Waaree Renewable Technologies Ltd Q4 FY24 Earnings Conference Call Insights

Key highlights from Waaree Renewable Technologies Ltd (534618) Q4 FY24 Earnings Concall

• Renewable Energy Growth
  • Government initiatives like incentives, subsidies promoting renewable energy adoption.
  • Renewable energy capacity addition of 18.48 GW in FY2023-24, 21% increase from previous year.
  • Utility-scale renewable energy tenders exceeded 50 GW target, reaching 69 GW in FY24.
  • Energy storage capacity target of 12 GW by FY24, 70 GW by FY30.
• Solar Energy Dominance
  • India’s installed renewable energy capacity at 143.64 GW as of March 31, 2024.
  • Need to add 310 GW in next 6 years, averaging 50 GW annually.
  • Solar installations accounted for 16 GW of total renewable energy capacity addition in FY2023-24.
  • Total installed solar capacity around 82 GW, leading India’s renewable energy landscape.
• Company Performance
  • Unexecuted order book of 2.3 GW peak, successfully executed over 700 MW plus in FY24.
  • Revenue from O&M at INR10.42 crores in FY24.
  • Secured significant orders totaling 1.8 GW peak for ground-mounted solar projects.
  • Strong financial performance with revenue growth of 149%, EBITDA growth of 147%, PAT growth of 167% in FY24.
  • Earlier missed invoicing around 100 MW, impacting Q4 revenues to some extent.
  • O&M portfolio reduced by 400 MW as some contracts ended.
  • New 900-1000 MW O&M orders to start after completing EPC portion.
• Execution Capacity
  • Company has enough capacity to execute over 2.3 GW order book and take on additional orders.
  • EPC is a platform business where resources can be scaled based on order intake.
  • For orders over 500 MW, execution typically takes 9-18 months depending on complexity.
  • Smaller orders under 100 MW can be executed faster.
• Order Book Breakdown
  • Unexecuted order book of 2.3 GW with average realization of INR1.2-1.3 cr/MW.
  • Turnkey projects realize INR3.25-3.5 cr/MW, balance of system projects INR0.8-1.5 cr/MW.
  • Current order book has 15% volume from PSUs but 35% value share.
• Order Pipeline
  • L&T currently has 13 GW pipeline visibility, up from 10 GW in previous quarter.
  • Typical conversion rate from pipeline to orders is 25-30%.
  • Pipeline includes utility-scale IPPs, order pipeline doesn’t include PSU orders yet.
  • Company is open to target both IPPs and PSUs going forward.
• Order Inflows
  • In last quarter, received biggest order of 450 MW from NTPC.
  • Market has seen 16 GW of tender/order inflows in just last quarter.
  • Strong renewable energy tender pipeline supports robust growth outlook.
• FY25 Execution Plan
  • Plan to execute 1.8-2 GW in FY25, doubling over previous year’s execution.
  • Revenue guidance depends on execution against order book.
• New Opportunities
  • Solar rooftop projects (<5 MW) emerging as significant opportunity.
  • Storage expected to be big with 47 GW pipeline from round-the-clock tenders.
  • Green hydrogen/ammonia – 5 MMTPA target presents renewables integration scope.
  • 5 GW solar parks allocated for green hydrogen production.
• Raw Material Procurement
  • As an EPC player, company is not significantly impacted by raw material costs.
  • For turnkey projects with modules, procures from manufacturers at arm’s length.
  • For balance of system projects without modules, no major raw material dependency.
• Margins and Manpower
  • Expects sustainable double-digit margins around 15% level.
  • Higher volumes can provide some upside to margins.
  • Will hire more engineers/designers and ground manpower as per project needs.
  • Manpower costs expected to remain stable as a percentage of revenues.
• Green Hydrogen
  • Had a pilot project with PSU but no major updates yet.
  • As opportunities arise, company aims to deliver EPC component for green hydrogen projects.
  • Aligns with group’s existing presence in hydrogen business.
• Execution Shortfall
  • Executed 704 MW against internal target of 900-950 MW for FY24.
  • EPC is a long-haul business with project preparatory work.
  • Shortfall doesn’t imply non-performance by the company.
• EBITDA Margins
  • Maintains double-digit sustainable EBITDA margins of around 15%.
  • Higher than single-digit margins of some competitors in EPC business.
  • Did not disclose reasons for superior margin profile over peers.
• Receivables and Order Book Mix
  • Receivables were around 40% of FY24 revenues, including retention money component.
  • Working capital cycle involves initial advances, progressive milestones, and 5-10% retention for 6-12 months.
  • Around 70% of current 2.3 GW order book is without modules.
  • Plan to execute entire 2.3 GW order book in-house.
  • 30% of orders also include supply of modules.
  • No intentions to subcontract any part of the order book.