost push also. So what was the kind of contribution of impact from the commodity inflation also in this quarter?

Okay. So your question is around margins, essentially, and how we've exhibited margins this current quarter. It's not a question of making excuses, but the fact is that they are... The execution of certain orders, especially on the export side, have gotten deferred by clients because freight rates have gone up between three to four times, and those have gotten pushed from Q1 to Q2 to maybe Q3 even, and what ends up happening is that when you have a higher percentage of domestic execution as part of the revenue mix, that is, of course, decreasing on margins to begin with. Secondly, you have, as you rightly pointed out, a strategic order that we've taken on the NTPC carbon dioxide-based energy storage project, which is essentially meant to validate technology and to prove a use case for our equipment. This, of course, is taken at negligible and near zero margins. And so that does not contribute to profitability at all. I'll ask Prasad to comment a little bit about the quantum of the NTPC project. But you will have to know that the NTPC project is due for commissioning in Q2. And so we will have certain revenue in Q2 as well. But Prasad, can you give a little bit of an idea about the NTPC project and domestic and other situations and margins?

Yes. So, I'll put it like this. Before getting into the margin on the NTPC project, as the VCM directly mentioned, that this is one of the technology validation projects, because it's the first of its kind when it comes to the energy storage through CO2. So, yes, we have taken this project knowingly, so this may not be contributing to the bottom line in the initial years, but once the technology is proven, this is going to bring a lot of value at. So, the positive thing is that this technology where the pilot plant is running in Europe, that started giving a very positive result, and even site execution going at a faster pace. So, probably by end of Q2, early Q3, it will come to a commissioning phase of this thing. So, basically, since this we forecasted these margins, there's a real margin sort of a thing from this. The major contribution is the share of domestic orders in the revenue mix is increased. That is the main pulldown on the margin sort of a scenario. So that way, so in addition to whatever international orders, couple of orders there because of the freight and the today vessels not availability, those things affected some of those planned export orders shifting to Q2, Q3. Otherwise, overall, we are quite confident. Overall, here, there will be a positive traction in terms of revenue growth as well as the profitability growth.

Right. Second question on the inquiry book. Last time you highlighted, I think, roughly about 18 gigawatts for the... Global inquiries and domestic inquiries was about 7 gigawatts. How that has grown? And what is the primary reason for the domestic slowdown? Any particular industry or are you seeing delays from the customers in terms of conversions of orders? If you could deep down more on the domestic side, yeah, that would help.

Yeah. So, you know, I hesitate to give you exact numbers and inquiries on a quarterly basis because the market does not move that quickly. So it's better to take it over a period of time. And so we will be sharing the numbers exactly on the six-month and full-year basis. But having said that, we see a continued strength in certain markets in the international market in terms of revenue inquiry growth, which includes the United States and Southeast Asia. There's some green shoots in Europe as well. The markets in North Africa, Middle East are quite depressed. The South region remains depressed. The Indian market has seen a decline, and that's broad-based across all industries, but it's not a reflection of the conversation that we're having. An inquiry is a potential demand, so when we are having conversations with customers, it seems to suggest that the market is sort of flat, but even though the direct inquiries, which are part of our inquiry book, have come down in the domestic market.

So lastly, you spoke about the top line and bottom line growth. So is there an expectation we are building that probably we'll be able to cross the double digit or it will be less than a double digit this year?

You know, we don't give visibility to that extent, but the fact is that we are a company that has to execute our order book. So the growth of our order book reflects what we have to actually execute. As we get into larger size orders, those have longer duration execution cycles. But suffice to say that we're quite confident of growth in this year. The team is all geared to execute on it. We, of course, still need certain book and bill of spares to come in, which has a shorter duration execution cycle. So some of that will depend in the coming months in terms of the order booking. But, again, we're optimistic based on our current order booking and order book size on the growth anyway. The extent of growth I think should be on the higher end of what you're suggesting.

Understood. Thanks, Nikhil.

Thank you so much for answering my question.

