Om Power Transmission (NSE:OMPOWER) Q2 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to Om Power Transmission Limited Q2 and H1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to from PIL Advisors. Thank you, and over to you, sir. Thank you, Steve. Welcome, everyone. Good evening, and thanks for taking all the time to join us today in the q two and h one FY twenty seven earnings conference call of Om Power Transmission Limited.

0:51 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, mister Kalpesh Patel, chairman and executive director, mister Kanu Patel, managing director, mister Fanil Patel, chief operating officer, and mister Chetan Modi, chief financial officer. We will start with a brief overview on the business performance from mister Patel, followed by opening remarks on financial performance by mister Modi, and then open the floor for a q and 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.

1:48 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 Kulpe, sir. Over to you, sir. Good evening, and warm welcome to the quarter two h one FY twenty seven early performance call for Om Power Transmission Limited. I will cover the business environment, recent order wins, 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 FY 'twenty seven has been healthy.

2:35 The monsoon month are usually a slower period for site work in our industry, but our teams maintain the pace of education across product. And this is visible in our revenue booking during the period under review. Revenue from operation for the quarter stood at $1.28.29 CR, a growth of 56% over quarter FY 'twenty six, and for the first half stood at $2.49.93 crores, 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 the utility utilities investing in network standard in the operation of renewable capacity, we've been growing rapidly.

3:25 And the conversion of over a distribution network into underground cabling in urban and high density areas. On our last call, we have indicated that tender activity from ZEPCO was somewhat slow at the start of the financial year, and that we accept it to pick up as the year progress. 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 book. 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.

4:11 I am happy to report that these are materialized during the quarter. We received an 11,000,000 barrel cabling order from BGVCL for and two sixty six underground cabling order from Jetta. 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 UTVCL for Ambani. Both the UTVCL and UTVCL order are part of the much larger initiatives. The government of Gujarat is driving the Gujarat by a free city mission. Under with the over a power distribution network across the multiple corporations and multi municipality in the state is to be convert into an account cable network in a phased manner by 2030.

5:13 We signed 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 tenders from the Gujarat Discord 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 on 09/13/2002 thousand 26,205... $6.5.99 crores. More importantly, the momentum in order, this has accelerated after the quarter close.

5:59 In October alone, we have one order worth $2.73.21 crores. That include two two twenty kV transmission line order from Jetco, Pari Jetta packet two, and Choranya Saladra. The two twenty kV Kutra Sanghani AIS substation order from Jetco, and the UG missile Om Power underground cabling order I mentioned earlier. Adding the October lease to our September 13 order book, our order book today stands at approximately $83.09 crores. Before adjusting the education during October, which is around 1.9 times our FY twenty six revenue and considered by higher than where we closed the quarter.

6:48 This order book give us stronger strong revenue visibility for the remain remain remain for FY '27 and well into the start of FY '28. Our projects are typically executed over twelve to twenty four months. And with the current order book and the pipeline of tender under evolution, we are confident of delivering the growth we have aimed for FY 'twenty seven and sufficient long momentum. Avert of margin, EBITDA 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.

7:35 As we have said before, individual quarter can slow medium in either directions depending on which project are which state of education. I would also like to highlight Mercu Project Education. We have commissioned the 400 kV GIS substation at DOLEHA, which is one of our largest projects to date. And the associated 400 kV transmission line at Doleira, which involve five foundation and river crossing work are in the final stage of completion. The successful education of a 400 kV GI substation establish our credential at this market class for GLS project, and we accept it to become the foundation for more GI substation order in the future.

8:25 At the same time, we continue to work on moving further value chain. Jetco is planning for seven sixty five transmission network in Gujarat in a big way, and we intend to participate as those standards come up to building on our 400 kV experience. We are also strengthening our capability that is capability to take onboard complex projects, such as DIA substation, pipe foundation, and we were crossing transmission line in HVDC. Over the medium to long term, the complex project require specialized engineering and education skill, and we believe they will support both our growth and our margin profile as our mix move in the direction.

9:14 To sum up, we have had a strong first half. Our order improve has picked up sharply, and our order book is at a level that give us clear visibility. Our priority for the second half are timely education, continuous discipline on working capital, and preparing for the next set of higher value projects. With that, I owe over the to take your throw of the finance. Thanks. Thank you, Kaspesh. Good evening, everyone. Let me take you through the financial performance for the second quarter and first half of the FY 'twenty seven. Revenue from operations for Q2 FY 'twenty seven stood at INR 128.29 crores, a growth of the 56.4% over the INR 82 crores in Q2 FY 'twenty six. EBITDA for the quarter stood at INR 19.56 crores, a growth of 111.3% on year on year basis.

