Financial Highlights:
- Q3 FY 25: Revenue reached a record ₹5.03 billion (up 17% YoY), with domestic sales at ₹2.5 billion (up 5%) and export sales at ₹2.5 billion (up 31%). EBITDA hit ₹1.31 billion (up 30% YoY) with a 26.1% margin (up 270 basis points). Profit After Tax (PAT) was ₹926 million (up 36% YoY). Order booking was ₹5.26 billion, with a record closing order book of ₹18.19 billion (up 15% YoY).
- 9M FY 25: Revenue grew 23% YoY to ₹14.7 billion, with domestic sales up 20% to ₹7.8 billion and exports up 25% to ₹6.9 billion. EBITDA rose 38% with a 25.7% margin (up 280 basis points), and PAT increased to ₹2.6 billion. Order booking for 9M was ₹17.3 billion (up 20% YoY), with exports contributing 62%.
- Dividend: An interim dividend of 200% (₹2 per ₹1 equity share) was approved, a 54% increase from the previous year.
Segment Performance:
- Product Segment: Q3 turnover was ₹3.3 billion (up 14%), and 9M order booking rose 30% to ₹12.8 billion.
- Aftermarket Segment: Q3 turnover hit a record ₹1.8 billion (up 22% YoY), though order booking declined 17% to ₹1.3 billion. Management remains optimistic about its growth potential.
Growth Strategy:
Triveni Turbines is pursuing a multi-faceted growth strategy:
- Diversification: Expanding product offerings (e.g., 30-100 MW turbines, API turbines, CO2-based systems) and geographic presence (U.S., South Africa, etc.) to mitigate market volatility.
- Innovation and R&D: Increased investment in R&D, focusing on CO2-based energy storage systems (e.g., a ₹2.9 billion order from NTPC for a 160 MW-hour system), supercritical/transcritical CO2 products, and steam cycle efficiency enhancements. This includes capital investments in testing infrastructure and digital technology integration.
- Aftermarket Expansion: Targeting higher-value refurbishment and service offerings, leveraging a growing enquiry pipeline in new geographies like the U.S. and South Africa.
- Global Collaboration: Partnerships with universities, design houses, and companies like Energy Dome to enhance technological capabilities.
- People Strategy: Emphasizing workforce training and hiring skilled engineers (100s planned over the next few years) to drive innovation and execution.
Future Outlook:
- Medium-Term Confidence: Management expects robust performance over the next few years, supported by a strong enquiry pipeline (up 75% YoY domestically) and order book visibility. New product introductions (e.g., CO2 systems) enhance resilience against market cyclicality.
- Market Diversification: Anticipates sustained demand in renewable energy (waste-to-energy, biomass) and industrial segments (Oil & Gas, Process Cogeneration), with Aftermarket as a key growth driver.
- Domestic Rebound: While Q3 domestic order booking was subdued, optimism persists for Q4 FY 25 and beyond, driven by enquiry growth in sectors like steel, cement, and distilleries.
- Capex Plans: Planned investments of ₹120-150 crore over the next two years for capacity expansion (e.g., a new bay in Sompura) and R&D infrastructure.
Market Situation:
- Domestic Market: Subdued demand in Q3, with a degrowth in overall market size and increased competitive intensity. However, enquiry pipeline growth (59% YoY in Q3) signals potential recovery.
- Export Market: Strong growth (41% YoY in 9M order booking), driven by renewable energy and new applications in diverse geographies. The U.S. is an investment market with growing traction.
- Geopolitical Impact: Minimal disruption due to an indigenous supply chain and localization capabilities, making the company agnostic to tariff wars.
Detailed Question and Answer Session (Minimum 10 Questions)
- Ravi Swaminathan (Avendus Spark): CO2-Based Energy Storage System – Addressable Market and Profitability
- Question: What is the size of the addressable market for the CO2-based energy storage system in India over the next 2-3 years? How does it differ from the core business, and what profitability can be expected?
- Answer (Nikhil Sawhney): This is a new product, with the current project being a 160 MW-hour system for NTPC costing ₹2.9 billion. It uses CO2 in a closed-loop thermodynamic process for long-duration energy storage, aligning with the company’s electromechanical expertise. The Total Addressable Market (TAM) wasn’t quantified, but it’s an alternate revenue stream not yet factored into projections. Profitability is modest initially due to outsourcing and civil works (10-12% of scope), but it won’t dilute overall margins. Normal domestic margins are expected long-term as costs are rationalized.
- Ravi Swaminathan (Follow-up): Project Execution Timeline and Domestic Market Weakness
- Question: What’s the execution timeline for the CO2 project, and is there domestic market weakness affecting order inflows?