Thank you. The next question comes from the line of Ravi Swaminathan with Abendesh. Please go ahead.

Hi, sir. Thanks for taking my question. My questions are also in similar lines to the previous part of the screen. With respect to the NTPC CO2 storage, how much of revenue contribution would I have? The fact that this will get commissioned into queue, how much amount of execution is like

You know, we don't give a real breakup of revenue from order to order, but I think we had alluded at the end of Q4 that we still had about 175 hours of the order to get executed, and it would be split, I would say, maybe 40% in Q1, Q2, and then the rest in Q3. Yeah, please continue, Ravi.

Yeah, and there's one thing.

No, there's no – see, cost escalations have already been forecast to whatever extent that they have been. And I think the previous caller also did allude to the fact that to what extent did cost escalations lead to what margin declined. But it wasn't to such a large extent. The fact is the orders were taken at a point in time when there was volatility in commodity pricing. So, the commodity prices were taken at that point in time itself, and those margins... Especially in the domestic orders were already low at the point in time that we took them. So they've been executed in line with our expected margins. So none of this is coming as a surprise to us. This is pretty much the way it was meant to be. The only thing that has come as a little bit of surprise is in our export orders, as trade rates have gone up three, four times, the availability of vessels has become a little bit less easily available for our customers, As well as possibly certain site activities may not have kept pace, that customers have pushed out some of their dispatches that they need from us. And this largely happens on the export side only because the domestic market doesn't suffer from those same problems. And that has just led to a delay in recognizing revenue and billing that. So I feel that all of this will come back on track in a period of time, because what this geopolitical uncertainty has done is it's made everything a lot more volatile. Where we thought that we would be lumpy on a half yearly basis, now it's come down to a quarterly basis and monthly basis. It's becoming... I guess for us to smoothen it out, we need to have a much larger order booking so that we can display that. But I think that this lumpiness will continue for a couple more quarters, both on the positive and negative side. So you may have a negative quarter like this, but then you'll have positive quarters as well. So we shouldn't read too much into those positive quarters also.

Wonderful. And with respect to the inquiry pipeline, or rather with respect to the domestic market, Yes, you had mentioned that the commentary or... Is it getting deferred a bit or is it that the inquiry level then? Good evening.

So I think the previous caller also had the same question. Let me answer it. The inquiry book is a status of vague or general demand in the market. The order finalizations themselves would translate into market share and then order booking. The decline in the inquiry book in the domestic market means that certain demand is just left to the market. But again, like I'm saying, if you start tracking this on a quarter-to-quarter basis, I think that when you've done it internally, it gives us the wrong impression in terms of the priorities. I don't think it's a matter of concern if the market declines at 2%, 3%, 4%, 5%, because the entire market is – the entire inquiry book, as we reported at the end of last quarter, is so large that it is several times annual demand in the domestic market anyway. Let me ask Prasad to comment a little bit about this as well, and maybe you could bring in money, Prasad. Yes, sir.

Yes. So in a domestic market, yes, the inquiry pipeline, suddenly in previous quarter, we have seen a little slowdown on that. Even order finalizations, we experience a little longer gestation periods, when customers are not concluding the orders immediately like earlier quarters. But even in a domestic customer, just waiting and watching. But by considering now, whatever the opportunities which are open for finalization, we feel that it should bounce back. Mani, you want to add any specific points, please?

Yeah. Now, in our kind of a business for the product, the gestation period is anywhere between 6 to 12 months. Now, the orders which get finalized in this quarter are the ones for which the inquiries were received 6 months or 12 months earlier. Now, the trend what we are now talking is with respect to the inquiries which we have received in this quarter, there has been a softening, but this would... B, the order gets finalized much later. So what is more important is for the current few quarters is what the inquiries we have in hand and the inquiries which we are receiving is going to be getting finalized few quarters later. Now on the inquiry finalization, we do see a The numbers as well compared to last year, though the enquiry generation for this quarter, in the domestic market, there is a dip.

This is how I would conclude.

