Techno electric engg ltd

(Amey Desai) #101

disclaimer - invested

Friends, do we know of their plans for upcoming 12mons?

(Mridul) #102

My notes from the concall -

  • During the quarter, we have booked orders worth Rs. 545 Cr, unexecuted order book as of the year end is Rs.2550 Cr plus. We are continuously participating in various tenders and are hopeful of good conversion for the current financial year.

  • Achieved a growth of 20% plus in EPC topline with an EBITDA of 14.97% for the current year. In EPC segment, focus for the current financial year and also happens to be the first year of the Thirteenth Plan period will be to consolidate and close the ongoing projects and collect the value retention money.

  • While revenue has grown well, trade receivables remains healthy. Focus remains to efficiently manage working capital while growing your company profitably.

  • In wind segment, the challenges of grid availability have eased and the business in last fiscal has been much better than our own expectations. We are witnessing further improvement in grid availability during the current year in the state of Tamil Nadu and the overall wind flow has been positive in the last two months.

  • The other current order book is the same like last year as Rs.2500 Cr by and large, but we do expect to book another business of no less than Rs.1500-2000 Cr during the year and in this quarter (q4) also we have booked business worth Rs.500 Cr plus

  • Executing work almost worth Rs.100 Crore a month, which we would like to improve further.

  • Philosophy - Techno believes, bottomline growth is superior to any topline growth… and number two that bottomline must happen in cash otherwise there is no need to be part of the business,

  • So this year is going to be a year of consolidation for us. What I wanted to convey was that order intake will be stronger this year whereas the stress on execution will be more in favor of the closing projects and collection of the retention money, so we may compromise the executed topline, but not the order intake. The order intake we are targeting no less than as I told you earlier also plus or minus Rs. 1500 Cr to Rs.2000 Cr, so that our year end unexecuted order closing should be no less than at least Rs. 3000 Cr by and large.

  • 2017-2018 we will be under MAT only.

  • You see with the growing size of the pie, some new entrants will always be a way of life, but acquiring the competency and proficiency of Techno for any new entrants in the specialized business is a process of no less than three to five years. But largely I will say that means putting in a little pressure more than these two entrants is a reverse bidding or in reverse auction in PowerGrid. That is more damaging.

  • More and more non-product companies would like to be part of the product business going forward. The business of product and project will get more and more distinctly segregated.

  • Emission norms - We are very much there. It is slowly happening. Because the ability of generators to pass on this cost of capex into tariffs is not very transparently crystallized by the government, so I see this happening more in the new projects than into the existing plants, but prospects are definitely bright. We are partnering on case-to-case basis and we will definitely see a breakthrough during the year because Techno is an electromechanical company. We are very strongly poised to capitalize on this opportunity.

  • They are more upbeat on FGD business (FDG is a environmental packaged solution), which is a electromechanical business and which Techno is more equipped with in respect to many other standalone companies, which are either mechanical efficient or electrical efficient also. So would like to focus more on FGD. Expecting one major breakthrough in this segment this year.

  • Solar for Techno has been hit and miss story… the way tariffs decline and more and more imported equipment prices crashed globally, so unable to make any inroads in this business. Techno won’t be very keen unless markets bottom out, and business becomes stable both in outlook and in pricing.

  • This quarter again (Q1 2017) we are expecting business worth about at Rs.400 Crores plus or minus.

  • Jhajjar KT – topline 54 cr. Debt – 200 cr (@ 9%), EBIDTA – 90/95%, IRR – 16%. Looking to raise money through bonds issue.

  • Long term debt – 290 cr

  • Have sold this 33 megawatt at Rs.165 Cr and the profit has come in at Rs.23 Crores. Though bottomline is minus 11 odd cr due to tax.

  • Patran – Topline – 24cr (will grow to 30 cr gradually), Debt – 150 cr (@7.9%). EBIDTA – 95%, Looking to raise money through bonds issue for this asset.

  • Regarding BOOT assets - by and large there is no tax rate as all these BOOT assets come under MAT.

(Abhishek Basumallick) #103

Q1 Results - Strong set of numbers from Techno

(Mridul) #104

My notes from Q1 FY18 concall -

  • This has been a historic quarter as pre-GST most customer wanted more execution in this quarter to save on the taxes for optimisation of the taxes. Sticking with overall guidance for the year (Q3 will be effected).

  • In view of upcoming GST regime, which will impact the profitability of the ongoing projects, they are witnessing some challenges in the EPC segment due to the GST implementation. So all the contracts although have a pass through clause on the impact of GST but the same need to be a renegotiated and amended by our customers. So immediate quarters will face some deep impact. Basically, in GST regime we see temporary disruption only and it should be finally settled amicably with all our customers and the present contracts provides for cost revision clause number one.

