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    Gensol Engineer.

    GENSOL
    Capital Goods·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

    5
    • 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

    4
    • 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

    Metrics

    7

    Periods

    2

    Q3 FY25

    3
    • Revenue
      ₹345 Cr
      YoY+30%
    • EBITDA
      ₹63 Cr
      YoY+19%
    • PAT
      ₹18 Cr

    9M FY25

    4
    • Revenue
      ₹1,056 Cr
      YoY+42%
    • EBITDA
      ₹246 Cr
      YoY+89%
    • EBITDA Margin
      23.3%
    • PAT
      ₹67 Cr
      YoY+34%

    Order Book

    high confidence

    Total Value

    ₹ 7,000 crores

    as of 2024-12-31

    quantified

    Inflow this qtr

    ₹ 2,928 crores

    Execution

    completion timeline for new projects is 18 months

    Composition

    Mix2 contract types
    • Turnkey Projects80.0%
    • Balance of System Projects20.0%

    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

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Gross ₹1,150 crores · Net ₹600 crores

    Liquidity

    Cash ₹250 crores · Undrawn ₹350 crores

    Access to non-fund-based limits is INR 350-400 crores.

    Guidance & targets

    5
    CategoryTargetPriority
    Revenue
    FY25 Revenue
    around INR 2,000 crores
    Low
    Revenue
    Q4 Growth Rate
    maintain good growth rate
    Medium
    Profitability
    Q4 Margins
    better than previous quarter
    Medium
    Debt
    EV Leasing Debt
    close to 0
    Medium
    EV Manufacturing
    Ezio Production Start
    sometime this year
    High

    Refex Deal Closure & Debt Deleveraging

    This quarter or coming quarter
    CurrentFinancial closure underway, INR 315-320 crores loan obligation to be transferred.
    TargetDeal 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.

    How to verify

    capital_allocation.debt.actions

    Risks & concerns

    4
    RiskSeverity

    Execution delays due to external factors

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

    medium

    Inability to meet revenue guidance

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

    medium

    Margin pressure from project mix

    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

    low

    High promoter pledged shares

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

    medium

    Q&A highlights

    8

    “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

    3 min read7 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    07

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.