And my final question is with respect to the progress in growth in API carbine and also in the U.S. market with the status of providing after-sale service to customers and also causing the supply of products to the customers.

Mani, why don't you take that as well?

Yeah, in terms of API business, we see a lot of traction with a number of thermal power plants coming in India. We see a lot many things happening and also with the oil and gas, especially while there are opportunities which we are seeing, because of the ongoing geopolitical tensions, the decision making is getting deferred. Though there is a potential and it's only a matter of finalization which is getting delayed, I would say, we are also now looking at oil and gas opportunities beyond the Middle East market in America as well as in European countries. In this particular quarter, we have secured API business orders from Europe as well. This is on the API business. Now, with respect to the U.S. market, we see a lot more traction. Now, there is a huge scope for data centers, and the last few years they have been predominantly being powered by the gas turbines. Now, with the ongoing demand for gas... 4 years to 5 years. So we see the company is going towards the other mode like conventional route, combine cycles. Then we are also seeing small modular reactors. So there is a lot amount of traction. We see number of inquiries from the American market and it's only a matter of time these gets converted.

Yeah, thanks a lot. I'll come back in the video.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question comes in the line of Mohit Surana with Monarch Network Capital. Please go ahead.

Thank you for the opportunity. So my first question is with respect to the bought-out components. Out of the total cogs, can you give us an indication of how much would be the bought-out component and was there any price inflation in that which we were not able to pass through?

We have a fixed price contract, so this is not a question of asking through price escalation. Unless a customer delays orders, usually these price escalations have to be absorbed at the point in time in the contract itself. Usually we work on great contracts, but I'll ask Prasad, maybe you could comment on the quantum or Lalit if you're there, you could comment. Prasad, maybe you can start first and then you could bring Lalit in if necessary about the quantum or BOP. I would suggest you be a little vague rather than give an exact number, please. Yeah, yeah, yeah.

So, two ways I will address this thing. One is, as we mentioned, that these are all fixed contracts, because as far as the customer is concerned, it is fixed locked price. So, during the execution, if any commodity price increases there, that is a risk what we carry along with us. Suppose if the volatility is too much, then sometimes that hits. But in the beginning of, when we are picking up the orders, we also monitor this very carefully. So, in majority of the cases, that is a de-risk, appropriately costing some contingency sort of thing. Then order-to-order, part-out item percentages changes. The scope customer-to-customer, he changes. There is no standard scope between two contracts. So this is the variation is to a large extent, sometimes about percentages, maybe something like it's a 30-40%, sometimes maybe 60-70%. We cannot generalize that. Again, that also quarter-on-quarter, the way how delivery takes place based on the readiness, that mix also changes. Lalit, you want to add some points on that?

Yeah, so there's no fixed percentage with respect to the balance of part which is intercured. So it varies from order to order between 30 to 70 percent. Yeah, that's what you would like to mention.

Understood, sir. So my next question is with respect to the R&D initiatives that we have been taking in the past with respect to the new products, heat pumps, methane gas vapor recompression. Any traction on that that you can share with us right now?

Yes, Prasad, can you please comment on – both of these are areas which really do – Hello, everyone, and welcome to the call. Yes, sir. Yes.

So heat pumps, basically, as a company, we are not seeing a heat pump as a standalone product. We are looking for a solution. So basically combining heat pump along with MVRs. So, this gives a total solution to customers. Basically, customers, there is a low pressure, low quantity steam requirement. So, this combination can replace a small packaged boiler sort of a business opportunity there. So, as some of you are aware, so we created a demo unit for heat pump and some of the MVR orders which are under execution, that initial orders. So, we are confident this combination going to, okay, it is taking time and it will take time because this is a new technology and some of the customers want the experience of this combination giving the desired results in terms of efficiency, in terms of return on investment and all those things. This is the initial phase of not pushing the product, pushing the solution into that. It is taking time, otherwise. Yes, these things are going as per plan and we are confident this is going to bring a good value addition in near future into this thing. In the similar way, we continue to invest into new technologies and new solutions. So when it comes to new technology and new solutions like the ORC, so we are in touch with customers. Enquiry pipeline is increasing for this thing. And that's also as a ORC solution, the customer is looking for the power generation from low heat. So today, this is unaddressed market or largely under addressed market by majority of the players around. So that inquiry pipeline is increasing and this market is across the globe sort of thing, including America's. So, the other area where we are working very closely, combining the ORC with the geothermal combination sort of a thing, basically, as our technology innovation, what we are focusing is rather than a product as an overall solution, combining two products and finding a better efficient solution, cost-effective solution. That is really on track, and it's going to give a positive result in near future.

