Regarding the order inflow, sir, earlier, as far as I remember, we were targeting around INR3,500 crores order inflow for this year. And now I think in the opening remarks, you had mentioned like we will be getting INR3,000 crores. So are you people witnessing any kind of weakness in the order inflows in the industry?
Not at all. Question is we have sufficient business in hand. Want to have more juicy business INR3,000 crores or INR3,500 crores is hardly a -- it's only a number at the end of the day. Maybe we end up more than INR3,500 crores also. But just as a conservative approach we have, we only guided you INR3,000 crores to INR3,500 crores, you may take it, but maybe it's close to INR4,000 crores. The more issue is the execution today in the given challenges of supply chain, the climate change, readiness of the grounds to deploy facilities. Enabling challenges are more than the capability to deploy them.
And when our work will be many more multifold than how we arrange the fund?
Look, we'll explore at that time whether we leverage it by borrowing or maybe monetizing the commissioned assets. Some of them, we have not applied mind because at the moment, focus is 2.5 million meters job in hand to be completed by September '26.
So now we have seen some record-breaking numbers being announced by the big companies in the U.S. to set up data center, for example, in Andhra Pradesh. So is there an opportunity for us to be a preferred sort of EPC player as they build out these data centers? Or do we see that initially when they build it out, they will bring their existing partners in other geographies? How do we assess this sort of an opportunity?
Yes. You see -- let me put it this way that any company announcing an investment of close to $15 billion in a single location is almost like developing a city in itself. And everyone who has been part of the industry, whether as an EPC or an equipment manufacturer or a developer themselves, the rewards of such an investment percolate to each and every person sitting in the industry. But I would look at it from a much larger perspective that this is the first investment that has been announced of this scale and may not be the largest globally as well. But for India, it's quite significant. But what it does is it's opened floodgates to many such more announcements to come because we have catched the attention of the globe. So today, it is Google and tomorrow, it will be OpenAI. And going forward, it will be many others. And somewhere or the other, the company stands to benefit from this kind of capital getting deployed in the industry.
My first question is on the transmission pipeline. Is it fair to expect that the H2 and beyond H2 '27, the opportunity size remains sizable because the bidding for F '24 and F '25 for transmission were too high and most of the projects haven't seen the tending as of now. Is it a fair assumption?
I will say mixed. It is picking up. Yes, because of Pakistan war or other priorities of the government in between things were a bit astray, but it is back on track now. Every week, one or other concession is being settled or fixed. So, I see things are being on track now. And the government will be able to meet its obligations for the year before...
On the working capital side. In the consolidated cash flow statement, there is one line item, other assets that is basically reducing our cash flow from operating activities significantly. So I just want the outlook on a full year basis, like how our cash flow from operating activities are likely to be at the end of March '26, sir?
It will be at the same level. Some will get billed out, some will -- new one will come in, but the number will remain more or less same.
On FY '27, when we say we will be excluding data center business guidance from the total EPS guidance of INR75, is it that in FY '27, maybe the first year of its operation. Are we expecting a negative PAT or negative bottom line from the data center operation?
We have not yet worked out here that kind of details, but I don't want to be speculative in this conversation. We'll talk about it when we are closer to the situation in around Q4 discussions of the current year.
We have guided for INR50 EPS for this year and INR75 for next year. But if I look at the continuing operation, consolidated EPS for first half, it is around INR18.48. So what is giving you the confidence that this figure of INR18.48 will be INR50 by the end of this financial year?
You see our previous years' track record. As I said, quarter-on-quarter is not equitably distributed, number one. Number two, first two quarters are generally not more than 40% at which you can see our INR50 guidance, we are already exceeding INR20 plus EPS already in first two quarters. And if you see last year also, we are confident to achieve INR50 plus as the EPS for the current year.
When you are giving the guidance of EPS of INR50, so are you speaking about the stand-alone numbers, sir?
Yes. More or less standalone or consolidated, they are nearly same with 0.5%, 0.5% here and there.
Here are two things. One is the continuing operation, second is the discontinuing operations. So are we including the discontinuing operations as well while giving the projections?
