Earlier you have guided for INR3,600 crores revenue in FY '26. I think in opening remarks, now you said INR3,500 crores. So can you please clarify this?
INR3,500 crores is not a big issue between us. You take it INR3,600 crores.
What is the general EPC margin range you look at? I mean this 14%, 15% is what general EPC margin?
14%, 15% is short rather, it should be at least better by 100 notches, 100 bps over last year as commodities have been cooled down, but it depends on Trump and tariffs. But it's all commodity pricing. Supply chain is under pressure. A lot of exports are happening on the supply equipment, and export prices are better to the manufacturer than domestic market prices. So all type of challenges are there. But nevertheless, our efficient and productivity will stand us out.
Could you please give us your expectation of consolidated EBITDA margin for the next 2 years, considering data centers will be revenue accretive. So, how much would that impact your margins positively?
Firstly, you see data center is a new subject to us, and ability to set up we have enjoyed. We have a great marketing team now. But the numbers we will be yet to be experienced to be honest. So, we cannot say the EBITDA as a consol. But overall, you can say as EBITDA, is experienced at 20% should continue on an overall basis at the company level. Whether it comes out of treasury will come down, and data center may add more to it.
My first question is regarding the period in various segments like Smart Meter data center and small edge data center business.
You see these two are different businesses altogether. Smart Meter is a concession-based projects. Their period is prefixed by the government itself. That they pay over 94 months we call PMPM Per Meter Per Month post commissioning immediately on achieving SAT or Go Live, they pay us around 15% depending on the location of the project. That is how the demand is in the concession projects. Coming to data center is totally a market-driven activity, and it goes with the market dynamics. By and large, we anticipate a data center payback should be no more than 5 years in my view. But because of the challenge of growing and changing technologies, applications, usages, they are all part of it.
Per megawatt revenue per annum is INR11 crores to INR12 crores. Is this estimate is correct?
You can take it at around INR8 crores to INR0 crores.
Just another question is just bookkeeping. I want to know the detail of other current asset line item, which is INR814 crores approx.
You are asking on contract assets basically not current assets. The contract asset is basically the investment in data centers and AMI or TBCB schemes. They are yet to be built out. That is what we call contract assets. They are not capitalized in our SPVs, but work on behalf of SPVs by the Holdco in deploying them. So that is a capex you can say indirectly carried out by the company in setting up these facilities like data center, INR400 crores, INR500 crores by now, meters, another INR400 crores by now. So it is that amount here.
How exactly do you plan to achieve this guidance? Like which segment will contribute the most to this growth? And is it entirely from the existing order book standing today or a portion of it will be via the new incremental orders that we expect in FY '26?
Look, this role of land acquisition is often performed by the asset owner. It is not in our scope, number one. Number two, our job starts once they hand over the land parcel to us. So, most of these orders are already around 3 to 6 months old. And customers as per our information, are fairly advanced acquiring land parcels. And we have taken that into consideration already. But you must take into view that larger execution has happened in last year, it will be in the same in current year also, like 40-60 with the H1 of the current year will be 40% and H2 of the current year will be 60%. So, it will go in the same pattern.
Which segment will contribute to this majorly out of the total order book?
So, it will all be from transmission, FGD, Meter Deployments, all will be an element of it. By and large if you want to take the break up, you can take transmission will be INR2,500 crores, transmission and distribution FGD INR500 crores, Meter will be another INR500 crores. A million and plus meters will be deployed as I said. So total will be INR3600 crores
On the data center, like you earlier guided Chennai Data center was expected to be by March '25. And similarly, Mumbai was to start construction in April and was expected to be commissioned by August '25. Can you update on why Mumbai data center is getting delayed now? And can you also confirm whether revenue generation from Chennai data center from Q2 this year timeline is intact or not?
Yes. So firstly, we do expect to start generating revenue in Chennai from Q2 this year. And so that is pretty much as expected. But Mumbai never got delayed because Mumbai was never within our plans earlier. We have very recently got the possession of a location in Mumbai through RailTel only about, you can say, 3 weeks back, and we have almost completed the civil work over there, and we are in line to commission our Mumbai data center by November. So, it was something new that came up to us. It was not a planned location.
In terms of from data center, what sort of revenue we are targeting for this year and next year, FY '26 and FY '27? And what sort of margin we can expect in data center?