  • The unexecuted order book as on June 2017 stands at 2,450 Crores.

  • Focus on EPC in TMD and in other growing segments of power generation, on pollution control and BBB Business will continue. Additionally, also find traction going forward in the industry segments which was not visible for last two to three years like refineries or aluminum segment. These are not very high value orders but definitely they are very margin attractive orders because of these more multiplicity of complexity solution resolutions integrally involved in that so they are good at it and we will be back in this opportunity. Have done captive power orders for Nalco, Hindalco etc in the past.

  • Order intake guidance for around 1500 to 2000 Cr for FY2018. Q3 will be soft due to GST. Will see better order book in third and fourth quarter of the year. Order intake in Q1 = 550 cr.

  • GST impact on margins… Earlier was 15%, now 18%, so trying to renegotiate all past contract, as there is a clause in the agreement. More clarity post q2.

  • SOx and NOx opportunity through NTPC. 18-20 orders coming of whch Techno is targeting to get 2-3 order of 200-500 cr. Competition will be lower in this segment but not sure of the margins yet.

  • Do not carry much inventories as they do not manufacture anything. So inventory is purely no more than construction material in source ~10 Crores. On receivables, as of now, it is no more than 300 Crores and 200 cr retention money.

  • They are continuously bidding. Recently placed bid for Bihar. By the end of the year they should bid one more out of 5 or 6 to be bidded out in that four-five months. Should be successful in one of them.

  • Nagaland project - Financial closure in September. Work will start in April next year. Sufficient time to finish it by 2019.

  • On remaining Wind asset sale - They are not sure as these assets have turned very profitable and value accretive. They said generation is not their core business and they would like to remain in EPC. But, probably, they have not taken a call as when to sell the remaining 130 MW.

This is specifically what he said - “if going becomes so good that you are able to achieve a PLF of 26% plus out of 9 of no less than 75 to 80 Crores post tax and your valuation keeps improving everyday because definitely they are better managed, better operated assets in the wind assets in the industry. All renewable getting so much of focus in the country should I be an early exit or I should be a matured exit tell me. generation is not my business. It will be definitely not be part of this business going forward. EPC is my business as guide to stay with EPC in multifaceted capabilities as well as BOOM asset in T&D segment”

  • Extremely focused on bottomline growth and said they will remain focused on margins and will not bid aggressively unless they are familiar with the region or package.

  • Operating margins of 25% from aluminium and oil/gas orders, whenever projects come. Guidance is based on historical data and projects undertaken, and things aren’t clear until they happen. Techno is EIL (Engineers India) approved company and expecting to get some work starting next year with oil and gas capex coming in. 2% of the overall capex is what comes to Techno of these large projects.

  • Capex - 100 Crores in the equity component of the SPV this year.

  • Some of the players in T&D are likely to be more aggressive then they are now so margins will always remain under pressure in T&D for some more time to come… as it happened in the period from FY11-FY14 when lot of Hyderabadi companies who are in market place. But this time some more large and hopefully sensible players will be in market so margin pressure might not be that much but still pressure will remain as such.

  • Wind assets - PLF is 26%, Realisation is 4.5 INR

  • PowerGrid is the single largest customers (still constitutes ~60% of the order book). NTPC is another about 10%. State electricity boards ~ 25%. BOOT projects ~ 10%.

  • Cash is presently ~ 425 Crores and debt (short/long term) ~ 200 Crores. Larger benefit is on the creditors side where they have paid out all creditors, the creditor outstanding with them today is not more than 45 days old largely around 150 Crores.

(Amit Aggarwal) #105

Anyone planning to attend AGM tomorrow?

(Kumarsids) #106

Hi Senior Members
Techno Electric has been more of sideways for last year or so. Last quarter results were not great but I didn’t see any red which affected sentiments. The only thing which is still not clear to me is treatment of Wind energy assets. In March17, they transferred it to a subsidiary and again in July 17 amalgated the subsidiary. I couldn’t make out much of this move in terms of how it helps. Fingers crossed for Sept quarter results coming out on Nov 10.
Any view from esteemed members is appreciated.
Kumar S.

(Mridul) #107

Regarding wind asset transfer n amalgamation, plz refer to concalls. They have given the rationale…tax n depreciation thing. Regarding valuation, commentary from q2 is weak, hence the weakness.