You see, that is obligatory to include, number one as a disclosure, but we are confident to achieve INR50 of an ongoing operation. You take it that way.
In the ongoing operations, if I look at the consolidated financial numbers that you released for first half, we have done INR18.48 EPS?
Yes, you can take that INR18.5 and it will be INR50 by the year-end.
On the tax part, sir, I'm not able to understand the fluctuations in the tax rate. So can you put some color like spend some minutes maybe the CFO in explaining like how the taxation is working for Techno Electric, sir?
Taxation is very normal. As per the rules, I had -- last time also, I guided you take on an average in our case, tax applicability at 20%.
20% will be the tax rate for this year. That's what you are doing?
Applicable on our pretax income, which includes other income also. What gets exempted is our dividend income. Dividend we earn as other income and dividend payout, both stands exempted. So on the actual bottom line, you pay a tax at 25%. And then a bit of adjustment on depreciation as applicable.
Execution, so you are doing very good. The thing is only the margins. So what is your guidance for H2 margin, sir?
We have always maintained 13% to 14% on an average and maybe a little more depending on the mix of the job. So you can work on a guidance of about 14%, 13.5% to 14%.
On the data center part, Mumbai data center is further getting delayed. Like earlier, we were speaking about December. Now we are speaking about the end of financial year. And secondly, from Chennai data center also, the revenue is getting delayed as far as I am understanding. So how do people look at it like still we are maintaining the EPS target for FY '27 or that will further maybe revise downwards?
So Bombay data center, as far as the schedule is concerned, we are still targeting it to be completed by financial year-end. We were earlier targeting it to be completed by December end, but because of delay in handover of land for a particular facility, the target has shifted. And regarding the revenue is concerned, we are pretty much on target as far as Chennai is concerned. And we are confident that we'll possibly be able to deliver better than what is visible in the industry across. And anyways, those revenues don't have an impact on the EPS of FY '27 because we've maintained that whatever EPS that we've spoken about till date is without consolidating the data center numbers.
Although sir has mentioned, he has clarified like INR18 consolidated from continuing operation will get near to INR50. But when you say we will be consolidating data center operations, so are we currently consolidating any cost related to data center in our consolidated financial results, sir?
Yes. In consolidation we have to do, but there is no financial impact considered what we are projecting to the market. INR50 is purely out of the conventional business, ongoing business as EPS. This year, we are not factoring any EPS contribution from data center. It is only value-accretive business for us as far as the current year is concerned. But next year, some EPS may happen out of it, which we have yet not accounted.
How is the smart meter business going on? Whatever investment in funding is required, how we arrange the funds in future?
You see, we are -- as you know, we are generally debt averse company. Presently, we are all funding it with our own resources, which we raised through the QIP. And we trust we'll be able to meet obligation of 2.5 million meters of the ongoing job out of our internal resources.
In data center, how much investment we did in Chennai?
Yes. The investment made in Chennai is approximately INR450 crores to INR470 crores.
And what is the expectation for financial year '27 top line?
It will contribute anywhere around INR125 crores.
And what is the bottom line here?
I would take it at approximately 55% to 60%.
I think our order book has stayed constant at around INR10,000 crores for many quarters now. So one way to look at it, is that we are proactively only not taking much orders because there is a limit to how we can execute these orders. And the other thing could be that there is some slowdown in terms of ordering because we are seeing government not prioritizing infra, power and all these areas. So if you can throw some more light.
Sir, look, these are all the perceptions and realities are very different. Look, sir, the issue is basically deployment. Somebody wins a concession, he has to deploy assets. He has to acquire rights of way and land parcels. And that is not easy in India given the realities on the ground. And that is what I was sharing with you. Now booking order, you can have -- you are a preferred supplier or vendor to Power Grid, Adani, Sterlite, IndiGrid or anybody as far as station is concerned. The question is you can pile up any amount of number as an order. What I am talking to you is an executable business. And that is more than sufficient for next two years for us at the moment. So we want to discuss business with you which is executable, something business as an order and still not visibility of execution is merely a number. That has no value to you and me as a company.
