Key highlights of the 1QFY25 Result
Execution led growth
The company during the quarter has reported 83.8%/90.8%/98.8% YoY growth in Sales/EBIDTA/PAT to Rs 348.0 cr/Rs 132.1 cr/ Rs 66.1 cr respectively. The growth is led by execution of both CPP and IPP orders to the tune of 15 MW and 13 MW respectively during the quarter. IPP energy production jumped 29% YoY to 6.2 cr units. We expect ~32 cr units of power to be produced under IPP segment for FY25. The EBITDA margin during the quarter registered 590 bps/140 bps QoQ/YoY improvement to 38% due to subdued raw material prices and favourable revenue mix.
Very strong order book; Ambitious vision to execute 10 GW of power by 2030:
The current book of the company as of 7 th Aug 2024 stands at 2,327 MW comprising of 1,260 MW IPP and 1,067 MW CPP. The company, during first 5 months of FY25 has received, 1,117 MW comprising of 916 MW IPP and 201 MW of CPP orders. The CPP orders to be executed over next 12-15 months while new IPP orders to be full executed by FY27. At full capacity, IPP segment can generate Rs 700-800 cr additional revenue per annum in the longer time frame given long term PPAs. Within IPP, ~140 MW is wind while rest is solar. The management has set an ambitious target of executing cumulative 10,000 MW of power by 2030 v/s 445 MW executed till date.
Raising Rs 1,000 cr through QIP: The company is raising Rs 1,000 cr through QIP.
The floor price is set at Rs 983 and assuming 5% maximum discount, we have assumed issue price of Rs 934 per share (equity dilution of ~8.9%). The fund raise will help the company to keep its D/E ratio ~1x as the execution of IPP projects would need ~Rs 3,500-4,000 cr for capex over next 2-3 years based on current order backlog.
Valuation still attractive; Maintain buy rating- Target Rs 1,246/-
At the current price, the stock is trading at 47.2x/29.5x of its FY25E/FY26E earnings respectively. We maintain our buy rating on the stock with an upgraded price target of Rs 1,246/- thus providing an upside potential of 24.6%.
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