Gensol Engineer. — Q3 FY25 earnings call

Call held 13 Feb 2025

Management summary

Gensol Engineering reported strong 9-month FY25 financial performance with significant revenue and EBITDA growth, driven by a robust Solar EPC order book of INR 7,000 crores. While Q3 FY25 saw slower growth and margin compression due to external factors, management anticipates a strong Q4 with higher-margin turnkey project execution. The company is also strategically deleveraging its EV leasing business and progressing cautiously with EV manufacturing, despite being behind its full-year revenue guidance.

Highlights

  • Solar EPC order book reached INR 7,000 crores as of December 31, 2024, driven by new wins totaling approximately INR 3,000 crores.

  • 9-month FY25 revenue grew 42% YoY to INR 1,056 crores, demonstrating strong top-line expansion.

  • 9-month FY25 EBITDA grew 89% YoY to INR 246 crores, with EBITDA margins expanding significantly by 582 bps to 23.3%.

  • The EV leasing business turned profitable this quarter and its Assets Under Management (AUM) reached INR 850 crores as of December 2024.

  • The company is undertaking a strategic deleveraging move by transferring INR 315 crores of loan obligation to Refex Green Mobility, which will also reduce promoter pledge by INR 300 crores.

Concerns

  • Q3 FY25 revenue growth of 30% YoY was slower than expected, attributed to extended rainfall and delays in land transfer from customers for large projects.

  • The company is significantly behind its original FY25 revenue guidance of INR 2,000 crores, having achieved INR 1,056 crores in 9 months.

  • Q3 FY25 margins were lower due to a higher proportion of lower-margin Balance of System (BOS) projects being executed, as land for higher-margin turnkey projects was unavailable.

  • Promoter pledged shares remain high at 81.7% as of December 2024, although a reduction is expected post the Refex transaction.

Key financials

2 periods

Q3 FY25

  • Revenue
    ₹345 Cr
    YoY +30%
  • EBITDA
    ₹63 Cr
    YoY +19%
  • PAT
    ₹18 Cr

9M FY25

  • Revenue
    ₹1,056 Cr
    YoY +42%
  • EBITDA
    ₹246 Cr
    YoY +89%
  • EBITDA Margin
    23.3%
  • PAT
    ₹67 Cr
    YoY +34%

What they filed

Q3 FY25: revenue up 56.8%, net profit up 50.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ4 FY23Q1 FY24Q2 FY24Q3 FY24Q4 FY24Q1 FY25Q2 FY25Q3 FY25
Revenue164 145 305 220 399 +143%362 +150%346 +13%345 +57%
EBITDA29 37 47 63 79 +172%75 +103%107 +128%69 +10%
Net profit7 10 18 12 20 +186%27 +170%23 +28%18 +50%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹7,000 Cr

as of 2024-12-31 quantified

Inflow this quarter

₹2,928 Cr

Execution

completion timeline for new projects is 18 months

Composition

Mix 2 contract types
  • Turnkey Projects 80%
  • Balance of System Projects 20%

Share of order book by contract type

Cancellations & deferrals

  • deferred: Execution delays in Q3 due to extended rainfall and customer delays in land transfer for large projects.
Order book is healthy and skewed towards A-rated customers, ensuring quality and execution visibility.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    • Car buying for EV leasing ₹10 Cr
    • EV manufacturing capitalization ₹15 Cr
    So, the only thing that we do in EV leasing is utilization of loans to buy cars. And you would have done maybe INR10 crores to INR15 crores of car buying on the EV leasing side. And on the EV manufacturing, I think about maybe last quarter, we would have done INR15 crores of capitalization.
  • Debt Gross ₹1,150 Cr · Net ₹600 Cr
    • Repayment Loan obligation to be transferred to Refex Green Mobility, leading to deleveraging. ₹315 Cr
    • Repayment Organically reduced debt in H1 FY25. ₹150 Cr
    Total gross debt is INR1,150 crores. And if you back out the Refex deal debt, which is about INR320 crores, that's going to transfer to Refex, so you get to about INR850 crores. So INR850 crores against the equity of INR600 crores is the gross debt, which is about 1.5x. And if you were to think of it in terms of net debt, then that number is INR600 crores, which is 1:1 ratio to equity.
  • Liquidity Cash ₹250 Cr · Undrawn ₹350 Cr Access to non-fund-based limits is INR 350-400 crores.
    On how much cash balance and as of 31st December, our cash balance and working capital mix, I'd like to go to Ankit to share his thoughts or maybe I'll do it. So, we have -- I think 250 or Ankit, could you share your thoughts on this year? I don't remember the exact numbers. Right. So, the total liquidity in the books is about INR250 crores. And on the working capital, about INR350 crores to INR400 crores access to the limits is what we have.

Guidance & targets

Revenue

  • FY25 Revenue Revenue · FY25 · Low confidence around INR 2,000 crores
    Our guidance for this year was around INR 2,000 crores. But looking at first 9 months, we are very much behind the guidance.

