SCHNEIDERNSEFebruary 14, 2025

Schneider Electric Infrastructure Limited

8,171words

58turns

8analyst exchanges

4executives

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Management on call

Udai Singh

MD & CEO

Suparna Bhattacharyya

CFO

Mohit Agarwal

HEAD -INVESTOR RELATIONS

Harshit Kapadia

ELARA SECURITIES PRIVATE LIMITED

Key numbers — 40 extracted

rs,

ad it, if you go deeper by the line as to what's there for your company. When I talk about numbers, we talk about a commitment of INR11.2 lakh crores in capital expenditure. We expect that the GDP g

INR11.2 lakh crore

ine as to what's there for your company. When I talk about numbers, we talk about a commitment of INR11.2 lakh crores in capital expenditure. We expect that the GDP growth will stay somewhat what it was, about 6.3%

6.3%

rores in capital expenditure. We expect that the GDP growth will stay somewhat what it was, about 6.3% to 6.8%. And the good news is that we also are trying to curtail our fiscal deficit to roughly ab

6.8%

apital expenditure. We expect that the GDP growth will stay somewhat what it was, about 6.3% to 6.8%. And the good news is that we also are trying to curtail our fiscal deficit to roughly about 4.4%

4.4%

6.8%. And the good news is that we also are trying to curtail our fiscal deficit to roughly about 4.4%. And the budget, if I may rate it overall is actually, is fuelled by reforms with a very guiding

100 gigawatt

Now if you see, we now have a very clear cut plan about making a nuclear nation of having about 100 gigawatts of nuclear by 2047. And it's not only that, it's also setting up another incentives or R&D alloc

INR600 crore

positivity around companies like us, including us, of course. The other programs, which are like INR600 crores being allocated for the green hydrogen under The National Hydrogen Mission and also the Green Co

100%

c the way it has been going up, you go to any flight at any point in time, fly any sector, that's 100% full. So we are trying to see as to the country envisages that in next 10 years, we need to have

4 crore

untry envisages that in next 10 years, we need to have an infrastructure which can cater to about 4 crore passengers traveling. That's a number which we are talking, which would also mean maybe enhancing

INR500 crore

being rolled out to manufacturing of mobile. And now first time, India is talking about infusing INR500 crores into AI vision, which means it will all drives towards inclusive growth and that is the area whe

INR1 lakh crore

enge Fund, which has been announced by government. I'm talking, in this budget, which talks about INR1 lakh crore being put in trying to make cities as growth hubs. Now what does it mean? This means that, we wil

30%

rightfully, government has been driving about penetration of e-mobility, where we expect to have 30% by year 2030, and penetration, which goes down by 45% from the base year is something which we ha

Guidance — 18 items

Udai Singh

opening

“We expect that the GDP growth will stay somewhat what it was, about 6.3% to 6.8%.”

Udai Singh

opening

“The other programs, which are like INR600 crores being allocated for the green hydrogen under The National Hydrogen Mission and also the Green Corridors is something which also will fuel and it will be more conducive for actually solar development in the nation.”

Udai Singh

opening

“Now, this is going to be the future, because that was something which will be the call of the day as and when we have more and more renewables coming into play and when we talk about usage at micro grid.”

Udai Singh

opening

“That's a number which we are talking, which would also mean maybe enhancing the fleet which we have few x times and also talking about 120 new destinations, which will be rolled up as years go by.”

Udai Singh

opening

“And because the new ships will be built, the old ships will be repaired, rejuvenated, and government has this time also gone in terms of paving the duties on the raw materials which are required for these works.”

Udai Singh

opening

“The way government has been creating, the way, rightfully, government has been driving about penetration of e-mobility, where we expect to have 30% by year 2030, and penetration, which goes down by 45% from the base year is something which we have been working on.”

Udai Singh

opening

“And we have given lots and lots of AIS and transformers to one project with the repeat orders through either directly or through different contractors in India.”

Udai Singh

opening

“So this is the one good thing which I'm proud of, and so I'm sure you will be.”