I think what we're talking about is a very important part.

We're a single product company, and as we add multiple products to our offering to one customer, that becomes more of a solution orientation. And we will do this incrementally without taking on sort of EPC responsibilities and the liabilities that come along with that. The point is to offer a better technical solution to our customers and ultimately give them a better payback for whatever they desire.

Understood, sir. So just one last question, if you may allow. With respect to the consolidated EBITDA margin, we were somewhere around 20-22% that has fallen significantly this quarter. As you explained, these are because of some specific reasons. But for H2, What kind of sustainable EBITDA margins going forward we can expect? Because, you know, now you have the visibility of the order that you have taken and building that you would also have the visibility of margins that you would make. So if you can just throw something at me. Bye.

I'm not going to be very specific on giving you a number, but I'll take you back to what we've always said as a company to our investors and on these calls, is that as a company, we believe that a PBT margin of over 20% is something that we can maintain in the medium and long term. And so, therefore, that is something that we would definitely sort of reinforce.

Understood, sir. Thank you so much.

Thank you. The next question comes from the line of Chirag Muchala with Centrum Roking. Please go ahead.

Thank you, sir. So, sir, first question is on the global data center opportunity that we had highlighted in the last quarter. So, in Q1, either for us or for other global steam turbine makers, has this opportunity started getting converted to actual order placement or is this still in advanced evaluation phase?

Mani, can I ask you to please answer this question?

Yeah, in terms of global data centers, as I mentioned earlier, I was personally there in the U.S. last couple of weeks. Now, we have visited several customers. Now, there is a huge demand. There is no question about it. There is a huge demand for data centers. Now, so far, as I mentioned earlier, they were using gas turbine to speed up the process so that the power can be generated as quickly as possible. Now, with the lead time for gas turbines going to four years, people are looking at other avenues to power the data centers. Now, we have had multiple enquiries. There is a growth in the enquiries with books from US. Same thing we also see in other parts where data centres are involved. Now, it's a matter of day switching from the gas turbine to a conventional cycle or a combined cycle. So, we are hoping it could translate in this year. We are hopeful.

Okay. Okay, sir. Second thing on the aftermarket service division. So in Q4 as well as in Q1, we have seen material rise in the order inflow. So if you can highlight if any specific areas like retrofitting or utility, power turbine orders, etc. for this aftermarket solutions is part of this last six months. 150, 170 crores, you know, and kind of 250. I'm not trying to get an exact number, but can after a market annual quarter, the info be moderately higher than what we were doing so far.

The attempt is to have multiple avenues of growth for the business. The aftermarket business is reliant on two streams. One is our own installed base and the growth of spares and service to that. The second is refurbishment, which actually has a much larger market based on the larger installed base of rotating equipment. Now, you've seen a very strong growth on the refurbishment side and exports. As we have invested in local capabilities, those take time to build up, and those are in certain areas such as gas, turbine, utility businesses, which provide long-term and high margin or good margin visibility for the company, not only for this current year but for coming years. Do you want to add on the outlook on this money for refurbishment?

Yeah. Now, on the aftermarket, as Mr. Nichols said, now we have had a good... Translation of orders across the sectors, whether it be in, across the region as well, be it in Southeast Asia or in Africa, there has been a good jump in the African market, and we also see some traction in

India on the report side, but on

the sector-wise, we have seen, on the gas turbine, The old utility turbines, we are now getting into the utility segment on the higher, moving to a higher value addition in the utility segment from the industrial segment. So those are the ones which are coming in. So that is why you are seeing the values going up.