(Vivek Mashrani, CFA) #108

Concall highlights:

  • This year is of consolidation and lot of changes being planned; Expect more traction in next 2 years in terms of growth and orderbook
  • Cash collection gathers good pace. Debt reduced from 300 cr to 150 Cr. Prepaid debt. Further planning to pre-pay loan of 90-100 cr from IFC. Planning to be debt-free by end of this year.
  • GST impact: 1Q accelerated so that maximum billing could be front-loaded, some inventory of 28% were deferred hence some revenue got deferred
  • Shortfalls of 2Q will be made good in next 2 qrts; Annual guidance intact
  • 2Q EPC subdued due to unexpected chennai rains
  • During the year, will collect retention money of atleast 125 Cr this year
  • 2350 Cr orderbook pending; Aim to grow oderbook to ~3500 cr in 1-2 years
  • Focus on EPS, PPP and T&D projects
  • Focus on efficiently manage working capital
  • May comeout with buyback this year also without promoter participating
  • Lot of order agreement pending due to GST uncertainity
  • Getting invitation from refinaries and mining companies
  • For many items now GST rate revised to 18% from 28%
  • Tenders in Jharkhand worth $1bn, hopeful of getting some pie
  • Pre-GST receivables all settled
  • Opportunity to come up for Bhadarpur powerplant for modifying plant to bio based due to Delhi smog issue; Techno is one of the pre-qualified partner
  • Wind business has improved a lot on the back of rise in tariff; will sell this soon

There might be some error in noting down. Please cross-check with actual transcript when it comes out. Thanks.

(arorasonia231) #109

(Alok Bhola) #110

(Abhishek Basumallick) #111

IndiGrid has acquired 46% stake in Patran Transmission Co. Ltd (PTCL) from Techno Power Grid Co. Ltd, Techno Electric & Engineering Co. Ltd and its nominee shareholders. The sum paid for the investment in PTCL is Rs 232 crore.

(Vivek Mashrani, CFA) #112

Techno Electric Q4 concall summary points

  • This year was described as consolidation year.
  • FOcus was to strengthen the cashflows, receivables, retention money etc.
  • Reduced debt from 300 Cr. to 67 Cr.; Cash and cash equivalent on books of 500 Cr.+
  • Topline Yoy lower by 14% due to GST effect, since topline now don’t contain taxes (YoY revenue not comparable)
  • Some billing will be carried forward this year; Merger with Simran will be done by 10 June (based on NCLT approval)
  • Got award from PowerGrid this year
  • Unexecuted Orderbook ~2,020 Cr.; Expect ~200 Cr this quarter + ~1500 Cr. this year
  • WIll focus on EPC and PPP projects going forward
  • Focus remains to manage WC efficiently + run under low risk profile model
  • There is a slowdown in domestic T&D segment; Looking for good business from abroad (Kenya, Afghanistan, Nepal, Bangladesh etc.)
  • Orderflow from Powergrid has slowed down
  • Looking for 15% margin; Look for 3-5 year horizon for 20% growth CAGR; Next year growth also would be subdued ~10% (Revenue + EPS)
  • 60 Cr of new orderflow in Q4 (only 1 order inflow)
  • Last year orderbook breakdown: 45% from PowerGrid; 10% from distribution; NTPC ~200Cr. Rest others
  • International order potential pipeline: Kenya - 90mn USD; SAARC countries being targeted; BUilding mgmt setup to explore international markets
  • Jharkhand order expected to be completed in 1.5 yrs
  • Will try to prepare for EV orders in future

Overall, not very bullish commentary ahead of slowdown of order from Power Grid and T&D space.

Please ignore any typos and points which I might have missed. Thanks.

Disclosure: Invested

(chets) #113

Any idea by when this will list again?

(maheshhamne) #114

Management had said in concall about end of September.

(devarshi84) #115

Still no word on their listing. Interestingly, the company has been extremely silent on any new updates. Many major mf schemes such as SBI small cap fund hold shares.

(devarshi84) #116

Another month has passed. Why is there no update from the company? Are they trying to wait out the crisis before relisting?

(devarshi84) #117

Techno electric has been relisted. Moneycontrol does not show it yet so most of us will be unaware. Also, it is now listed as techno electric engineering (without &). Plus company has announced Buyback. A lot of Dii purchased this stock before it got delisted.

(devarshi84) #118

Techno also published about receiving new/renewed orders for 313cr when it was delisted. That is their usual qtrly sales so I wouldn’t read too much into the news.

(agb8484) #119

This is hitting lower circuit every day since relisting. My obvious guess is that people were waiting eagerly for relisting so that they could exit.
At PE of 13.5, is it a value buy for long term?

(devarshi84) #120

Since it has just relisted and the market conditions have gone down hill in a while, it’s just profit booking and exiting as per my assumption.

Some plusses for fresh investment would be.

  1. Pending buyback with promoters not participating.
  2. Mutual funds buying in techno post delisting with edelweiss group firm taking up to 3pct stake. SBI also has a a huge stake through different MF. (I personally am wary of considering mf investments as a plus.)
  3. Amalgmation with Simran Wind Farm and stake acquisition in Kohima Mariani Transmission.
  4. Repeated orders from mnc and big players qoq.

I do not see many negatives at the moment but others can chip in.