HPL Electric & Power Ltd.
Q1 FY26
Call date · August 20, 2025
1 · Management Commentary
Key Positives
- Smart meter order book stands at over ₹3,000 crore, providing long-term visibility.
- Consumer & Industrial (C&I) segment revenues grew 16% YoY; EBIT up 23%; margins crossed 11%.
- Wires and cables grew 35% YoY; switchgear demand steady.
- Gross margin expanded by 230 bps; EBITDA margin by 85 bps; PAT up 8.5% to ₹18.5 crore.
- Distribution network now over 900 dealers and 85,000 retailers.
- R&D investments in smart meters, automation, and energy-efficient products.
Key Negatives
- Q1 consolidated revenues down 2.5% YoY due to delayed dispatch clearances and monsoon-related slowdowns in Metering & Systems.
- Execution delays at AMISPs impacted Q1 metering volumes; some dispatches shifted to Q2.
Forward Guidance
- Expect Q2 and H2 FY26 to be much stronger as delayed metering volumes are realized.
- Capex on R&D, automation, and new product development (e.g., smart switchgears, expanded wires/cables).
- C&I business targeted to cross ₹1,000 crore in revenues by FY28.
- Channel expansion to 100,000 retailers by FY26.
- International expansion in metering and wires/cables underway; traction expected in next 2 years.
- Margins expected to sustain/improve via product mix, cost optimization, and premium launches.
- Working capital and debt levels to improve further; borrowing costs reduced after rating upgrades.
2 · Q&A Highlights
Q 1 (Composite): What caused the Q1 metering revenue delays, and when will volumes normalize?
A (Management):
• Delays due to monsoon disruptions and AMISP execution ramp-up; pace now improving with government monitoring.
• Some material already picked up in July; expect to be back on track in Q2, with H2 historically stronger.
Q 2 (Composite): How robust is the smart meter order pipeline and when will large deliveries commence?
A (Management):
• Order book over ₹3,000 crore; industry capacity no longer a constraint.
• Execution is key; expect meaningful deliveries to pick up in H2 FY26 and continue into FY27.
Q 3 (Composite): Why did HPL face delays when peers did not, and is this a recurring issue?
A (Management):
• HPL supplies to multiple AMISPs, so delays were broad-based and not unique to one client.
• Viewed as a one-off; execution already improving.
Q 4 (Composite): What is the outlook for the C&I segment and margin sustainability?
A (Management):
• Wires/cables have grown ~25% annually for 2.5 years; switchgear steady; lighting growth returning.
• Margins supported by stable commodity prices, cost reduction, and premium product launches; expected to sustain/improve.
Q 5 (Composite): What are the prospects for international business and new product segments?
A (Management):
• Focused expansion in Africa, SAARC, Middle East for wires/cables and lighting.
• International certifications for meters underway; expect traction in 2–3 years.
• Investing in smart switchgears and backward integration for components.
Q 6 (Composite): How is working capital and debt profile evolving?
A (Management):
• Net working capital down ₹60 crore YoY; debtor days reduced by 28 days.
• Debt-equity at 0.69; borrowings reduced; interest costs down after rating upgrades.
Q 7 (Composite): What is the long-term outlook for metering post current cycle?
A (Management):
• After initial 5–7 year rollout, replacement cycle (8–10 years) and tech upgrades will drive recurring demand.
• International markets to supplement domestic opportunity.
Q 8 (Composite): What is the warranty and lifecycle for smart meters?
A (Management):
• All meters supplied under a 10-year warranty as per government framework; products engineered for this lifecycle.
3 · Other Key Numbers
- Smart meter order book: over ₹3,000 crore (as of August 13, 2025).
- Smart meter order book as of May 22, 2025: over ₹3,500 crore; sales of about ₹204 crore in smart meters already executed.
- Q1 PAT: ₹18.5 crore (up 8.5% YoY).
- Q1 consolidated revenues: down 2.5% YoY.
- Gross margin expanded by 230 bps; EBITDA margin by 85 bps.
- C&I segment: revenues up 16% YoY; EBIT up 23%; margins crossed 11%.
- Wires and cables: 35% YoY growth.
- Lighting: 7% YoY growth in Q1.
- Distribution: over 900 dealers, 85,000 retailers; target 100,000 by FY26.
- Metering installed so far: about 3 crore meters out of 22.5 crore sanctioned; total requirement expected to exceed 30 crore meters.
- Manufacturing capacity: about 1 million meters per month.
- Working capital: debtor days reduced by 28 days; net working capital down ₹60 crore YoY.
- Debt-equity ratio: 0.69.
- No specific volume numbers disclosed for smart meter sales—Not disclosed.
- Revenue recognition: at time of supply to AMISP.
- Warranty on meters: 10 years.