10:14 EBITDA margin was 15.25% compared to 11.29 in Q2 FY 'twenty six and twelve point one five percent in Q1 FY 'twenty seven. As the investor mentioned, margin for the quarter was elevated by the business segment and project mix in this particular quarter. Profit after tax for the quarter stood at CL13.85, growth of 116.7% year on year basis with a bad margin of 10.7% against the 7.7% in Q2 FY 'twenty six and eight point six percent in Q1 FY 'twenty seven. Earnings per share for the quarter was 4.04 compared to 2.54 in Q2 FY 'twenty six and on the expanded share capital after the IPO. H1 FY 'twenty seven performance for the first half, revenue from operations stood at 249.93 crores, a growth of the 46.3 over the INR170.88 crore in H1 FY 'twenty six. EBITDA was INR34.34 crore, up 61.4% at a margin of 13.74% compared to 12.45% in H1 FY 'twenty six. Offered after tax, INR 24.37 crores, up for by 65.3% with a profit margin with a after tax margin at 9.7% against 8.6%.

11:35 Honeyc per share for the half year was INR 7.24 against INR 5.92. Moving to the balance sheet. Net cost as of thirty eight September twenty six stood at 283.43 crore compared to INR 136.94 crore at March 26, reflecting the IPO proceeds and profit for the half year. Gross borrowing reduced to INR 24.06 crore from INR 47.67 crore at March 26 as we prepared the INR 25 crore of borrowing from IPO proceeds. Against this, we hold a cash bank balance and a liquid investment of 38.34 crores. So the company is in a net cash position. Debt to equity stands at 0.08 x compared to the point 35 x at the March 26 on an expanded equity base.

12:20 Working capital and cash flow front on working capital trade receivables stood at rupees 237.06 crore against the $2.21.42 crore at March 26, and increased about the seven percentage in the receivable on a half year revenue base that is at 46% higher than last year, thus indicating much better control over the cash flows. Trade tables reduced to 88.11 crore from $1.23.55 crore, coinciding with the deployment of IPO proceeds towards the working capital, availing the cash discounts and procurement wherever appropriate. As a result, net cash used in operating activities for the half year was $38.38.0.20 crores negative, which mainly reflects the 35.98 crores reduction of the daily payments.

13:07 Our collection title with the PSC customers remains on terms we described longer our last month. Of the net IPO proceeds, 119.32 crores, 108.56 crores had been utilized as on 09/30/2026, 35 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 rupees 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 is net cash disposition and the order book at this point gives a good visibility for the second half. With that, we open the floor for the questions. Thank you.

14:04 Thank you. Ladies and gentlemen, we will now begin with the question and answer session. You may press star and two. Participants are requested to use handset while asking a question. Participants are requested to ask your 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 Ronak Patchpai with WealthMind Advisory. Please go ahead.

14:59 Hello, sir. Am I audible? Yes. Hello. Please. Sir, my first question was any update on seven sixty five kV, GetGo, and HEDC project in terms of timeline? What kind of timeline are we expecting? Also, you had mentioned So any comment on that? So there is $1.65 value of amount. Minimum twenty four months to thirty six months. Okay, sir. Understood. Also, sir, quarter margin, approx 200 basis points increase when it's a mix of project. So can we understand, like, what the segment contributed to the higher margins? And can we expect the similar margin in in second half of the year?

15:56 Explain to you in our earlier call as well. We operate in the majorly four segments, transmission line, substation, underground cabling, and operation maintenance. In the transmission line is our needs and expertise. So in this particular h one and quarter two, 79% of the revenue mix comes from the transmission line vertical and the subscription vertical, it's 17%. So which are about the higher contribution margin segments. Hence, there is reflected in the improvement in the EBITDA margin and paid margins. Alongside that, we are also operating and under executed... Execution of the project, which is also specialized jobs. So that has also contributed the better markets. So can we expect, like, 14 to 15% margin range for the second half?

16:47 So on a yearly basis, our margin profile remains steady between around 12 to 13% at EBITDA level and cash margin between eight to 9%. So that will depend on the project mix at a... And business segment mix on a particular timeline. Okay, sir. Understood. Also, the similar line, I think our h one to h two split remains 35 to 65% roughly. And so far, in h one, we have done $2.50 crore. So can we expect the full year to close somewhere in the range of upwards of $7.20 to $7.30 crores since our guidance was 15 per... 50%, but we have maintained a higher historic run rate. We will maintain the 50% growth year on year. So overall, compared to last last year financials, we'll maintain a 50% growth.