So on that, sir, basically, let's say, in the second half of next financial year, we would have made another INR7,500 crore revenues from the current order book. So I think that -- so basically, the way I'm understanding is that if we have to grow 15%, 20% FY '28 onwards, we can always get more orders. Right now, we are not taking as much because we can't execute if we take more.
Dear, I think you have not studied our three-year track record. This one quarter performance of this company is equivalent to whole year performance of '23. Please look in that. We mentioned in our presentation in last three years, we have grown 4x. So it means what we do in 1 quarter now, three years back, we were doing in whole year. So we are growing by no less than 40%, 50% a year, year-on-year, year-on-year. So kindly don't classify generally and generically. That is not good for us. So -- and we are a man-based industry, not something which is a machine-based industry like structure or like any other manufacturing transformer reactors, I can create capacity and harness it. We have to execute by the very manpower we deploy at different pockets of India. So you don't have an unlimited capacity. You need a lot of discipline, integrity, a lot of processes and controls behind it. So it is -- it has its own ecosystem behind it. And we will continue to grow at 40% per annum at least for next two years, visibly. Then we have to get into a consolidation phase also to sustain that momentum.
In one of the previous calls, you had mentioned that when it comes to renewable, the transmission requirement is almost 4x of that of thermal. So given that, sir, do you see that as an industry, we have enough supply side scale to match up to the kind of requirement that would be required here? And at Techno, sir, how are we sort of increasing our own capability to be able to cater to that massive transmission side demand?
You see, by now, it should be very clear to you what Techno Electric is good at and what it stands for. We are a zero manufacturing company. We only deploy facilities. So definitely, we work in partnership with the supply chain people. They are definitely at the moment also stretched and they are booked heavily at the moment because of this very deployment of renewable power capacity, which is going at a rate of no less than 50 gigawatt a year now in the country. So -- but simultaneously, more capacity is also being planned and added by the very manufacturers. So at the moment, if you ask me, supply chain is definitely a bit constrained in some products. But Techno having a presence in this sector for the last four decades and relationship with all the suppliers gets us a kind of edge over many other new players.
My question was more on the tending activity, sir, tending from the power grid, tending from the private IPPs. Are you seeing those opportunities multiplying?
Absolutely. Absolutely. Absolutely, sir. They are...
Those guys are already shipping a large order book, right, be it Adani, be it the Power Grid, both have very large project pipelines. So do you think that those pipelines will get awarded and there will be higher opportunity for us as we enter the H2 and F '27?
Yes, yes. Mohit, you are perfectly right. We are in discussions with them. And we are already L1 in many tenders with Power Grid, but they generally don't announce it these days till they have fixed their own issues with, I would say, with big coordinators or they have acquired the SPV by then. So we are working in close coordination with Adani, Sterlite as well as Power Grid who are larger stakeholders in this sector and who are good at delivering projects.
On the smart meter side, of course, the -- no bid has happened in last couple of years. But I think the Tamil Nadu, there's a bid which is likely to open. Then there is a bid in Delhi, which is likely to open, right? And there's a Punjab. So are we looking at those bids or these are not -- we are not comfortable with these geographies?
Look, at the moment, the kind of aggressiveness we are seeing with the other bidders, we are definitely not comfortable at the rates quoted by others. Definitely, Punjab and Tamil Nadu are not the preferred location for political reasons. And Tamil Nadu is anyway going for the election now, shortly. So I don't think this will happen so soon. Punjab, it may happen, I am not sure. But at the moment, our focus is lifted to 2.5 million meters completion and seeing satisfactory in operation.
On the data center, on Chennai data center, sir, have you started leasing out renting out? Have you started booking or booking the rental income now? Or do you think it will start from after this fiscal year?
We start booking our first revenue from Chennai data center from the month of November onwards.
Have you leased out the entire thing or still some part is pending?
No, we have leased out about, you can say, close to about 0.5 megawatt. And today, we are yet to lease out the remaining capacity. Having said that, we are in discussion with a couple of -- we have a couple of discussions ongoing, which are seeming promising to lease out larger capacity.
