I had attended the Q1FY20 concall of TD Power. Some of the points noted during the concall:
• 283 crore of order book of manufacturing business.
• Order inflow 112.3 crore this quarter vs 106 crore in Q1FY19
• Order book for project business is 39 crore.
• Market condition – domestic order inflow is down by 23% - 40 crore this quarter vs 52 crore of last quarter. Exports and deemed exports is up 53%. Absolute number for Q2 will be lower than last year due to lower domestic market. Expect government to improve the markets. Not concerned about process at TDPS this year and next year as we have very strong presence in exports. Not concerned currently. Railways will also provide good growth.
• Orders for TDPS Turkey
• Guidance for FY20 – outlook for FY20 is firm with 475 – 500 crore of revenue. Expenses will go up by 5 crore. Book and build target will also be met. Project business topline is 31 crore.
• Book and bill guidance of 175 – 200 crore for the year and opening order book of 300 crore. A part of the order book is for next year as well. 40 – 50 crore order is for next year for carried forward order book.
• What has changed in domestic order inflow? Slowing down in order inflow in domestic side. Business for next year might be affected. Don’t want to be too early. Things could change. Lot of business in the pipeline which will fructify. Delay in finalization of orders in domestic market. Not getting worried at this point of time. Waste to energy opportunity coming up – steady improvement in the nos and only going to get better. Steam turbin, hydro side, gas engine and gas turbine – they are doing well in exports – getting good export order inflow from it.
• No updates on railways side currently.
• Gas turbine – opportunity for the segment. Clients we are supplying? Opportunity for us? Gas turbine supplying to specific opportunity in shale gas energy in US. Mobile power units which are replacing diesel engines. Large opportunities. Don’t want to get over excited about it. Will put 20 units across the market by end of the year. Large opportunity – very exciting place to be about. This is still a new segment in the market. Rolls Royce has been launching the product and how the product is successful will be known in future. Large opportunity available. Only supplier to Rolls Royce and segment.
• Added two clients – when do we see them seeing giving us higher orders of 30 – 50 crore? Added Caterpillar and one more client in the segment? See improved business from them. Second client will take time to scale up.
• Steam exports – getting steady business in the segment. Last year we had lot of big machines coming up. Quite cyclic.
• Cost measures initiatives taken by the company? Last year we cut cost significantly. 395 crore last year to 480 – 490 crore revenue this year without adding much costs. Cost improvement and efficiency improvement next year.
• EBITDA margin guidance for this year? 10 – 15% guidance will stick to it.
• Railways – it is as per plan sales. 40 crore sales in the segment. Next year will be 100.
• Hydro – best ever revenue or close to that for FY20.
• Cant compare realisations on quarter to quarter basis
• Interest cost has gone up this quarter. Can it be annualized? 3.50 crore finance cost for the year – FY20
• Steam segment grew by 75% last year. Are we seeing growth this year also? This year there could be some flat or some reduction in the segment due to domestic side. Will not reflect guidance for full year. Break up of domestic and exports? Cant give that numbers.
• Employee expenses to increase by 4 – 5% every year.
• Waste management improvement in domestic market. Currently, it is mainly on export side but its increasing from domestic market. We have firm orders for domestic side and there will be deliveries this year. Size of the orders? Range from 10 MW to 25 MW.
• Timeline for reaching – 750 crore revenue? We will be close to 500 crore next year. Next year we will be around 550 – 600 crore. Then another year – we will reach may be next 2 – 3 years.
• Getting lot of export orders. Macro situation in US and Europe also slowing down. From where is demand coming from? We are relatively smaller player in the market. In general markets are shrinking, we are taking market share away from other players. Pricing pressure in the industry is there and we are more competitive. We already have presence in the market.
• Distillery business is seeing strong traction. If Triveni sees it, we also see it positively. Larger impact will be there next year and FY22. Take atleast 6 month time to produce boilers and turbines. Major impact to be felt next year.
• Current market situation? Not giving any negative guidance currently but will get back to you in November in next concall. Seeing some slow down across segments.
• Overall market share in domestic markets? 80% market share in domestic market. Global market share – 5 – 10% of market share for 50 MW. Global shut down taking place for large players in the segment – taking place slowly. Too early to talk about expansion currently.
• Railway opportunity – Nothing new to report on the railway side.
• Gross margins – will do better this year. Possible to go beyond 32 – 33% gross margins in future? We will break into 30s% this year compared to 29% last year.
• Cash – 148 crore. Debtors – 174 crore.
• Working capital commentary for next couple of year? This year (FY20) working capital cycle will be a bit extended compared to last year. Trying to tighten the conditions with our customers this year.
• Export orders and uptick in order inflow from from it might slightly compensate for slowdown in domestic orders, if any, next year.
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