17:40 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're not audible. Can you please repeat the question? Yeah. So in terms of being cash flow from operating positive, in terms of working capital, so, like, what is our target, and what are we going forward with? So 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 the trade payables only. Right? So, historically, if you see on... From the March 23, we had a receiver days of around a hundred hundred and one one seventy six days, which is being on the reducing basis from March 24. It was further reduced to one forty. Then March 25, it was further reduced to hundred and twenty days. So... And in March 26, it comes around around one eighty days. So depending on the project duration, which is ranges from the twelve months to twelve... Twenty four months, Our cash flow from operation will will be collected within the project duration cycle.

18:56 So, of course, the cash flow will now come in the positive way going forward. Okay, sir. Understood. That is it from my side. Thank you so much, and all the best to. Thank you. You. The next question comes from the line of with Prudent Equity. Please go ahead. Oh, yeah. Yeah. Hi, sir. Am I audible? Yes, sir. Yeah. So I I was going through the result and the first half revenue shown growth, but our disables are not not improving. They are now 45% of the total revenue. So why is that, and what is our collection plan?

19:48 Yeah. So, sir, let me give you the detailed rationale for this. So as I just mentioned, k, 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 was... Receivable days was $1.76 days. On March 24, it was hundred and forty days. At March 25, it was hundred and eighteen days. And then now looking at the March 26, it is hundred and eighteen days. So it is once... So depending on the the company's average project duration range from the twelve months to twenty four months. So give us that twenty four 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.

20:42 Oh, okay. Okay. Okay. Understood. And, sir, then September 26, we are at the advanced... We have majority of our projects are running in the last three to four days pattern, so that's why retention accumulation is there. So that's why receivables temporarily spike up, but it will normalize subsequently when we do closure... When we do the closure of the project. So what is Oh, okay, sir. Okay, sir. Understood. And, sir, our employee employee cost has been reducing. So why is that? So, sir, if you see, as I mentioned, we have core business verticals out of that. Operation maintenance is vertical segment is a operation manpower supply job. So if you see there is... Its contribution in terms of revenue has been reduced to 3% in this h one. So that employee benefit cost, which is pertaining to this particular has currently been reduced.

21:33 So hence, there is a... We are having maintaining the same margin. And so what what do we expect from OIM segment going forward? In terms of margin EBITDA, I mean, EBITDA level, OIM is a lesser contribution margin profile. So if we found so we will participate in the OMPOWER segment if we find that the margin profile is as per the company requirement. Oh, oh, okay, sir. Okay. Understood. And, sir, our our borrowing has reduced, the finance cost has been on the rise. So what what is the reason behind that? So finance cost also consist of the bank guarantee commission.

22:19 So in our case, whenever there is a increase in the... We are increasing our top line. There is increase in the top line. We have to... When we we are awarded with the tenders from the... Our customers like Getco, we are supposed to provide the ten ten percentage of performance bank guarantee of the contract value. So our... For that 10 percentage performance guarantee, we get the the bank guarantee issued from our bankers 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... That's why it's been reflecting in the... Also in the supporting the growth of the business only. Oh, okay. Okay. But what what kind of quarterly run rate in finance cost can we see over next two years?

23:06 Sorry? What what kind of quarterly run rate in finance cost can we expect? So so, of course, sir, there is there's been increment in our improvement in our rating from the. So we are expecting... So the company currently expect having the borrowing cost of between nine to 10%. So going forward, it will also improve. So it will around range from the... Around eight around 88%. 8%. Oh, okay. Oh, and and, sir, what is our current order of execution time line and then mid pipeline? The current execution timeline of the project is twenty to twenty four months as well, as earlier mentioned, because that would remain ideal for all the projects.

23:54 What was the other question? Or the order order bid bid pipeline. So as of March 26, we have outstanding unexecuted order order book of 621 crore, which we are expecting to complete by June 27. Yeah. But I'm asking, what is the bid pipeline? So 1600 is the beta pipeline. 1600. 161600. Correct. Oh, okay. Okay. Okay. Okay, sir. Thank you. Thank you so much. That was from my head. Thank you. The next question comes from the line of with Molecule Ventures. Please go ahead. Hello. Am I audible?

24:41 Yes, ma'am. Yes. Yes. Okay. New underlying... Underground cable and your orders have been received $2.20 for distribution network conversion. Margin, ma'am, PHP transmission line to compare it will be lowered or a higher side. Okay. And ROW right of way for this order Yep.

25:33 ROW is in utilities. So all the PSU tenders which you have received from Jetco, the ROW is in their scope. Okay. And for the Jetco orders of seven sixty five kV projects, are we independently sufficient and qualified enough? We'll have to do a JV for that. We would be individually be sufficient enough to qualify for the upcoming 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 crores.

