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Sterling and Wilson Renewable Energy Ltd Q4 FY24 Earnings Conference Call Insights

Key highlights from Sterling and Wilson Renewable Energy Ltd (SWSOLAR) Q4 FY24 Earnings Concall

  • Order Book
    • Total order inflows of ~ INR 6,023 crores (~ 3.3 GW) in FY24, up 37% YoY.
    • Domestic orders at INR 4,854 crores, up ~10% YoY.
    • Won first international orders after 3 years in Spain and Italy.
    • Unexecuted order book at INR 8,084 crores, 85% domestic orders.
    • Bid pipeline reduced from 40 GW to 30 GW in focus markets.
    • 30 GW pipeline expected to be floated out this year without delay.
  • Outlook
    • Active order pipeline of 25 GW in India and 5 GW internationally for FY25.
    • Working on finalizing Nigeria MoU, expecting closure soon.
    • Expect FY25 order bookings to be higher than FY24.
    • O&M portfolio grew to 7.6 GW, expected to improve in coming quarters.
    • Order inflow guidance of around INR 8,000 crores for FY25.
    • Gross margins to be maintained at historic levels for domestic and international projects.
    • Interest cost expected between INR 30-35 crores on term debt of around INR 328 crores.
    • Overheads not expected to rise significantly from current financial year levels.
  • Delayed Orders
    • Around 3 GW worth of domestic orders pushed from Q4 FY24 to Q1 FY25.
    • Primarily repeat customers and PSU orders.
    • Expected closure by end April or early May 2023.
  • Order Book Conversion
    • Expect INR 6,000-7,000 crore revenue from current unexecuted order book of INR 8,084 crore.
    • For new orders of INR 8,000 crore guidance, expect 25-30% revenue conversion in FY25.
    • Excludes potential Reliance and Nigeria orders.
  • Commodity Price Impact
    • No major impact as current prices factored in bid pricing.
    • Orders placed immediately after winning, protecting from future price fluctuations.
    • No major recalibration expected for future bids.
  • O&M Business Growth
    • Portfolio at 7.6 GW currently, expected to grow significantly.
    • Large domestic EPC orders have compulsory 3-year O&M component.
    • 4 GW Khavda order to directly add to O&M portfolio.
    • Plans to enter wind O&M segment as well.
  • Manpower/Attrition
    • Has robust leadership pipeline and strong execution/engineering teams.
    • Well-placed mechanisms to supplement manpower for growth projections.
    • No concerns on attrition or personnel being hired away by competitors.
  • Growth Vision
    • Expects 15-20% CAGR revenue growth over next 3-4 years conservatively.
    • Guidance excludes potential upside from Reliance and Nigeria orders.
    • Will maintain asset-light, negative working capital model without equity dilution.
  • Battery Storage Business
    • Already has in-house capabilities to execute battery storage projects.
    • Has executed similar projects in Africa previously.
    • Expects battery storage market in India to grow significantly.
    • Well-positioned to address this market across technologies and geographies.
  • Hybrid Projects
    • Currently no specific number for hybrid projects in 30 GW pipeline.
    • Part of pipeline, but developers still finalizing wind/battery mix configurations.
    • Expects hybrid project portfolio to grow in coming years.
  • Wind EPC Business
    • Open to taking up wind EPC projects, but without land risk.
    • Will only bid for projects where land is provided by customer/developer.
    • Will evaluate PSU wind tenders based on competitiveness and risk profile.
  • Legal Cases/Receivables:
    • Around INR 900 crore receivables tied up in litigation cases.
    • Cases coming up for hearings in Q2, Q3, Q4 of current year.
    • Taken legal opinions, well-positioned favorably in these cases.
    • No provisions made currently based on expert legal views.
  • Nigeria Order
    • Delay not due to Nigerian currency (Naira) depreciation.
    • Contract tagged in USD, so no impact of Naira movement.
    • Delay due to bureaucratic changes after NTPC merged with Ministry of Power.
    • Contract negotiations with NTPC finalized recently.
    • Order expected to be finalized very soon, possibly by Q2.
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