Lastly, sir, you mentioned that some of the export orders have been different by one to two quarters due to logistics cost and free trades rising significantly. So, sir, just wanted one clarification here. Are these free trades and logistic costs, does it come under our preview or is it something that the clients bear?

No, it's on the clients. That's why it's their flexibility.

Okay. So all export orders of ours, the logistics and freight rates are won by clients? Okay.

It's FOB.

Okay. Okay, sir. Okay.

Thank you. The next question comes from the line of Amit Mahabhar with UBS. Please go ahead.

Hi, Nakeel. I have just quick two questions. First on the after-sales traction that we have started seeing, some very encouraging numbers.

If you can highlight in last two quarters when we've won some 6 billion orders.

Broadly, how much is that from North American region? And if you can give sub-color, and Prasad can add, on what kind of size can we attain in the next two to three years? That's my first question.

So, Amit, you know that we've had a limited presence in the U.S. market from a perspective of installed base. Our attempt to invest in a facility and capability in the U.S. was to first... To first see how we could leverage the very, very large install base that exists there from a republishment perspective and we set up capability. The fact is that the U.S. market itself, given its federal structure and on the repair maintenance work, requires individual certification and licensing in states. It is a time-consuming process. So it has not contributed in any meaningful manner to our order booking as far as what we've reported. The exact number is going to be less than 10% of the number that you would have suggested. So the growth that we are anticipating from the aftermarket side, as well as new product demand from the U.S. market, is high. It just takes a little bit more time. The U.S. market, in terms of finalization of orders, especially on the steam turbine side, for areas such as data centers, would take time. As you see, as Mani explained, also, the first priority would be to go for gas turbines, et cetera. As those deliveries have gotten delayed, some of the inquiries that have come up fit very adequately within our product line. Similarly, on the refurbishment side, as we get better registrations and we get more visibility with our customers in terms of our capabilities, that builds on itself. Why don't you add a little bit on this, Prasad, please? Yes, sir.

So basically now two, three areas where the aftermarket-wise is one of the strong growth engines for us. As Mani mentioned that utility area is one of the biggest area across the globe, where over the years we invested in our own technology development and we started working in these opportunities. That is the one thing. Other opportunities where today customers are asking us to support them on a gas turbine maintenance, repair, and overhauling sort of things. This is one more addition which is getting added into our refurb business. So as you know, as a refurb business, apart from steam turbines, we support rotating equipment. Some of the small compressors also, we do that. So these inquiry pipelines increasing across the globe. So going forward, as you are asking, next two, three years as a company, we are very bullish on this because we have all the required. The market reach is there. Now we expanded our presence across the rotating equipment, that is the steam turbines, that is industrial utility. Then we entered into gas turbine space to repair and maintenance or other things. Compressors in a small way, we are doing that. So this is an interesting area to watch for us. So I could not want to mention that way.

Got it, Prasad. So maybe then, you know, mostly SATC is what is driven the after sales. I can maybe conclude with what Nikhil also mentioned. Second and last question, Nikhil, is broadly in FY27-28, you know, how much of investment-led loss will be there in U.S.? And if Prasad can help us to understand by 27-28, is 28 the year where we can be very well utilized in the American facility? That's it. Thank you.

So, of course, utilization of the U.S. facility depends on the order booking, and while we're optimistic on growth on the order booking, both in the aftermarket and the product side, the product will only get executed possibly in FY28. So when we look at this current year, the utilization of the subsidiary will be adequate. It will obviously not be at a high utilization level, but we look at the entity breaking even for sure. As you would imagine, even in the first Q1, we've incurred a substantial loss in the U.S. subsidiary operations. But that was, again, as anticipated because the order book didn't exist. Prasad, do you want to add anything on the U.S. operations?