You can take conservatively, let me put it, our this year target will be about INR100 crores. And next year target will be at least INR300 crores to INR350 crores. Generally, EBITDA is very high in these projects. I say you can take around 80%.
The revenue that you have said in terms of INR3,500 crores and INR4,500 crores, this includes the data center? Or is it over and above this?
You see this year, we have not included. That is why 35 or 36 debate remains, as you must have heard of your colleagues. Next year, it includes up to 350.
Next year, your FY '27, your margins you will see a big jump in your margin, right, because of this data center?
Absolutely. It should be. That is why I said which differentiate us from the other T&D players.
On the FY '27 EPS guidance. Just wanted to reconcile that INR75 figure, would that also include any monetization of assets or any arbitration awards that you're expecting? Or would that be only from business, and monetization will be over and above this figure?
But definitely, we have not considered any monetization that will be over and above this in any case. But there are not great disputes we are carrying in our company with the clients, but something is often a way of life, I will say, that does not impact much financially. But there may be a significant collection out of the discontinued business. So that will be over and above this, like it has happened in last year also. The EPS of INR4 is happening out of the discontinued business. So we are yet to get some more money from Chennai and data centers.
When we say 1 megawatt of a data center, so 1 megawatt on 100% capacity generation, we say 8.7 million units of kilowatt hours of electricity would be generated. So, in how much time does a 1 megawatt would be the energy cost for a 1-megawatt data center?
Firstly, you see, these are energy-consuming solutions, not generative. So, please correct it. And when we talk of the revenue, generally power cost is a pass-through cost here. What we talk is only a lease rental of the facility provided to the users. Energy is a pass-through. We don't make some money, but we don't take it as a part of INR8 crores. That is over and above.
Can you throw more light on the Smart Meter business. What kind of capex outlay are we seeing over here? How has our execution been so far, and the outlook for the current year?
I will say that we are conservative, and our engagement is very nominal. As I told you earlier, we are having presence of more than 5% in this segment, till date, we have commissioned 7 lakh meters out of a concession received for 2.5 million meters by us, and the deadline of -- the schedule is to complete by September '26. In '25, '26, we are targeting to do 1 million meters more. So we are on track. On an average, we do about 400 meters in different pockets. And they are in cost control.
How are we funding this project like anything, because it is capex intensive. How do we plan to fund it?
You see we are funding internally, number one, from our own resources. As I told you, we have already invested about INR400 crores in this. And another outgo this year will be about INR500 crores on this activity. So we have sufficient accruals. It is out of internal accruals, you can say. We'll be able to take time being. And once the schemes are complete and going, we may like to see exit at that time.
So we won't be raising any debt for this, sir?
We don't want to raise any debt. We'll be monetizing straight away.
Capex plus investment plan in next 2 to 3 years in Smart Meter, data center or Smart Edge data center, what will be our capex?
For the current year, we have already given in my presentation. That this year we plan to invest about INR1,250 crores, which will comprise of INR500 crores of Meters and INR500 crores in Data Centers and another INR250 crores in our TBCB projects. Similarly, going forward over the 5 years, we have already said we'll be investing about INR10,000 crores, with a larger 80% belonging to data centers. Maybe you did not hear me in my presentation. We said by 2030, we'll be doing INR10,000 crores of capex and 80% will be on data centers by and large. And we intend completing about 250 megawatts by then, including edge and hyperscale and another, you can say 1000 in Meters and 1000 in TBCB aspect. But depending on opportunities, this may change here and there. But as of now, this is the program with the company.
You mentioned in your opening remarks that to execute on the compressed timelines, you're getting like additional incentives from customers. What exactly are we seeing? Is that in terms of like better working capital, like better receivables? Or is it like additional margin that we are getting?
No, the incentive is an additional payout over and above the contracted price. 2% to 5% of the contract value, but we account it in our books only as and when received.
Would that mean like we would see higher margins for this financial year because of this incentive?
Yes. Obviously, if it happens, yes, for that portion of the top line.
On the data center side, just wanted to understand the customer onboarding and customer acquisition cycle. How long does it take, like once our data center is ready if we have a customer agreement signed, like for them to get onboarded and for us to start generating revenues?
Typically, once we've onboarded a customer, it can take anywhere between 2 to 3 months for them to move into the data center and for us to start generating revenue against that contract.