    — Garvit Goyal

  • Q4 Growth Rate Revenue · Q4 FY25 · Medium confidence maintain good growth rate
    So I will not go into too many specifics, but like I mentioned that our aim is that we will continue to maintain the growth rate. So, we have done a very good growth rate in the first 9 months, and that will continue to get maintained and we will be around that range.

    — Anmol Singh Jaggi

Profitability

  • Q4 Margins Profitability · Q4 FY25 · Medium confidence better than previous quarter
    I would say it will be better than the previous quarter. But yes, it will be better because this quarter, we will have some more turnkey projects that we will be executing. So, it will be slightly better than previous quarter.

    — Anmol Singh Jaggi

Debt

  • EV Leasing Debt Debt · future · Medium confidence close to 0
    After the Refex transaction gets concluded, we will be doing similar kind of transactions to actually make the EV book maybe close to 0.

    — Anmol Singh Jaggi

EV Manufacturing

  • Ezio Production Start EV Manufacturing · FY26 · High confidence sometime this year
    And maybe sometime in this year, we will start the production and then slow and steadily ramp it up. So even in our earlier calls, we have mentioned that we will be able to only do a slow and steady start to the production.

    — Anmol Singh Jaggi

What to watch in Q4 FY25

Refex Deal Closure & Debt Deleveraging

This quarter or coming quarter
Current Financial closure underway, INR 315-320 crores loan obligation to be transferred.
Target Deal closed, debt reduced by INR 315-320 crores.

Why it matters

This is a significant deleveraging event that will impact the company's debt metrics and promoter pledge.

Refex is currently undergoing financial closure for this, and we expect it to be done soon. The management of Refex is highly proactive and is working efficiently to close the transaction at the earliest.

Risks & concerns

  • Execution delays due to external factors

    medium

    Extended rainfall and delays in land transfer from customers impacted Q3 execution, causing projects to spill over into coming quarters.

    Management acknowledged

  • Inability to meet revenue guidance

    medium

    Company is significantly behind its FY25 revenue guidance of INR 2,000 crores, similar to missing FY24 guidance.

    Analyst acknowledged

  • High promoter pledged shares

    medium

    Promoter pledged shares stood at 81.7% as of December 2024, though management outlined plans for reduction through asset sales.

    Analyst acknowledged

  • Margin pressure from project mix

    low

    Q3 margins were lower due to a higher proportion of lower-margin Balance of System (BOS) projects, but expected to improve with more turnkey projects in Q4.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
FY25 Revenue Guidance Miss Partial
Our guidance for this year was around INR 2,000 crores. But looking at first 9 months, we are very much behind the guidance. So, what is your take on it? Because in earlier year also, you were guiding for INR 1,200 crores top line for FY '24, and we achieved only INR 960 crores. So why we are not able to execute the numbers that we are guiding to the investors, sir?

Analyst challenged management on repeated guidance misses, highlighting a potential issue with forecasting or execution, which management attributed to external factors and land delays.

Asked by Garvit Goyal

Q3 Margin Compression Direct
So, as you know, we have always been saying that we have 2 different kinds of projects. One is our turnkey projects where our margins are higher. And then we have a balance of system project where the margins are lower. And this particular quarter, quarter 3, because we couldn't get land from our turnkey customers, majority of the execution came from balance of system customers.

Analyst questioned the significant dip in Q3 margins, and management provided a clear explanation related to project mix and land availability issues.

Asked by Garvit Goyal

Refex EV Leasing Deal & Deleveraging Direct
Yes. So, these vehicles are today owned by Gensol Engineering Limited, and these vehicles are being bought by Refex. And when these vehicles are being bought, Refex is financing these vehicles. So, we are going to do a sale of these vehicles and Refex is going to purchase these vehicles. And when Refex purchases these vehicles, Refex will pay us that amount, and we will pay back the same amount to the lenders, and that's how we will get deleveraged.

Analyst sought clarification on the mechanics of the Refex deal, which is a significant deleveraging event for the company and impacts its capital structure.

Asked by Santosh Varma

Promoter Pledge & Reduction Strategy Direct
So, the promoter pledge is in way of 2 things. One is the share pledge that we have given to Power Finance Corporation and IREDA against the EV lease debt that we have taken. And as you know, we have already signed and we have already deleveraged on the EV lease debt by about INR300 crores, that INR300 crores of deleverage will also mean that another INR300 crores of share pledge will get removed from us.

Analyst raised concern about the high promoter pledge, and management explained its link to EV lease debt and how the Refex transaction will significantly reduce it.

Asked by Pratik Bagadia

Ezio Production Timeline & Strategy Direct
When it comes to when will we start the production of this Ezio, we have completed our base testing, and we are in the process of completing our advanced testing, and we expect our advanced testing to get completed soon. Post that, we shall be going into the production for the vehicle. Anyways, we have said that even if we start production, it is going to be a very slow and steady start to the production.

Analyst inquired about the launch timeline for the new EV, and management provided a cautious, phased approach to production, emphasizing a slow and steady ramp-up.

