Schneider Electric Infrastructure Limited Q3 FY22 Earnings Conference Call Insights

Key highlights from Schneider Electric Infrastructure Limited (SCHNEIDER) Q3 FY22 Earnings Concall

Management Update:

• Actual sales for 3Q22 was about INR600.5 crores, the highest ever sales in a single quarter for the company.

Q&A Highlights:

• Anuj Jain from Globe Capital asked about the opportunity in the data center segment and how it is shaping up. Sanjay Sudhakaran MD replied that it is shaping up pretty decently. The company has had two substantial wins in the space. Due to confidentiality, agreement details cannot be disclosed. SCHNEIDER is making good steps towards scale development in this space.

• Chaitanya from Silverlight Capital enquired about the basic turnover, and breakup on the hardware and software side. Sanjay Sudhakaran MD answered that the company is not tracking the hardware and software differently. Revenue is divided into four segments like transactional 14%, service 12%, projects 8% and rest systems.

• Chaitanya of Silverlight Capital asked about the competitive advantage against the companies like ABB Power. Sanjay Sudhakaran MD answered that the company has competitive advantages like the immense portfolio on the product side, services side, software side and the skills acquired and the relationships with the customers.

• Chaitanya from Silverlight Capital also asked about the revenue mix in terms of government versus private. Mayank Holani, CFO answered that in terms of utilities, the business is close to 40%, 45%. The company generally work more with the EPCs or contractors, therefore exactly how much is with government or private is difficult to tell.

• Nalin Shah with NVS Group asked if stability of the Q3 kind of a performance will persist for the next few quarters. Sanjay Sudhakaran MD replied that the Q3 performance has an impact of the pent-up demand in the economy as well and the inventory buildup and the second wave. So there is a little bit of normalization to expect.

• Jeetu Panjabi from EM Capital Advisors asked about the goals that the management team has set based on what the Board has given directions. Sanjay Sudhakaran MD replied that profitability and turning around the situation on cash, those are the top most priorities.

• Nikhil Desai from Karma Capital asked if the company would look at double digit kind of EBITDA margins minimum in a few year’s time in a normalized situation. Mayank Holani, CFO replied that the company should be looking at that, but it will take time, it won’t happen overnight. It’s a gradual process.

• Nikhil Desai from Karma Capital also asked about a CAGR kind of growth over the next five years. Sanjay Sudhakaran MD replied that overall for the next three years, looking at the CAGR for the three segments, should be upward of around 8-9%.

• Manish Goyal from Enam Holdings queried about the order pipeline build up. Mayank Holani, CFO said the orders have been picking up in spite of all the challenges and COVID second wave and now third wave. Now, probably people are more used to working in this situation and more used to remote working. So orders growth has been positive even in this quarter.

• Manish Goyal from Enam Holdings asked about the order backlog. Mayank Holani, CFO replied that in terms of backlog, the company is at INR7023 million, up 12% YoY.