Genus Power — Q3 FY25 earnings call

Call held 14 Feb 2025

Management summary

Genus Power reported a strong Q3 FY25 with EBITDA margins reaching 19%, one of its highest. The company maintained its FY25 revenue guidance of ₹2,500 crores and projected 30-40% growth for FY26. While execution is progressing with new capacity and project go-lives, the working capital cycle is expected to remain stretched for the next six months, and no major new tenders are anticipated in the immediate future. Management also clarified that an ED search had no impact on operations.

Highlights

  • EBITDA margin reached 19% this quarter, one of the best in company history.

  • Maintained FY25 revenue guidance of ₹2,500 crores.

  • Maintained FY26 revenue growth guidance of 30-40%.

  • Capacity expansion in Assam is operational, and production has started.

  • All four Assam projects and two Chhattisgarh projects have gone live or are about to.

Concerns

  • No major smart meter tenders expected in the next quarter.

  • Working capital cycle is not expected to improve for the next six months.

  • Other expenses increased due to notional Mark-to-Market (MTM) losses.

Key financials

  1. EBITDA Margin 19%

What they filed

Q1 FY27: revenue up 44.9%, net profit up 43.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue487 604 937 942 1,149 +136%1,122 +86%1,537 +64%1,365 +45%
EBITDA81 93 196 199 234 +189%212 +128%267 +36%260 +31%
Net profit83 57 123 137 143 +72%140 +146%172 +40%197 +44%
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

medium confidence

Pipeline

other

No major tenders in the pipeline for next quarter

Currently, our order book is very, very healthy. According to the tenders coming, we will be making our strategy. But yes, Genus will always be a very significant player in the market that I can assure you.

Source: Q&A

Capital allocation

high confidence
  • Capex Capex disclosed
    • Assam Brownfield CAPEX for capacity expansion
    Understood, sir. So, since you had mentioned in your press release that the Assam Brownfield CAPEX, the capacity expansion has taken place. I just wanted to understand how is the ramp up in terms of execution going on over there, sir? Have we started production at the new capacity installed? Yes, we have already started production at the new capacity.
  • Debt Gross ₹1,200 Cr · Net ₹300 Cr
    So, gross debt is right now is around Rs. 1,200 crores and net debt will be around Rs. 300-400 crores.
  • M&A Non-listed companies and group companies Divestment · Pending regulatory

    Demerger of non-core investments

    So, that's already we are working on that and that's already filed in NCLT. That's a different investment in non listed companies and some group companies and all that is going out. That is already being filed with the demerger of the company and it is taking some time and that is the only thing. It's a very old process going on.
  • M&A JV for smart meter projects Joint venture · Pending investment · Consideration ₹[object Object] (cash)

    Investment in smart meter platform

    Total investment over 3-4 years, next year's portion to be funded by internal accruals without debt.

    And regarding the investments in the JV, basically the total investment that Genus has to do is almost $200 million and that will be in 3 to 4 years. Next year, whatever there will be internal accruals that will be sufficient for the investment in the JV. We don't need any debt or anything to invest for the JV.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · yearly basis · High confidence 15%-16%
    Basically, we have given guidance of 15%-16% EBITDA always, 16% EBITDA always, and you have to stick on that. There might be some differences in the margin from quarter to quarter, but we should not see that. It's always we have to see the average margins on the yearly basis. That is important. So, we are again on the same guidance that we will be doing a 15%-16% EBITDA and that is for sure.

    — Kailash Agarwal

Revenue

  • FY25 Revenue Revenue · FY25 · High confidence Rs. 2,500 crores
    Understood. And second is on, sorry, if you could, I mean, any specific guidance in terms of FY26, I mean, and in terms of FY25 revenue guidance of Rs. 2,500 crores, we are maintaining that? Jitendra Agarwal: We are 100% maintaining that.

    — Jitendra Agarwal

Revenue Growth

  • FY26 Revenue Growth Revenue Growth · FY26 · High confidence 30%-40%
    FY26, we have already given guidance last quarter that we will be doing another 30%-40% of... This year we have given a guidance of Rs. 2,500 crores and there will be surely an increase of 30% to 40% for next year.