26:20 Okay, sir. Thank you. Thank you. The next question comes from the line of Arjun with. Please go ahead. Good afternoon, sir. My only question is, what is your vision FY 2030? 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? So for FY... For FY 2030 vision, right, we just don't want to talk about numbers.

27:06 What we're talking about is at a much higher scale going up our building capabilities in 765 as earlier mentioned as well. So we are starting 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 FY '30. 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 you are targeting till FY 'thirty, FY 'thirty we're targeting around INR 2,500 crores. That's great. Amazing. And in the subscription 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. Subsequent in the upcoming years, we'll build our order book with GIS tenders, and that will result into a higher percentage of GIS revenue.

28:09 Okay. That's good. That's all from my side. Thank you so much. All the best. Thank you. Thank you. The The next question comes from the line of Akshay Dargy with Self Shine Industries. Please go ahead. Good afternoon, sir. I have a question on order pipeline. Like, you mentioned it's 1,600 per hour. So what is the expected timeline to convert into? About three three to four months. Three to four months. And my second question is on trade receivables.

28:59 It's around $2.37 per as mentioned. So out of this, like, how much is retention money and how much is the normal? Like, that 20% in retention. So $2.30 cents per own message. So retention money or normal pending receivables? So, sir, as I mentioned, the high spike spike of the receivable days is on account of the advanced execution of... Advanced execution stage of the overall project sites. So retention has been accumulated that. So that is contributing 45% of the total total receivables as of September 26. Okay. 45% total sales, 25% is.

29:45 Yes. Okay. That's So for this project, we are... Yes. I mean, you are in the link meeting. So for this project, as we are having the last billing pattern, last last, it took four 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 on the... It's a commercial property that we let it out on the rent. So as the company has to provide the bank guarantee bank guarantee to our customers for the execution of our achievement of our growth in the revenue.

30:39 So that's why we keep on investing our additional funds in this immutable properties so that we can get a better collateral availability with our bankers to over the boarding facilities. Okay. Okay. That's all. Thank you. Thank you. Thank you. The next question comes from the line of Ganeshwar, an individual investor. Please go ahead. Hello, sir. Am I audible? Yes.

31:24 So build pipeline seven sixty five Yes. We have started bidding for seven sixty five kV for power grid tenders as well. So there are substantial amount of seven sixty five kV tenders in our build pipeline. Okay. And second thing is that, tender continue what's going on? So in the near future, you will see the tenders from other states as well apart from Gujarat. There are few tenders which are already bidded in states like Delhi and Madhya Pradesh as well. So Okay. Considering the... Yeah.

32:18 Considering if we win the tenders, we'll recently find out the different state expansion as well. Okay. And the question is that,? No packages, package two or package three. Those orders package two complete December Okay. Thank you. The next question comes from the line of Arjun with Orevia Crest. I observed twenty twenty, 20% of the revenue was dropped. And in the last quarter, 40% of the revenue.

33:12 So back of the acquisition So is that your actual projection of the FY twenty seven revenues? Cash flow positive deleveraging plan so that our net profit margin would increase.

34:02 So, sir, if you see our debt to equity ratio, it is 0.08 x already as of September 26. So company has better leverage position as of now already. Okay. Okay. And our cost of debt is around how much? So it is... Currently, it is between nine to 10%. But now considering the improvement in the rating, which is triple b plus, we are expecting around 8% going forward. So that will also improve our overall borrowing cap... Borrowing capacity and and the borrowing cost as well. The next question comes from the line of with Healthline Industries. Please go ahead.

35:10 Sakshi, your line has been unmuted. Please go ahead with your question. Yeah. Hi. It's a follow-up question. Like, 23745% retention. The left over the one thirty per or, six months older amount. So, sir, if you see, 84% of the data are consisting of less than six 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...

35:58 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 Arun Vinay Kambe. Please go ahead. Sir, last question. 1,600 crores pipeline. As you mentioned, substantial orders are of $7.65 k b. Right. So it's order incrementality margins and till, say, FY 'thirteen.

36:49 Considering the new entry to seven sixty five kV segment as well for OPTLs, we are we are moving for the similar margin rate itself, which we have maintained till now. Like, 20 to 13% on a yearly basis? Yes.. So 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 already mentioned. And it depends usually on the project mix and the stage of the current project. Okay. But like you said, the majority of the revenue comes from the last quarter.

37:36 And revenue mix 15% So Q3 and Q4 ideally, we can vision towards 1314%. 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 means as well as the business segment. If we get a specialized job, so we may have the better margins as well. Okay. And on board basis, some of orders like, you have said in low margin business. So why are we into this segment?

38:39 Okay. That's all from my side. Thank you so much. Alright. Thank you. Thank you. As there are no further questions from the participants, with that, we conclude today's conference call. On behalf of Om Power Transmission Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.