As you rightly mentioned that since the product side will be supporting from India, this is only from a refurb side, we are quite optimistic this year should be the break-even year by seeing the inquiries because now the market reach is increasing. We are also targeting to make this year as a break-even for US.

Thank you. Thank you, Nikita Prasad, and good luck.

Thank you.

Thank you. The next question comes from the line of Harish Subramaniam with Unify Capital Private Limited. Please go ahead.

Thank you for taking my question. The first question is just in terms of the U.S. market. Typically, we see a conversion timeline of inquiries over 6 to 12 months, but obviously, we've discussed in the past that water permitting takes more time in the U.S. So, what's the sense you have in terms of what the conversion of these inquiries would look like compared to our existing business? And as a clarification, our understanding was the steam turbines can be complementary to gas turbines in a combined cycle. Is that understanding right?

I'll start with your second question. Yes, that's correct. 50% of utility gas turbines that come up come up in a combined cycle format. 50% come up in a simple cycle format, either due to lack of availability of water or a variety of other constraints. But to answer your first question, can you repeat your first question again, please?

Yeah, the first question was that typically the inquiry conversion, as you were discussing on the call, take from the first 12 months.

Yes, yes, yes. For the U.S. market, Mani, can you answer that question in terms of the U.S. market in specific? How do you see the inquiry conversion? Is there anything that you can speak on a broad basis?

Okay. In terms of inquiry conversion in US, what we have observed is it is more than 12 months. Having said that, we are seeing a lot of traction in this quarter and the next quarter.

Okay.

Once those get materialized, we will announce in the coming quarter. But we see tractions on the product. So, the first thing in the U.S. would be the product would be the one which would get into the market. Then, as we have built the shops and everything, Reforb is the one where we are doing the qualifications, we are registering. So, that is something which would follow the product, order booking.

Okay, got it. That's very helpful.

And just a second question is, I know we've discussed this a bit in the call, but on the margins, right, if I back out about 40% of the 174 crore, 175 crore NDPC order, and if I look at the contribution that domestic makes compared to the past Q1s of FY25 or FY24, perhaps, right, it's been in the range of 46 to 49%. But we've still managed in the past to deliver an EBITDA margin of about 20%, and this quoted somewhere around 15%, right? So I'm just trying to understand, is this solely because of the bought-out mix being higher, or are there other elements that are affecting margins domestically? I'm just trying to understand how the margin did when the domestic level seemed similar to Q1 of previous years.

So about a year ago, you had commodity price increases. At that point in time, we had taken orders, as we do take orders, based on execution cycle. What ended up happening is that... So, there's been no reduction in BOP pricing. As you can see from our execution of certain orders, which were taken at lower margin, as you know, each order has different margins. Especially, there's a certain broad range of margins that you have on the domestic side, there's a certain broad range that you have on the export side as well. So if you look at both of those, I think, in general, Our pricing was lower for products that we're executing right now. As we look forward as part of our inquiry book, the order booking margins are substantially higher. The rupee is also benefiting us. So we will have a double whammy going down. Actually, if you look at even our comprehensive income as part of our reported results, you'll be able to see the difference between the net income and the other comprehensive income. And you'd have an indication as to where margins will go in the future.

Okay. So, essentially, Q1 last year, we took in orders at a certain margin, assuming certain commodity prices, and as we execute them now, the commodity prices have short up a bit. So, that's squeezing the margin at the moment. Is that interpretation right?

No, no, no. When we take an order, we take it at a fixed margin. It's taken at a fixed BOP cost. You know, there are certain things which are not fully finalized at the point in time of execution of an order, but broadly, we have an expectation of the margins going in. But those are the margins that were available at that point in time in negotiation with customers, and so that is what the market was offering at that point in time, given our competition. It is a competitive industry at the end of the day. So what we get is what our competitors get. They may have a different margin structure. We may have a different margin structure. But that is what is available. And like I said, each individual order is different. And they're taken for different reasons. Certain markets where we have a lower market share, we would price products differently. In certain markets where we have a higher market share and where we have greater customer acceptability, we would have different margins. And they vary quite drastically, both even in the domestic sector as well as export sector. But, okay, I don't know if that answers your question for me, but that's the way we view it. Excessive, because if you're taking the explanation that we have for this current Q1 and extrapolating it to future quarters, certain BOP orders can be at a higher margin also. It doesn't necessarily need to be only because of... Because of what you suggested.