Asked by Lokesh Dubey

Deferred Tax Asset Explanation Direct
Yes. I think what you are referring to is, on the consolidated numbers, we have created a deferred tax asset of about INR2 crores. And that is because of one of our subsidiaries had carry forward losses, which is essentially the Let'sEV entity, which does EV leasing. And in the past, like we discussed earlier, it was in losses.

Analyst questioned the INR 2 crores deferred tax, and management clarified it's a timing difference related to carry forward losses in the EV leasing subsidiary and accelerated depreciation, not a performance issue.

Asked by Sedin George

EV Leasing Business Strategy & Profitability Direct
So, in the short term, as you know, we are actually scaling down the EV leasing business because we are doing this INR300 crores plus transaction with Refex, and we want to do multiple such transactions to scale down the EV leasing business. So that is what you see. But as our as Ezio starts to get into production, there will be a number of customers who will lead leasing and financing solutions.

Analyst questioned the strategy of scaling down EV leasing after its launch, and management explained it as a temporary deleveraging move before ramping up to support new EV manufacturing.

Asked by Shraman Siyal

EV Leasing Revenue Breakdown Evasive
See, those numbers, we don't like to disclose because it's not a segment. Maybe what we can do is we can share with you in a separate statement.

Analyst pressed for a breakdown of EV leasing revenue between the parent company and its subsidiary, which management declined to provide, indicating a lack of granular disclosure.

Asked by Shraman Siyal

3 min read 7 chapters

Detailed narrative

Robust Solar EPC Order Book and New Project Wins

Gensol's Solar EPC business demonstrated strong momentum, securing new large-scale projects from prominent public sector undertakings. The company won contracts for 275 MW and 245 MW projects in Khavda, Gujarat, valued at approximately INR 1,062 crores and INR 968 crores respectively. Additionally, a 225 MW project from NTPC in Gujarat worth INR 898 crores was secured. These significant wins boosted the total Solar EPC order book to a healthy INR 7,000 crores as of December 31, 2024, with 80% of this book comprising higher-margin turnkey projects, ensuring future revenue visibility and profitability.

Strong Financial Growth Despite Q3 Headwinds

For the nine months ended FY25, Gensol reported a 42% year-on-year increase in total revenue, reaching INR 1,056 crores. EBITDA saw an even more significant jump of 89% year-on-year, totaling INR 246 crores, with EBITDA margins expanding by 582 basis points to 23.3% from 17.5%. Net profit for the nine-month period grew 34% to INR 67 crores. While Q3 FY25 revenue grew 30% to INR 345 crores and PAT was INR 18 crores, management acknowledged a slowdown in Q3 due to extended rainfall and delays in land transfer for large projects, which are expected to spill over into coming quarters.

Strategic Deleveraging and Profitability in EV Leasing

Gensol's EV leasing vertical continues to grow, with assets under management (AUM) reaching approximately INR 850 crores as of December 2024. A significant strategic move involved partnering with Refex Green Mobility to transfer 2,997 electric 4-wheelers, which will result in the transfer of INR 315 crores of loan obligation. This transaction is expected to significantly deleverage Gensol's balance sheet, and the company plans similar transactions to bring its EV leasing debt close to zero. The EV leasing business also turned profitable this quarter, demonstrating its operational efficiency.

Cautious Progress in EV Manufacturing with Strong Pre-orders

The EV manufacturing arm gained considerable traction, unveiling two new electric variants, EZIO (urban mobility) and EZIBOT (cargo), at the Bharat Mobility Global Expo 2025. The company has received 30,000 pre-orders from fleet operators, indicating strong market interest. Production for Ezio is expected to commence sometime in FY26, following completion of base and advanced testing. Gensol plans a slow and steady ramp-up, starting with an initial batch of 100 cars, reflecting a prudent approach as a first-time OEM to ensure quality and customer feedback integration.

Capital Structure and Liquidity Position

As of December 31, 2024, Gensol reported a gross debt of INR 1,150 crores. Following the Refex deal, which transfers INR 315-320 crores of debt, the gross debt is projected to be INR 850 crores against an equity of INR 600 crores, resulting in a gross debt-to-equity ratio of 1.5x. Net debt stands at INR 600 crores, a 1:1 ratio to equity. The company holds a cash balance of INR 250 crores and has access to INR 350-400 crores in non-fund-based limits, indicating sufficient liquidity for its operations and growth plans.

Warrants and Future Equity Infusion

Gensol had a warrants round for INR 540 crores, of which INR 140 crores has been received. The remaining INR 400 crores is expected to be received by December 31, 2025. These proceeds are strategically allocated primarily for working capital (more than half), EV manufacturing (25%), and a small portion for inorganic acquisitions. This capital infusion is crucial for supporting the company's growth initiatives across its renewable energy and e-mobility segments.

Focus on High-Margin Turnkey Projects for Profitability

Management emphasized its strategy to maintain healthy margins by focusing on higher-margin turnkey projects. While Q3 saw lower margins due to a higher mix of Balance of System (BOS) projects, 80% of the current INR 7,000 crores order book is comprised of higher-margin turnkey projects. This strategic focus is expected to lead to improved margins in Q4 and subsequent quarters as these projects are executed, ensuring sustained profitability and value creation.

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