Categories Concall Highlights, Earnings, Energy

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.

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