Understood. Okay. Thank you.

Thank you. The next question comes from the line of Brolin Nandu with Aiden Weiss Public Alternatives. Please go ahead.

Oh, yeah. Thanks, Nikhil, for taking my question. So, the first question, Nikhil, is, you know, if you think about last two years, right, there has been one event or the other, which has, you know, in a way disrupted our usual business, so to say. This quarter, it was great. Last quarter or last year, you know, there was this domestic geopolitical issue, which led to customers not able to do the audit part of it, right? Great. So, and before that, if we think about the, you know, three, four years before that, there was a very smooth sailing, so to say. So, what are we doing, right? You do, you know, just to ensure that, you know, this volatility in the business, because this factor, which are geopolitical, which are not in our hand, seems to be occurring more often than not. So how do we ensure that the volatility in our business, assuming that geopolitics will remain where it is? The volatility comes down.

I think the only way to overcome that is by order booking. You know, when you have a large enough order book is the only way that you can smooth out any volatility that happens, both in terms of customer delays as well as in any other geopolitical situation. The fact that we are trying to expand our product range to be able to cater to a variety of different demand structures, it hopefully will lead us to building that order book, which allows us to have that comfort. I think that that's the only way to actually, as a company, to weather these geopolitical interruptions that are causing volatility in both our execution as well as order booking.

Yeah, thank you, Mitchell. And secondly, on the US, specifically the data center inquiry and the small modular reactor inquiry. Now, in the combined cycle, you know, where there is an opportunity for us. I think somebody on the call mentioned that you are expecting an inquiry to get converted into order sometime in this year. So, just want you to understand in terms of product approvals, are the approvals in place? And how is the competition, right, in the combined cycle? And also on small modular reactor, there also do we see some traction happening this year in terms of inquiry going down to order book?

So, firstly, competition in the combined cycle, of course, is competition. This is a competitive space, but there aren't many manufacturers. We only include inquiries in our inquiry book where we are qualified. Otherwise, the inquiry would not be given to us by a customer. So we're talking about orders where we are quoting and where we are engaging with customers. Now, Pasad, maybe you can just add a little bit onto the competitiveness as was alluded to and how we see the market developing in this current year, especially in the U.S. Yeah, yeah.

So U.S. two ways, what we are seeing is, one is, as it is mentioned, we are qualified by all the consultants and OEs and EPCs. That's the reason why they are giving the inquiries. Now, what we are seeing is, as Mani also mentioned, that now today gas turbine delivery cycles are quite long delivery cycles. So now they want the power. So what people are also doing is now starting the bottoming cycle. That means using a steam turbine, firing the gas in a gas pipe boilers and start generating the power. So this fraction is increasing. This is a space where we can play a bigger role. And competition-wise, across the globe, we compete with the same players across the globe. So we are competitive in the rest of the world. Obviously, we will be competitive in America. And over and above, the local presence with our workshop gives the confidence to the customers. So this is a narrative on which we are building and we are bringing the confidence to the customers. So the inquiry pipeline started building up. As Mani mentioned that we are quite optimistic and in some cases we are quite closer to the final commercial discussion sort of thing. So this year should be a little positive results we are expecting on the product sales side and followed by refurb and now overhaul opportunities.

And can you also touch upon the small modular re-anchors, where are we similarly in the journey?

So, we have to start, please.

