Techno electric engg ltd

[salman_khan]

• Few pointers why i would delay the investment in this company

Data centre Chennai data centre commissioning pushed from sept23-dec23 to now march 24
data centre and AMI business is pulling the numbers down on a consol level
all the investments in data centres and AMI is not generating any revenue so mostly the kicker will come from q4 fy23 or maybe q1 fy24
but i guess the price may shoot before that if they get some strategic investor to do a JV or Buyout the data centre business
Techno can also be a good pick as it caters to all the themes which are currently in momentum namely power transmission,Smart meter,Data centre etc

[salman_khan]

Power cost is the biggest running cost for a data centre ,earlier the management had said that they would be drawing power from their renewable assets for their Chennai data centre ,but now since they have sold off the wind business do they have any other renewable assets to supply power ?

[vineet_mittal]

I think, intent is to allow JV partner to decide Power supplier for RE . Now days, lot companies are buying stake in power generator to sign long term sheet.

Where can i find recording of the interview which you are sharing ?

[salman_khan]

Here

Techno electric engg ltd

[B&K Securities : Fireside Chat with Techno Electric Engineering - Mr Ankit Saraiya] ABOUT MARGIN DETAIL DEISCUSSIO IS AVAILABLE IN THIS VIDEO

[nandan_ganatra]

This may answer your question.

Concall notes from Q3 FY23.

I would suggest you to read atleast last 4 concalls of this company. You will get better updated idea about company’s growth plans for future.

Management has given good amount of details about their plans in concalls. Their execution will be the key monitorables for investors.

[nandan_ganatra]

Very strong numbers from Techno Electeic

Finally Management is walking the talk…

Revenue at 486 Cr Vs 185 Cr YoY
Profit at 72 Cr Vs 36 Cr

EPS of 6.63

EPC Margins around 15%

Concall on 16th November - Important thing to watchout for is their ordebook guidence.

Disc: Invested since last year, added more recently. One of my top holding.
Biased views.

[nandan_ganatra]

Techno electric concall - strong outlook

● Total unexecuted Orderbook : 4361 Cr
Received this quater- About 850 Cr.

● L1 in order worth 2700 Cr - including About 2000 Cr in AMI ( Smart meter ) - from Jharkhand, Tripura , J&K
( On initial notes of concall - company said that L1 is 3550 Cr. However, later MD, Mr. Gupta rectified it by saying that L1 of 3550 Cr. includes received order of 850 Cr. )

● Bid of 5000 Cr yet to open- company expects further 2000 Cr from it

● Guidance:
FY24 topline - 1600-1800 Cr
FY25 - 2500 Cr

● Data centre
~ Got a land allotment in Kolkata for data centre

~ Invested 220 Cr. on chennai data centre so far. - Further capex of 330 Cr. to be done in next 4-5 months , by FY24.
~ Revenue to start flowing in from next FY

Overall, Total Capex in chennai phase 1 of 1200 Cr - to be completed by FY25.

● Cash on books: 1500 Cr. - to be used for growth, such as data centre assets , Smart meters etc.

~ 1000 Cr. Investment in Smart meter projects

~ To be large dividend paying company going forward as well.

~ Receivables pending from windpower: 125 Cr. From tamilnadu goverment

Disc: Invested since last year, as mentioned earlier, biased views.
I am not a SEBI registered analyst. Do your research well before any buy/ sell.

[anjeshv4]

Any guidance on the margins? That’s the real number that can propel the stock.

[Sudhanshu_Shekhar]

Hi. pls share the concall link

[nandan_ganatra]

Overall margins guidance have been maintained at 13% +/-

No changes

[nandan_ganatra]

I have taken notes from the live concall - which was at 2:45 today,

I dont think company has shared its links as yet. Should be available soon on company website - I think.

[nandan_ganatra]

Techno electric wins another 525 Cr. Order for substation & transmission projects

[Midhunjoe]

**Techno Electric Concall Notes

Order Book

H1= Rs 611 Cr + Smart Meter order 536 Cr+ Transmission Order 288cr = 1435 Cr
They are L1 for orders worth 3550 Cr.
Pipeline bids = 5000 Cr

Management has given revenue projections as follows

FY 24 = 1800 Cr
FY 25= 2500 Cr
FY 26 = 3000 Cr

EBITDA Margin @ 13%

Segment wise Projection

FGD business to be Subdued , growth to come from Smart meter, transmission and data center business.