Is it fair to expect that the entire capacity will get tied up in the next 6 months?
Yes, you can say that.
I had one clarification on the other income line item. Is it largely driven by interest income, subsidies, treasury gains or any one-off item? And going forward, should we assume this run rate to be stable? Or is it likely to fluctuate?
No, we showed you in the beginning of the year, the income will be like of the last year. It will be plus/minus INR150 crores. It is like a treasury income to us. Also, it's a form of dividends and short-term capital gains and somewhat out of the interest income from the bonds, money parked in bonds, at least AA plus or AAA credit. So it will be around INR150 crores.
My question is regarding the data center unit economics. If you could give details about the interest and depreciation, which we will see and how are you planning to fund the capex?
So currently, we are funding the capex for data center through internal accruals. And for some time, more, we will continue to fund it through internal accrual and that would be the plan for at least the next year or 2. And regarding the unit economics, as we've spoken about it earlier in our con calls as well that we can expect a top line of close to around INR8 crores per megawatt and a margin of around 75%-odd.
Depreciation -- it will be depreciable over 10 years period, if I'm not wrong, as you mentioned in the last call?
Yes, it will be depreciable over -- I think it will on an average come to 15 years.
This EBITDA margin is including the power cost or it will be -- the power cost will be a pass-through, so we don't have any effect on our margins?
Power cost will be a pass-through in most cases. And in case it is not a pass-through, then obviously, it will have an impact on the margin because it will add to the top line and expense on an absolute basis.
Regarding the Chennai data center that we are planning it to commission in phases. So like you mentioned in the last call or maybe last to last that you are planning 6 months -- in every 6 months, you're planning 6-megawatt installations. So are we still planning that? And how -- what kind of capex are we looking for next 2 years?
I think in terms of Chennai, we will start our Phase 2 in the calendar year '26. And on every phase, we can expect an investment of close to around INR225 crores to INR250 crores going forward on total. It may not be the annual capex, but the total capex for each phase will be around INR225 crores to INR250 crores.
My second question is regarding the other financial assets which we have currently. So what is the -- what comprises of other financial assets like it has increased so much in this quarter. So if you can give a light on that?
No, they are generally -- you have to create a category called AHI1 and those are largely the unbilled assets belonging to your smart meters because the concession is of a long-term 10-year nature. It can also comprise of certain work in progress of the ongoing projects. But it has not gone up. It remains at around INR1,000 crores, INR1,100 crores as it was in the first quarter or year closing also. So, it is more or less same. It will remain in that range only.
My last question is regarding our plan to fund $1 billion in data center. So how are we planning the debt equity mix in the longer time frame?
You can take -- so obviously, at some point of time, we will look at an equity partner and hopefully a strategic partner. But having come so ahead in the industry and now reaching a point where we are building more products and services to be served out of our data center itself, we would like to mature out our ownselves over the next 18 to 24 months before we seek an equity partner. While that is on the equity side, I can say that in industry on an average, we can -- we'll see a debt of close to around 55%-odd and an equity of 45%. That is where the industry average will lie.
I'm speaking about the cash flow from operating activities. So are you saying like same level, what do you mean by same level, sir?
Yes. If you see the cash flow, we have capitalized our data center in September end and an invoice of about INR400 crores was pending to be paid by the subsidiary, which was paid out on October 15. So it is only a interest rate correction. So if you correct by that, you will find that book that has come to the same old level, INR700 crores, INR750 crores.
Recently, there is a news regarding some renewable energy projects that didn't find any PPA or PPA agreement. So these projects are basically rejected. So how do you see the impact of this thing happening on the overall renewable energy adoption in India?
That is what I'm saying. Mr. Goyal, you have asked this question as a first opener of the questionnaire, that the industry in renewable power is today stranded because of the evacuation not being in place, feeders being not in place, transmission being not in place. The PPAs are not getting signed because of that. Unless any renewable power asset gets a connectivity, do you think it is a bankable proposition or a marketable proposition? That is the challenge industry is facing today that the transmission is a laggard in the value chain over generation.