- Answer (Nikhil Sawhney): Execution specifics will be clearer by Q4; it’s premature to detail now. Domestic order inflows were soft in Q3, mirroring trends in capital goods. S.N. Prasad added that Q3 enquiries grew 59% YoY (75% YTD), with traction in Process Cogeneration, Steel, Cement, and Oil & Gas, though finalizations lagged. Q4 looks promising.
- Amit Anwani (PL Capital): Export Markets and Geopolitical Impact
- Question: Which new export markets and product categories contributed to growth, and how do geopolitical changes affect markets?
- Answer (Nikhil Sawhney): Specific markets weren’t disclosed, but export growth (9% YoY in Q3) came from renewables (geothermal, biomass, waste applications). Geopolitical tariffs have minimal impact due to localization capabilities and an indigenous supply chain, ensuring resilience across markets like the U.S.
- Amit Anwani (Follow-up): U.S. Investment and API Turbines
- Question: What’s the total U.S. investment, client type, and API turbine enquiry pipeline?
- Answer (Nikhil Sawhney): U.S. investment details weren’t specified beyond a ₹200 million loss projection for FY 25, absorbed by margin growth. It’s a key market with growing enquiries in Oil & Gas, Process Cogeneration, and renewables. API turbine specifics weren’t provided due to micro-level granularity.
- Harshit Patel (Equirius Securities): CO2 System Scope Split
- Question: What’s the scope split between Triveni and its technology partner for the CO2 system?
- Answer (Nikhil Sawhney): Details are pending Q4 disclosure due to exchange notification constraints. The ₹2.9 billion order covers end-to-end responsibility, with Triveni providing the turbine and peripherals, collaborating with Energy Dome to offer an alternative to lithium-ion storage.
- Harshit Patel (Follow-up): Aftermarket Slowness
- Question: Why hasn’t Aftermarket order booking grown despite expansion efforts?
- Answer (Nikhil Sawhney): In South Africa, reduced outages (200+ days without) lowered order volume but increased value addition. Sachin Parab noted U.S. enquiry growth, with revenues lagging but expected to rise. Overall, Aftermarket remains a growth focus.
- Amit Mahawar (UBS): SADC vs. North America Market Dynamics
- Question: How do SADC and North American market experiences compare?
- Answer (Nikhil Sawhney): SADC is smaller with less capital stock, while the U.S. is larger, bureaucratic, and competitive. Both validate service, refurbishment, and product goals, but the U.S. offers dynamic new applications. Sachin Parab highlighted certification delays in the U.S., offset by long-term potential.
- Amit Mahawar (Follow-up): Aftermarket Inflection and Hiring Plans
- Question: Is FY 26-27 an inflection point for Aftermarket, and what’s the hiring plan for 2025-26?
- Answer (Nikhil Sawhney): Aftermarket growth exceeds product growth, with a global share of 0.5-1%, not 6-7%. S.N. Prasad cited a strong refurbishment pipeline. Hiring targets 100s of service engineers over years, focusing on capability and attitude.
- Prolin Nandu (Edelweiss): Sustainable Energy Demand
- Question: Is focus on sustainable energy (waste-to-energy, biomass) declining due to easing energy prices?
- Answer (Nikhil Sawhney): No decline; demand persists as long as waste is available, driven by economics over subsidies. Oil & Gas remains strong, balancing renewable focus.
- Prolin Nandu (Follow-up): Growth Opportunities in FY 26-27
- Question: Will FY 26-27 focus on ramping up new products or entering new white spaces?
- Answer (Nikhil Sawhney): Mature markets (e.g., 30-100 MW) offer growth, while CO2 systems need proven value. Diversification across products and Aftermarket sustains growth without over-reliance on untested segments.
- Bimal Sampat (Individual Investor): Capex Plans
- Question: Will capex increase with U.S. expansion and CO2 segment?
- Answer (Nikhil Sawhney): Yes, capex will rise to ₹120-150 crore over two years for capacity (new bay in Sompura) and R&D testing. Sachin Parab confirmed infrastructure upgrades.
- Chirag Muchhala (Centrum Broking): Domestic Market Size and Competition
- Question: What’s the domestic market size in MW, competitive intensity, and market share?
- Answer (Nikhil Sawhney): Market share is ~50%, but market size shrank, increasing competition. Triveni avoids price wars, relying on value-added services. MW data wasn’t provided.
- Shreyansh Gattani (SG Securities): CO2 Turbine Cost Parity
- Question: What’s the cost parity of CO2 turbines vs. lithium-ion?
- Answer (Nikhil Sawhney): Current cost is $200,000/MW-hour, aiming for $120,000-$125,000. It’s a 30-35-year product with minimal degradation, with more clarity next quarter.