Order book projection

FGD = 1450 Cr
Transmission = 3000 Cr for 3-5 yrs
Smart meter = 2000 Cr every year.
Got 1 order from J&K for 2.5 Lakh meters worth 536 Cr.

Data Centre Capex Update

24 MW IT load
Civil work completed
Invested 220 Cr
1st phase by 2024 March

• Significant interest in developing DC in JV model from partners .

• Smart meter target of 1 mn meters/year

Cash in books = Rs 1500 Cr approx Rs 140/share

Data Centre rental approx 80-110 $ /KVA or 90-100 lakh INR /MW.
Cost of data centre approx 5 mn/MW .

All in all very bullish commentary from the management .
With a BOE calculation based on the management projections it can double in next 3 yrs from even current levels.

[nandan_ganatra]

Thanks for notes.

Only one correction here - On initial notes of concall - company said that L1 is 3550 Cr. However, later MD, Mr. Gupta rectified it by saying that L1 of 3550 Cr. includes received order of 850 Cr. So actual L1 is 2700 Cr

[nandan_ganatra]

News are coming in thick and fast for techno electric.

Techno electric & Keppel Data centre ( india ) pvt ltd. Sign MOU for collaboration on a joint data centre campus development

The Keppel group owns and operates a global portfolio of more than 30 data centres located in key data centre hubs across Asia Pacific and Europe.

This is very positive developement indeed.

[nandan_ganatra]

Finally market is realising techno electric’s data centre business and its capabilities and slowly giving it the deserved valuations after their collaboration with KEPPEL group

@nandan_ganatra

Even then, at current MCAP of 5500 Cr. ( debt free balancesheet, includes 1400 Cr. Cash & EPC business ) it looks like market is either not factoring in / giving very little value to their data centre business segment…

Congratulations to all shareholders for new ATH.

Disc: Invested since last year, one of my top 3 holdings. Biased views

[raj261178]

Agree. Congratz to all stakeholders who stayed put in the stock.
My second top holding (9% of my portfolio). Invested from last 3.5 years… lot of patience required considering everything was going up but not this stock whereas fundamentally thiz was top class

[Maheshcm]

do you know whats the nature of collaboration with Keppel? will there be a JV as a subsidiary, what will Keppel do as a partner, what are the terms?
Also , company’s projected revenue from smartmeter looks significant, I remember vaguely from the concall that it needs significant capital from company, and its more like build operate transfer(BOT), correct? so whats the economics of this stream? is there any commentary on this or have you worked any numbers on working capital and returns from this revenue?

[nandan_ganatra]

1. On data centre

I dont have info on terms & conditions of collaboration with KEPPEL. ( on a lighter note ) I am no insider, bro . All I know is that its an MOU for collaboration. However since KEPPEL is a globally recognised company and they must be eager to get into india (considering visible growth and growing demand in this sector in india ). And on the other hand Techno electric was looking for a partner since last one year but was waiting for good terms ( as they have highlighted in earlier concall ) So it must be a win win deal for both parties.

2. On smart meter,

AlI I know is that ( from concall ) management has mentioned in concall that its DBFOT model where goverment gives 15% grant, and 65-70% has to be invested by contractor ( if we include tax element of 18% & finance cost of 20% ). which gets paid in 94 months installment. So, yes its capex heavy project.

However, since techno is debt free, cash rich company, they are going use their cash on books in this smart meter project. So in my view, thats what make this project even better for them as they have cash which will get them over 15% ROCE in smart meter ( as mentioned by them in concall )
& about 20% ROCE in DATA CENTRE as well.

If one wants to keep it simple, then company has mentioned that 2500 Cr. Topline Next FY & 3000 Cr in Fy 26 revenue with margins around 13-14%. What I feel is that these are conservative numbers given by company and they may exceed these numbers easily.

If anyone has any more info, please do share. Lets learn togather

Some highlighted concall notes - for your info.

[Maheshcm]

@nandan_ganatra thanks for your notes.