Sir, these are the long gestation periods because this is the technology because we are working with some of those EPCs and developers sort of a thing. These are at the inquiry stage. So we are working very closely with them. It may take a little more time because this is from concept, the first of its kind. Now somebody has to come with a module in such a way that is the mobile module sort of a thing, the concept of what in US people are working. We are working with various developers very closely by finding the right consideration on that. It may take a little time compared to the combined cycle applications for data centers.

Thank you so much and all the way best.

Thank you.

The next question comes in the line of Subhi Gupta with Threenetra Asset Managers. Please go ahead.

Thank you so much for the opportunity. So, my first question is, you mentioned that the execution cycle is quite long for these large projects. So, if you could just tell me what is the execution cycle?

It depends on order to order and scope. It's very difficult to determine that, but in general, Smaller orders, less than 15 megawatts is maybe 7, 8 months. 15 to 45 megawatts is about 9 to 12 months. 30 to 45 megawatts is probably about 14, 15 months. It may be 18 months for 100 megawatts.

Okay, so answer, next question is, what is the conversion rate for us, pipeline to order book, or box?

That is not – it's not something that actually comes out. The pipeline to order booking is dependent on the market. The only way that we measure it is through market share, which we report on an annual basis.

Okay. Thank you.

Thank you. The next question comes from the line of Parikshan Kanpal with HDFC Securities. Please go ahead.

Yes, sir. Hi, sir. First question is on the CO2 base. So, I think earlier in the call, you said that there has been some validation in Europe. So, just wanted to understand how has been the response there in terms of round-trip efficiency versus the base. And do you think that similar kind of fixes can be replicated in India and whether it will turn into larger inquiries and ordering for you?

No, of course, the attempt is for us to validate technology so that it can drive more demand, and we would not have picked it if the round-trip efficiency and the lifecycle cost were not competitive enough. The indications of the plant and its performance in Europe is very good and something that's appreciated by the customer. Now, we have to prove it. Yeah, and that's...

So, do we have any exclusivity with energy, don't we, in terms of technology, or it's open for all? So, what level do we have by taking this pilot in India?

No, we have a very strong relationship with our technical partner. The nature of the relationship is something I'm not willing to discuss on the call. But the fact is that we're committed to the market to approach it jointly.

The second question around the up to 100 megawatts, I mean, now I think NTBC is talking about coming out with maybe smaller subcritical kind of packages up to 250 megawatts. Do you think there is such a possibility that does arise? So are we able to bid or bid to that megawattage level?

No, of course, we have the capability to manufacture to that level. Will we participate or not? I think it's something that we'll see. We'll see. Prasad, do you want to add anything on this point?

In this range, yes, I want to say that we are qualified for that, but just we have to wait and see because the request for quotations, those qualification guidelines were qualified for that. We have to wait and watch how these things will move further.

Just a lot of questions around this, so this validation will happen, maybe the completion happens in Q2 or the part of early part of Q3, so how much time the validation takes and when do we see more orders or more tenders coming in for this in the future?

I think the question is a little premature. This is also a first-of-a-kind project that we're doing. So when we can actually establish validation of technology is something that I think is a little premature for us to determine most of the timelines. And secondly, in terms of generation of demand, we have to wait and see what happens post-validation. But we are optimistic that this presents a market.

Okay. Sure, sir. Thank you.

Thank you very much. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the contents over to the management for their closing comments.

Thank you very much, ladies and gentlemen, for joining the call for Q1 FY27 for Triveni Turbine. I realize that maybe all questions could not be answered. Please do take it up with Shriya, and we'd be sure to get all the answers to all of you. Again, the quarter was a challenging quarter. We're very optimistic, again, as we have explained on the call about the full year performance, which will be back-ended again as it was last year. Quarter and quarter, there will be volatility. There continues to be geopolitical uncertainty, but we aim to power through that, given the diversified nature of our reach and our local presence in certain markets, which allows us to have, for our size of company and to have a good export exposure and to keep pushing our global market share, which is a key driver of what the company aims to achieve over the coming years. Thank you very much.

Thank you. On behalf of TriveniTurbine that can do this conference, thank you for joining us and you may now disconnect your lines. Thank you.