Captains Speak     

Published: November 30, 2024
Updated: November 30, 2024

Techno Electric & Engineering Company

Rs 4 k cr power orders expected in FY25

Maintaining that Techno Electric Engineering Company’s order book is highly robust, PP Gupta, Managing Director, added that the company has various bids in the pipeline and is confident of additional orders for around Rs 1,500 crore in FY25. “This will take our total order tally in FY25 to around Rs 4,000 crore. This simply reflects post order execution for the current year. It will still have enough orders in hand to keep the growth momentum going.

The company has successfully raised capital or completed a QIP for Rs 1,250 crore in the first half of FY25,” he noted. Mr Gupta was speaking at a conference call organized to discuss the Q2FY25 performance of the company

Referring to the company’s working during the Q2FY25, Mr Gupta clarified that these results are not comparable on a quarter-onquarter basis due to the very nature of the business. The first half generally contributes 40% of the full year and the balance 60% is in H2. In this respect, it is short by around Rs 100 crore in H1. That is, Rs 100 crore sales less from 40% of Rs 2,500 crore, the target for this year. This is basically due to the delay in handing over of sites by various clients like Power Grid, IndiGrid, Apraava and Adani. But now, it has received 4 sites from Adani and Power Grid, and is confident to make it up in H2 as the company has a robust order book and clear visibility of additional opportunities in the T&D sector.

According to Mr Gupta, the average order value now is almost double digits in recent times. So though the total order value may seem high, the number of sites are more or less same. At the same time, the speed of executing these projects is becoming a norm or requirement of most customers. They want to make up for lost time in acquiring land parcels and handing these over to us for deployment of solutions. The most interesting recent experience in H1 is related to Sikar Power Grid where the site was handed over after a delay of almost 2 years. The company was asked to complete the project in 9 months, as against an execution time as per the contract of 19 months. It was successful in doing it and Power Grid acknowledges this achievement for the first time in the country of a project of this scale and size being deployed in such a coordinated and integrated manner.

CHENNAI PROJECT

Techno has a proven record and is competent to do faster execution. So speed is going to be the way of deploying these solutions in future. The company has now been deploying a 40-megawatt data centre at Chennai. Phase 1 of this data centre is nearing completion, and the asset is still in implementation stage. It has not achieved the revenueaccretive phase but is definitely extremely value-accretive. There is good interest from foreign entities to be part of this project.

In the consolidated results, it has knocked off the financials of the SPV of the data centre. So that is the difference between the standalone and consolidated results. This won’t be a requirement once it becomes revenue-accretive. In brief, in the first half of financial year 2025, revenue has been around Rs 914 crore, and EBITDA is about Rs 126.13 crore.

Pointing out that the company has successfully collected all the outstanding as per its books from TANGEDCO, Mr Gupta added that that’s a major achievement in this H1. PAT for the quarter is Rs 90 crore, about 27% up year-on-year and EPS is Rs 7.88, up by about 19% year-on-year. According to him, the current investment and cash is at around Rs 2,600 crore, which is about Rs 2.25 per share. It has an extremely robust order book of around Rs 9,725 crore as of September 2024. It has further booked business worth Rs 642 crore in Q2 and another business of around Rs 1,100 crore post-September till date. Thus, it has a current order book of around Rs 10,800 crore, plus unexecuted. It is L1 in another Rs 622 crore order.

GROWTH OUTLOOK

As regards the outlook of the company going ahead, Mr Gupta said the company has been able to tide over most difficulties as witnessed after the close of financial years 2022 and 2023. It saw growth momentum in 2023 and 2024, and it sees the same continuing for the next 3 years. The company expects larger business out of transmission, basically high-end power solution deployment, data centre, hyperscale and edge data centre or distributed data centre, the AMI segment and also somewhat on digitalization solutions in the power distribution space under the RDSS scheme while its muted in the AMI scheme.

After witnessing negligible or nil growth on energy demand for the last 8 years, last year it experienced growth in energy by almost touching double digits. The present peak growth demand is about 240 gigawatts or more, and this is likely to be 400 gigawatts by 2030, thereby employing a per capita consumption of no less than 1,700 units by 2030 as against 1,200 units today. To meet this demand, the government is concerned, and power plant capacity is planned to be enhanced by 80 gigawatts in the conventional power space by deploying ultra supercritical power stations along with renewable energy deployment to the extent of 500 gigawatt by 2030. All these mean that the sector is transforming technologically and also deploying high-end power generation and power transmission solutions, and all solutions like supercritical power plant, 765 kV grid AIS, GIS transmission solutions of gigawatt scale, STATCOM solution, VSC, HVDC solution, and solutions backed by BESS or DSO facilities where the company has a larger presence than any other entity in the marketplace.

The company is usually focused on areas like transmission solutions, particularly high-end EHV solutions, including STATCOMs and VSC, HVDC solutions. It is also present in the hyperscaled/edge data centres. It is present in FGD. It is doing big smart metering implementation for 2.5 million meters.

In the transmission segment, around 50 to 100 gigawatt of bidding is happening and almost 4 to 5 concessions are being finalized every month and awarded to Power Grid or to private players. This means almost around Rs 40,000 crore of business, out of which it will be expecting business worth Rs 2,500 crore per year over the next 3 to 4 years.

SMART METERS

It has currently orders worth Rs 6,500 crore in this space, and it is L1 in another Rs 650 crore segment for which Power Grid has already won the concession. So this will materialize in this quarter. Its projects won in TBCB at Gogamukh and Bokajan with a total revenue visibility of Rs 2,800 crore over the concession period are under execution, and it is confident to achieve it ahead of schedule. In the smart metering space, it expects business worth about Rs 1,000 crore per year, at a deployment of about 1 million meters per year. It has orders for about 2.5 million meters worth Rs 2,500 crore.

Referring to data centres, Mr. Gupta revealed that in data centres it has already started construction in Chennai, which is in a very advanced stage, and has started commissioning activities on the ground. It is hopeful that in another couple of months, the data centre would be ready for RFS for service. Apart from that, on the hyperscale data centre side, it has been allotted land in Kolkata by West Bengal through West Bengal HIDCO. It’s a 4-acre land parcel in a prime location named Bengal Silicon Valley. It should be coming up with the data centre from the next year onwards. It hopes to begin the construction activity somewhere around mid-next year or towards the second half of next year and possibly complete the construction by mid-2027. This would be roughly a 15-18 megawatt data centre. Apart from that, it is executing edge data centres in strategic partnership with RailTel, a Navratna PSU. It has already started construction of the first location at Gurgaon, in sector 44. It is expecting the handing over of a second location from RailTel in Mumbai, right across the well-known St. Regis hotel at Mahalaxmi.

As for the size of these locations, the one in Gurgaon is a smaller project totalling 200 kilowatts. And this would be expanded to 1.5-2 megawatts over time. The one in Mahalaxmi is starting at a capacity of 560 kilowatts with 56 racks and should see expansion of 1.5-2 megawatts over a period of time.

It has seen good traction of customers for edge data centres. In Gurgaon, it is close to finalizing a few customers, accommodating them within these 20 racks. It is seeing interest from hyperscales as well to lease out these edge data centres in select cities and is working closely with a couple of such hyperscales to deliver to their requirements. So all in all, it looks like an exciting, promising time and space for this industry.