    — Kailash Agarwal

  • FY26 Revenue Growth Revenue Growth · FY26 · High confidence 30%-35%

    Previously 30%-40% → 30%-35%

    So, we spoke during the conference only. What we have told earlier, we will maintain the same. That we are maintaining the same 30%-35% growth in the next financial year.

    — Jitendra Agarwal

Meters Manufactured

  • Meters Manufactured (FY25) Meters Manufactured · FY25 · Medium confidence 3-3.5 million
    So, number of meters always, these numbers have a lot of dependence on the variety of meters. So, numbers will be around 3-3.5 million. I don't want to specify on the numbers because then it becomes very confusing. So, that is why I want to specify on the overall guidance. So, it is not only dependent on the number of meters. So, there is a big mix of meters that makes a big difference.

    — Jitendra Agarwal

Working Capital

  • Working Capital Cycle Improvement Working Capital · Next 6 months · High confidence No improvement for next 6 months
    So, right now it's the initial stage where we are picking up the different projects. There are so many projects and every single project has, we are just picking up on that. So, right now there is no improvement in the working capital cycle, rather it is a little more than what we expected. But coming forward or going forward, it will be surely improved once the SAT (site acceptance test) or OGL (operational go live) of the different projects will start getting up. So, initially for the next six months, you will see that there is no improvement in the working capital cycle.

    — Kailash Agarwal

What to watch in Q4 FY25

Working Capital Cycle Improvement

H2 FY26
Current No improvement expected for next 6 months
Target Signs of improvement post 6 months

Why it matters

Improvement in working capital is crucial for cash flow generation and reducing debt reliance.

So, initially for the next six months, you will see that there is no improvement in the working capital cycle.

Risks & concerns

  • ED Search

    high

    An ED search occurred on December 3, 2024, but management states no impact on manufacturing or business and no further updates received.

    Analyst downplayed

  • Stretched Working Capital Cycle

    medium

    Working capital is not expected to improve for the next six months due to initial project stages and time required for SAT/OGL.

    Management acknowledged

  • Slowdown in New Smart Meter Tenders

    medium

    No major new tenders are expected in the next quarter, though some states are yet to adopt smart meters and tenders are anticipated to resume later.

    Management acknowledged

  • Raw Material Price Volatility

    low

    Management states that as a high-technology product, raw material price increases do not have a major impact on costs.

    Analyst downplayed

  • Notional Mark-to-Market (MTM) Losses

    low

    MTM losses are notional, market-dependent, and do not affect actual profit or loss, thus having no effect on the company's core business.

    Management acknowledged

Q&A highlights

7 direct, 1 evasive
Reason for EBITDA margin expansion Evasive
Sometimes it happens. It is the quality of meters, the number of meters. There are many things that is not properly explainable. Basically, it's always important to understand the average margins.

Analyst sought specific drivers for the strong margin, but management gave a general, non-specific answer, making it difficult to assess sustainability.

Asked by Darshil Pandya

Increase in other expenses Direct
Other expenses you will see in consolidated, that has gone up because as per the accounting policy, I don't know that is because of the auditors only. When they say that MTM or mark to mark, it's all the notional. One thing you have to understand that it is a notional thing.

Clarified that the increase in other expenses was due to notional Mark-to-Market (MTM) losses, not operational issues, which is important for understanding profitability.

Asked by Mahesh Patil

Smart meter ordering pipeline Direct
Well, there are no major tenders in the pipeline. Yes, there are always few tenders going on, but there are no major tenders in the pipeline and on the ordering side, Genus is fairly good.

Management indicated a slowdown in new major smart meter tenders for at least the next quarter, impacting future order book growth.

Asked by Mahesh Patil

Working capital cycle improvement Direct
So, right now there is no improvement in the working capital cycle, rather it is a little more than what we expected. But coming forward or going forward, it will be surely improved once the SAT (site acceptance test) or OGL (operational go live) of the different projects will start getting up. So, initially for the next six months, you will see that there is no improvement in the working capital cycle.

Management explicitly stated that working capital will not improve for the next six months, indicating continued cash flow pressure in the short term.

Asked by Chinmay Kabra

Go-live status of Assam and Chhattisgarh projects Direct
So, all the four projects in Assam have go live. So, they are all on the operational go live. And in terms of Chhattisgarh, there are two projects running. One should get go live in next week and the other by the end of next week.

