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.