Sanjaya Satapathy

“How your deal pipeline and future outlook in terms of order going forward?”

Udai Singh

“No, Sanjaya Ji, this was more of a time effect, I would say, because we are in a business where there are multiple project orders given by multiple stakeholders.”

Risks & concerns — 5 flagged

Now, if we speak about Infrastructure, there are good -- if you -- I'm sure you would have noticed there is one Urban Challenge Fund, which has been announced by government.

— Udai Singh

More stress on services, focus on modernization, digital services and remote asset monitoring as we have a growing installed base, so that helps us in generating more service revenue.

— Udai Singh

And for Q3, especially, the orders, order growth is at 5.3%, which is a slight slowdown, because this is a little lean quarter with respect to the orders.

— Udai Singh

So are we expecting some slowdown in growth that we are looking maybe for this quarter or for the next few quarters?

— Aditya Deorah

I think, there was also stress on services and better leverage.

— Vinod

Q&A — 8 exchanges

Congratulations on a great set of number. So just two questions. One is that you mentioned your order inflow was a little slow in quarter 3. How your deal pipeline and future outlook in terms of order going forward?

Udai Singh

No, Sanjaya Ji, this was more of a time effect, I would say, because we are in a business where there are multiple project orders given by multiple stakeholders. And we intentionally try to pull up some orders, so that we can make the year more robust. If you ask me, generally speaking, the pipeline is good, is healthy, and we don't see any road block in the pipeline as we see today. And my last question is that, your other expenses continues to rise fairly strongly like almost 30%, 40% rise, again, in this quarter. And can we -- can you get a sense like how things will go moving forward? And

So major of my question was on the order book, which was already answered. Second was, sir, on the nuclear part of it. In the nuclear part, what can be our opportunity size out of this plan of 100 gigawatts? And where are products -- what products can we supply here?

Udai Singh

So Rucheeta, it's an important question, and a very nice one. Government has actually, if you must have seen the budget, they are talking about developing indigenous expertise in developing smaller reactors. So you have -- typically, if you see we have the nuclear power plants, which are capacities of 700 or 800-megawatt energy. Now we are thinking about making something which is being called as small modular reactors or SMRs, which go up to 300 megawatts, and then micro reactors, which are of a smaller scale, will be typically around 10 megawatts. This 100 gigawatts is the capacity which is s

Sir, our order backlog growth is just 7% for this quarter, on a year-on-year basis. So are we expecting some slowdown in growth that we are looking maybe for this quarter or for the next few quarters?

Suparna Bhattacharyya

So Aditya, thank you for keeping an eye on the backlog. Yes, this quarter was a little slow based on the industry situation in terms of orders. But based on the pipeline that we have, we are hoping that the next order will pick up -- the next quarter, the orders will pick up. And we shall have a good backlog by the year-end, by the quarter 4 end. And also, it is worthwhile to note that we pulled in a lot of sales from the orders that we had until Q2. So with the heavy sales, the backlog has certainly reduced, but then the focus to increase our orders in the next quarter will be surely visible

In your opening commentary, you mentioned that this quarter had a better sales mix, better productivity. I think, there was also stress on services and better leverage. So are we seeing the best in terms of our performance? Or you mean, are we peaking up on margins at this stage?

Suparna Bhattacharyya

See, whenever we are doing business, we always look for seeing better in terms of sales growth, margin growth, optimization of the fixed expenses. So that way, I mean, this question, I would probably say that we are definitely working for a better future with respect to performance. Specifically, to talk about saying, every business is always looking for growth. No, I understand that, but I think you checked all the right boxes in this quarter. So everything right has fallen in place. So from that perspective, I was just asking. Suparna Bhattacharyya: No, we are looking for better times ahead

My congratulations to the Schneider team for outstanding performance and getting company on the solid profit part. Am I audible? Suparna Bhattacharyya: Yes, sir.