Confirmed successful execution and operationalization of key projects, which is crucial for revenue recognition and future cash flows.

Asked by Darsh Solanki

Impact of MSEDCL prepaid/time-of-day billing policy Direct
So, these are two separate things, prepaid whether MSEDCL wants to continue it or scrap it. It is definitely the choice of MSEDCL, but to the best of my understanding, currently all the smart meter tenders are on the prepaid mode... Time of day use is one of the biggest features of the smart meters.

Clarified that smart meters support both prepaid and time-of-day billing, and such policy changes are part of the evolving smart grid ecosystem, not a fundamental threat.

Asked by Pranjal Mukhija

Impact of ED search on manufacturing and revenue targets Direct
If you see that the search happened on 3rd of December, it's almost 2.5 months. So, nothing to do with the manufacturing, nothing to do with our business. It's a normal course. There is some inquiry and it happens. So, there will be no effect on the business of the company.

Management reassured that the ED search has had no impact on manufacturing or business operations, addressing a key investor concern.

Asked by Sohan Joshi

Challenges in improving smart meter installation rate Direct
I would say it's an overall ecosystem, it's just picking up. These are very consumer centric infrastructure projects... So, it's a complete change of ecosystem, complete change of mindset for everybody in the country. This is one project which will touch each and every human of this country. So, that is why it is an ecosystem which is getting built.

Highlighted that the main challenge is the complex ecosystem change required for smart meter adoption, rather than specific company-level hurdles, implying a gradual but steady rollout.

Asked by Rajesh Vora

3 min read 8 chapters

Detailed narrative

Q3 FY25 Performance & Margin Expansion

Genus Power reported a strong Q3 FY25, with EBITDA margins reaching 19%, noted as one of the best in the company's history. Management attributed this expansion to factors like meter quality and quantity, though specific details were not fully elaborated. The company reiterated its full-year FY25 EBITDA margin guidance of 15-16% on a yearly average basis.

FY25 & FY26 Revenue Guidance

The company maintained its revenue guidance of ₹2,500 crores for FY25, expressing 100% confidence in achieving this target. For FY26, Genus Power projects a revenue growth of 30-40%, later refined to 30-35%. This growth is expected to be supported by the ongoing smart meter rollout and capacity expansions.

Operational Execution & Project Go-Live

Genus Power confirmed that all four smart meter projects in Assam have gone live and are fully operational. In Chhattisgarh, two projects are running, with one expected to go live in the next week and the other by the end of the following week. The company's new capacity expansion in Assam Brownfield has also commenced production, contributing to overall business support.

Order Book & Tendering Outlook

Management described the current order book as 'very healthy' but indicated that no major new smart meter tenders are expected in the pipeline for at least the next quarter. They noted that some states are still in the process of adopting smart meters, and tenders are anticipated to resume thereafter, with southern states expected to become more active in the next financial year.

Working Capital Management

The working capital cycle is currently more stretched than expected and is not anticipated to improve for the next six months. This is attributed to the initial stages of numerous projects, which require time for Site Acceptance Tests (SAT) and Operational Go-Live (OGL) to be completed before monthly charges and Direct Debit Facility (DDF) mechanisms become fully active.

Debt Position & Strategic Investments

The company's gross debt stands at approximately ₹1,200 crores, with net debt ranging between ₹300-400 crores. Management stated that they do not foresee any further increase in debt. Regarding strategic investments, a demerger of non-listed and group companies is underway, filed with NCLT. A total investment of $200 million in a smart meter JV is planned over 3-4 years, with next year's portion expected to be funded entirely through internal accruals.

ED Search Update & Business Impact

An ED search occurred on December 3, 2024. Management clarified that they have provided updates to exchanges and have not received any further communication from the department or court. They asserted that the search has had no impact on the company's manufacturing or overall business operations, considering it a normal course inquiry.

Raw Material Costs & MTM Losses

Management stated that raw material price volatility does not significantly impact the company due to its high-technology product nature. They also clarified that the increase in 'other expenses' this quarter was due to notional Mark-to-Market (MTM) losses, which are market-dependent and do not reflect actual profit or loss, thus having no effect on the company's core business.

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