For the Kolkata data center, like for Chennai, I remember last year also, we mentioned that we are trying to get customers, but like eventually, we ended up waiting until the end of the completion and now, even after we commission, it will take like 2 months. So, is that something that we are looking to change or is that how the industry is operating?
So, you see, in this industry, it's difficult to onboard customers unless you have reaching completion of a data center, because with the given options, our customer is always more comfortable moving into a commission data center, which is readily available and most of the customers come out with their requirements only about 3 to 4 months in advance of their actual need. So, for that very reason, most of the time, it is -- these activities start towards completion of the project and go on for at least 6 months before the capacity is truly leased out.
Regarding the capex outlay that you mentioned, INR10,000 crores in next 5 years. How do you plan to fund that capex? And how much time frame are we going to looking at the fundraising part?
So presently, we are planning to do it a lot of internal accruals and cash available with us by and large. And also, it will be supplemented by monetization of the completed assets to begin with the TBCB followed with Smart Meters. But data center, we like to hold on for a while. And maybe a bit of a debt in data center is ultimately called for at the SPV level.
On FGD and Smart Meter side. Are we facing any slowdown in order intake in FGD? And what is the competitive landscape looking like in Smart Meters?
As I told you, probably we are one of the smartest players in this segment with the exposure of only 2.5 million meters among, you can say, about 12 million, 13 million meters in execution by, in the market, maybe not 10 million meters, 100 million meters to my mind in execution by now. And then we'll continue to focus only in the pockets where we are good to deliver time out and also able to deal with the utility properly. So, we are not looking for a business ultimately more than another 2.5 million spread over next 4 to 5 years. So overall, book size may be about 5 million meters by 2030 or '28 or complete of the scheme.
On FGD side, is there any slowdown in the order intake? Because of regulatory...
Yes. Regulatory was there. Government was bit confused because the capex involved in setting up these solutions is very high. It's almost INR1 crores per megawatt. So that was a huge detriment to the government. Currently now government has reached it and on selective basis, they want to revise this, comply these requirements on emissions on SO2 or NO2. So, the revised target starts from '27 onwards. And as we all know the generating capacity, majority generating capacity is in private hands. So obviously, the call has to be taken by SCBs and private because the capacity, lot of capacity has happened in already in the central sector. Additionally, I will say that the whatever new generation capacity is coming in market, 70 gigawatt, 80 gigawatt, it is all with FGD only. It is not without FGD at the greenfield level itself. So, we are hopeful of this market to continue at least for next 10 years, but in its own proportion.
In the last quarter you said that you are going to use an opex model for the data center. And with the current guidance that you have given about the margin, it is quite confusing. Can you give some light on how you will be generating a 80% EBITDA with using an opex model?
Sir, the opex model systems are all in concession contracts. Somewhere we are confusing. I have always maintained your Smart Meter and your data TBCB projects are opex model. They are concession. They are government that shows you payment month on month and per meter basis or per month of use basis. But Data Center is your own asset, and you have multiple users deployed in the data center within the overall capacity. So that is a capex model only.
This monetization model for RailTel I am not clear because you said that Gurgaon as data center 75% will be used by RailTel, but I think Bombay you're saying it is rather susceptible. So, what's the agreement with RailTel?
The agreement with RailTel is a revenue share model. With whatever revenue the data center generates, a percentage of that revenue goes to RailTel and the remaining of it comes to us through an escrow account. So, the revenues will largely come out of any customer. It can be a third customer, whether a private company or a public company or RailTel itself. So, the data center is open to service all kinds of customers. It is not that RailTel is assuring a revenue or is going to leave the space on back-to-back basis.
Based on your learning from Chennai data center, what are the learnings you want to apply to like Calcutta and the subscription data center in terms of cost and technical advancement?
If you ask me, I think customers in this industry push you for technical advancement because of their unique use cases that they come up with. And in last 1.5, 2 years, we are seeing a lot more demand for AI related services from customers, and which is pushing us to deploy technologies which can accommodate very high dense rack, any racks going above 25 kilowatt and on an average about 50 kilowatt, which in Chennai we had designed at 10 kilowatt, though it was even at that time or even today 10 kilowatt rack is considered a higher dense rack and compared to what it used to get designed. So, one is that one may have to plan for higher density racks to get accommodated. And I would believe that we should be able to bring down our project cost by 5 odd percent in comparison to Chennai.