Udai Singh

Yes, you are audible. Okay. Okay. My first question is regarding how are we -- are we affected by this rupee-dollar movement? Or it's -- that can be negative? So are we importing any of the imports in the raw material side or anywhere else? Is it impacting us? So we have a robust hedging policy as per the guidelines within the organization and not really impacted by -- not impacted much over the foreseeable future, because we do have a very robust treasury team, which is -- which helps us cover such currency fluctuations. Public Okay. And my second question is just with this 2030 coming nearby

Very hearty congratulations on very strong numbers and historical high margins. Just a question on the Digital Solutions offering. What we have that in recent past, we have been seeing a lot of wins over there. So just want to get your perspective on industry scenario, like is it very competitive to kind of pitch for such solutions and the competition intensity is equally high over there? And what is the kind of adoption we are seeing from the customers in terms of acceptability of digital products and maybe the EcoStruxure architecture, what you offer? And then related question is, in terms o

Udai Singh

Yes. So I'll go and try to answer one by one. First is, India is an evolving and complex landscape and we speak about market. So if I cannot make a general statement about the -- being competitive, but what happens is, what I can say for sure is that there is a growing demand for these digitalized offerings, because people have realized the consumers, the users, the sites, the projects, they have realized the merit of adopting it. That is answer to your first question. Now the second question is, whether where do we apply this? Now this is -- this gets applied primarily not greatly in transact

Sir, you're expanding your transformer capacity from 5,500 MVA to 7,000 MVA at a cost of just INR14 crores. If you look at some of the competitors who are increasing capacity, the per MVA cost is very different. So how do we look at the capital cost for a transformer on a per- MVA basis? Is there any basis to look at this capital cost?

Udai Singh

Sir, I don't know the benchmark which you are comparing with. I can speak about your company's establishment, which exists today and where we want to take it. So -- because at multiple places, it may not be right to compare and try to arrive at a project cost per MVA and the investment required for this, because it may be a greenfield versus a brownfield expansion and certain facilities not being there or being there makes it happen. Because what we are trying to do here is, trying to see as to how do we scale up our existing infrastructure by infusing some facilities and expanding there. So I

No, I would like to thank everybody for joining this call and being a great support all this quarter. And let me assure on behalf of management, that all teams are focused towards delivering, as I mentioned, the vision and the mission which I shared at the beginning of the presentation. We are working and trying to make Schneider Electric Infrastructure do things which are the first in the nature, which is more focused towards customer needs and requirements, and we abide by all ethics in why we do business. So all the best, and thank you so much.

Management

Speaking time

Udai Singh

Moderator

Vinod

Suparna Bhattacharyya

Viraj Mithani

Sanjaya Satapathy

Rucheeta

Aditya Deorah

Manish Goyal

Harshit Kapadia

Opening remarks

Harshit Kapadia

Hi. Good evening. Thank you, Manav. Good evening, everyone. On behalf of Elara Securities, we welcome you all for the Q3 FY '25 and 9-month FY '25 conference call of Schneider Electric Infrastructure Limited. I take this opportunity to welcome the management of Schneider Electric Infrastructure, represented by Mr. Udai Singh, Managing Director and CEO; Ms. Suparna Bhattacharyya, Chief Financial Officer; and Mr. Mohit Agarwal, Head of Investor Relations. We will begin the call with a brief overview by management, followed by Q&A session. I'll now hand over the call to Mr. Singh for his opening remarks. Over to you, sir.

Udai Singh

Thank you, Harshit, and good evening, everybody, and thank you so much for joining in, in this afternoon. And I would like to -- I'm sure you have been able to go through whatever we uploaded, the results of the quarter, which went by. And I would like to take you through that, just to summarize as to how the quarter has been. And just to reiterate, which I have been doing for a few quarters till the time I have been occupying this chair as to what your company is. We have a vision and a mission, which is very clear in our minds, vision of leading the new digitalized energy world, by offering our customers and partners the most innovative connected products and solutions, which are ready for the then emerging power distribution's elevated expectations. Now we also have a vision of having a balanced business models, which delivers superior quality and efficient supply chain, which keeps the growth and profitability resilient and sustainable. And the mission, of course, to be a digital p

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