SWELECT ENERGY SYSTEMS LTD - some information from Annual report

[nandan_ganatra]

Swelect Energy Systems Limited is a solar power systems company with presence in solar PV module manufacturing, EPC
services for solar power plants and solar power generation. The subsidiaries of SESL have been incorporated to develop and
operate certain solar power plants of the Group

Some useful information from its Annual report.

● New 500 MW production capacity of solar PV module manufacturing plant at Coimbatore…
( Earlier capacity was 110 MW )
Trial production for this 500 MW plant started in February 2023

● Topline was lackluster from 2015 ( 222 Cr.) to 2021 ( 253 Cr. )
However in 2022, there was a big jump of about 40% - 354 Cr.

• In my view new production plant of 500 MW could be a game changer in accelerating its topline growth…

● Net CFO ( Consolidated )
Fy 22 = 97 Cr.
fy23 = 131.46 Cr.

Current Mcap: 675 Cr.

● Company stopped it’s production of it’s plant in Bangluru ( 110 MW ) in 2022 - due to “unavailability of specific types of Solar cells”
The plant was operational since 2014.

Side effects & risk of change in technology

● Its subsidiary - Amex Alloy pvt. ltd.

Three division - Alloys, Iron Foundry Investmenr casting

“India’s first foundry group offering all the above under one roof & one stop shop solution”
80 Cr. Revenue in export from this subsidiary…

● Consolidated Financial instruments by catagory.

Debt - 549 Cr.
Investments - 280 Cr.
Deposits & cash balance - 250 Cr.

● Also on technical charts, stock price is consolidating since last 15 years, finding resistsnce at around 450 levels. Currently at the resistance level.

Disc: I have invested in this stock recently. About 2% of portfolio.My views are biased.
This is not an investment advise. Do your own research.

Note: There was another thread on this company on VPFORUM, however, I found that it was closed long ago and there was no option of reply on that thread, so I have created a new one.

[Crishna]

I see that Swelect is recognised as tier1 solar pv manufacturers by Boolmberg. Not sure if there are any other manufacturers from India. With India’s solar pv module exports increasing significantly in recent times, could it help in boosting the revenues even further?

[nandan_ganatra]

There are bigger players than Swelect Energy systems in this sector in india. Its not the only player in india.

The reason for my investment is

1. Sunrise sector, huge growth ahead.

2. Production capacity increased from 110 MW to 500 MW.

3. Top line was up about 40% in 2022. So some triggers are already visible, in my view. And with exports rising for the sector , it could be a trigger. However as per annual report, solar revenues were mostly from india (most of the exports reveune were from foundry devision, as per Annual report )

4. Good valuations and good balancesheet.

Disc: No recommendation. Do your study well.

[rupeshtatiya]

Swelect uploads the AGM recordings on the website. FY23 AGM Video link is below -

28th AGM Video Recording - 26.07.2023

They also do a good presentation in AGM about the business. AGM recordings of previous years are also present.

Some of the interesting points -

• The nameplate solar module capacity at new manufacturing location is 700 MW with 500 MW of production possible. The company expects capacity utilisation of 50% or roughly 250-300MW of sales. My understanding is per MW sales can result in revenue of 2.5-3cr. In AGM22, management had said that EBITDA margins of 5-10% are possible in modules. Chinese module prices have been falling - we need to track what kind of margins can module manufacturers make.
• There is 40% duty on solar modules and 25% duty on solar cells imported into India.
• The company is also looking to go one step backward and manufacture solar cells. More details on these plans and capex plan will be shared after current module manufacturing line is stabilized.
• The company also has 200 MW balance of systems (BoS) capacity.
• Currently new module plant is operating in 2 shifts. From August, they expect to operate 3 shifts. From Oct, they are looking to manufacture bifacial modules. Anyways, the presentation made at AGM gives detailed quarter wise plan.
• In AGM22, they have said that Amex Alloys is a sub scale casting/forging/foundry business and hence company makes losses or very less margins. At some revenue, operating leverage will play out and margins should inch towards industry average.

Following is a video recording available on YouTube made by ValueQuest - that explains Solar Industry, Developments in India and Positioning of Waaree Energies. I thought it was a good video.

VQ S.C.A.L.E. - Waaree Energies

[nandan_ganatra]

Good result from Swelect Energy

Topline Growth in solar segment is very much visible

56 Cr. Vs 34 Cr. YoY

As management have highlighted in AGM that they expect new module plant to operate in 3 shifts ( from 2 shifts in Q1) from August, So one should expect some uptick in revenue going forward as well.

Disc: Invested. Views are biased.

[Mukul_Jain]

Hi, Thanks for this thread!! I am interested in this company since it is starting it’s new Module PV plant which is much higher than the closed one.

Since you have done a bit of work on this company and also gone through the AGM Video, can you just on the back of the paper estimate the Capacity Utilization Levels from this new plant? And what could be the potential revenue coming out of this plant for FY24?

Also, with all segments the company has viz. Casting, EPC, IPP, and this new manufacturing, how much do you think the revenue will flow in for FY24 and a rough-margin range? I am asking this because if there is some good uptick in Profit then valuation might look cheaper and encourage us to put more time into evaluating further in detail.

Regards,
Mukul Jain