Earnings Call Transcript Analysis Report #
Triveni Turbine Limited Q3 & 9M FY25 Earnings Analysis #
Financial Performance #
- Key Metrics:
- Q3 FY25 Revenue: ₹5.03 billion (record high), +17% YoY.
- Q3 FY25 Domestic Sales: ₹2.5 billion, +5% YoY.
- Q3 FY25 Export Sales: ₹2.5 billion, +31% YoY. (Export share: 49% vs 44% YoY).
- Q3 FY25 EBITDA: ₹1.31 billion (record high), +30% YoY. Margin: 26.1% (+270 bps YoY).
- Q3 FY25 PAT: ₹926 million, +36% YoY.
- 9M FY25 Revenue: ₹14.7 billion (record high), +23% YoY.
- 9M FY25 Domestic Sales: ₹7.8 billion, +20% YoY.
- 9M FY25 Export Sales: ₹6.9 billion, +25% YoY. (Mix: 53:47 Domestic:Export).
- 9M FY25 EBITDA: +38% YoY. Margin: 25.7% (+280 bps YoY).
- 9M FY25 PAT: ₹2.6 billion.
- Order Book & Booking:
- Q3 FY25 Order Booking: ₹5.26 billion (largely flat YoY). Domestic subdued, Export +9% YoY to ₹3.46 billion (66% of Q3 booking).
- 9M FY25 Order Booking: ₹17.3 billion, +20% YoY. Domestic -3% YoY to ₹6.6 billion, Export +41% YoY to ₹10.7 billion (62% of 9M booking).
- Closing Order Book (Dec 31, 2024): ₹18.19 billion (record high), +15% YoY. Domestic ₹6.4 billion (-22% YoY), Export ₹11.8 billion (+55% YoY, 65% of total).
- Segment Performance:
- Product (Q3): Order Booking ₹4 billion (+6% YoY), Turnover ₹3.3 billion (+14% YoY).
- Product (9M): Order Booking ₹12.8 billion (+30% YoY), Turnover ₹9.7 billion (+21% YoY).
- Aftermarket (Q3): Order Booking ₹1.3 billion (-17% YoY), Turnover ₹1.8 billion (record high, +22% YoY). Management confident in future growth despite Q3 booking dip.
- Dividend: Interim dividend increased by 54% to ₹2 per share (200% face value).
- Guidance/Forecasts: No explicit revision, but management expresses strong confidence in maintaining robust performance in the medium term, supported by the order book and diversification.
Strategic Initiatives & Business Updates #
- CO2-Based Long Duration Energy Storage (LDES):
- Received Notice of Award from NTPC for a 160 MWh LDES system at Kudgi plant.
- Contract Value: Approx. ₹2.9 billion.
- Scope: Full EPC (Design, Engineering, Fabrication, Erection, Commissioning, Testing).
- Technology: CO2 thermodynamic transformation in a closed loop, using an indigenously developed sub-critical CO2 turbine by Triveni. Collaboration with Energy Dome.
- Goal: Provide grid stabilization, support renewable energy integration. Seen as an “alternate revenue stream” with significant future potential.
- R&D and Technology:
- Increased investment planned in R&D (manpower, capital for testing infrastructure).
- Focus areas: Allied CO2 systems (supercritical, transcritical), steam cycle efficiency enhancement, cost reduction (modularisation, supply chain efforts).
- Developing digital services as future revenue streams.
- Global collaborations with universities and design houses are ongoing.
- Market Expansion & Operations:
- U.S. Market: Significant investment phase, incurring incubation costs (loss > ₹200 million factored in FY25). Focus on building capabilities, getting certifications, driving service/refurbishment/product sales. Initial signs seen as “very, very encouraging,” with breakthrough orders in Q4.
- SADC (South Africa): Aftermarket presence established, contributing to reduced power outages for utility clients. Order value decreased, but value-add (parts business) and margins are improving.
- Aftermarket Strategy: Focus shifting to higher value-add refurbishment and parts business for own and third-party turbines globally. Aiming to leverage workshop facilities in India, U.S., and SADC region.
- Capacity Expansion: Planning an additional bay at the Sompura facility for manufacturing and R&D test beds to cater to increased volumes and new products. Capex expected to increase beyond historical levels.
- People Strategy: Strong focus on hiring, training, and capacity building to support growth and innovation. High demand noted for capable service engineers.
Market & Competitive Landscape #
- Industry Trends: Strong demand in renewable energy (waste-to-energy, biomass). Oil & Gas (API market) investment is robust. Industrial heat and power market favors decentralized generation. Sustainable energy transition seen as an opportunity, not a threat, due to fuel-agnostic heat capture technology.
- Competitive Positioning:
- Domestic market share estimated around 50%.
- Acknowledges intense competition domestically, sometimes leading to backing off on price-sensitive deals.
- U.S. market is more competitive than SADC, with established OEMs and third-party providers.
- Global Aftermarket share estimated very low indicating significant headroom for growth.
- Market Challenges/Opportunities:
- Domestic: Subdued Q3 order finalization despite a strong enquiry pipeline. Market size saw degrowth in 9M FY25. Q4 recovery hoped for but cautious outlook due to elections.
- Export: Strong growth driver, diversifying geographical risk. New geographies and applications contributing. U.S. presents a large, dynamic, but bureaucratic market opportunity.
- Geopolitics/Tariffs: Management feels “quite agnostic” due to localisation capabilities and largely indigenous supply chain.
- Market Sentiment: Overall positive, driven by export strength, aftermarket potential, and new technology initiatives (CO2). Domestic market softness is the main current concern.
Risk Factors & Challenges #
- Domestic Market Slowdown: Acknowledged subdued order booking in Q3 and overall market degrowth in 9M FY25. Uncertainty around the pace of recovery in Q4/near term.
- Competitive Intensity: High competition, particularly domestically, can pressure pricing and requires focus on value differentiation over price.
- U.S. Market Entry Challenges: Bureaucratic hurdles (permits, certifications) slowing down ramp-up compared to SADC entry. Incurring initial losses (“incubation costs”).