HPL Electric & Power Limited — Q1 FY26 earnings call

Call held 20 Aug 2025

Management summary

HPL Electric reported a mixed Q1 FY26, with consolidated revenues slightly down due to temporary dispatch delays and monsoon-related disruptions in the Metering & Systems segment. However, profitability improved significantly, driven by a strong performance in the Consumer & Industrial segment, which saw robust growth in revenues and EBIT. Management expressed high confidence in the long-term prospects of the metering business, citing a substantial order book and an improving execution pace for Q2 and H2 FY26.

Highlights

  • Consolidated revenues were down slightly by 2.5% YoY.

  • Gross margins expanded by 230 basis points.

  • EBITDA margin expanded by 85 basis points.

  • PAT was up 8.5% to ₹18.5 crore.

  • Consumer & Industrial segment revenues grew 16% YoY, with EBIT up 23% and margins crossing 11%.

  • Wires and cables segment grew well at 35%.

  • Smart meter order book stands at over ₹3,000 crore, providing long-term visibility.

  • Debt-equity ratio is comfortable at 0.69, with borrowings reduced over the last 12 months.

Key financials

  1. Consolidated Revenue Growth -2.5% -2.5%YoY
  2. Gross Margin Expansion 230 bps
  3. EBITDA Margin Expansion 85 bps
  4. PAT ₹18.5 Cr +8.5%YoY
  5. Debt-Equity Ratio 0.69

What they filed

Q1 FY27: revenue up 34.5%, net profit up 5.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue422 392 493 383 434 +3%474 +21%520 +5%515 +34%
EBITDA61 56 82 58 66 +8%72 +29%86 +5%63 +9%
Net profit22 18 37 18 22 +0%20 +11%31 −16%19 +6%
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.

Segment breakdown

  • Metering & Systems
    — Revenue Growth₹3,000 Cr Order Book
  • Consumer & Industrial
    16% Revenue Growth23% EBIT Growth11% Margins35% Wires and Cables Growth7% Lighting Growth

Guidance & targets

Volume

  • Metering Program Horizon Volume · long-term · High confidence 5-10 years
    Importantly, this remains a very strong medium- to long-term business. The metering program has a 5–10 year horizon.

    — Mr. Gautam Seth, Joint Managing Director & CFO

  • Total Meters Installed (Program End) Volume · program end · High confidence >30 crore meters
    By the time the program reaches its final stages, requirements are expected to exceed 30 crore meters.

    — Mr. Gautam Seth, Joint Managing Director & CFO

Capacity

  • Smart Meter Manufacturing Capacity Capacity · current · High confidence 1 million meters per month
    What I can share is that we currently have a capacity of about 1 million meters per month, which is quite significant.

    — Gautam Seth, Joint Managing Director & CFO

Revenue

  • Consumer & Industrial Business Revenue Revenue · by FY28 · High confidence ₹1,000 crore
    by FY28, we expect the Consumer & Industrial business to cross ₹1,000 crore in revenues, which would make it a very meaningful part of our overall business.

    — Gautam Seth, Joint Managing Director & CFO

Market Share

  • Retailer Network Market Share · by FY26 · High confidence 100,000 retailers
    three years ago we set ourselves the target of reaching 100,000 retailers, and with over 85,000 already onboard, we should achieve that by FY26.

    — Gautam Seth, Joint Managing Director & CFO

Export

  • International Expansion Traction Export · next two years · Medium confidence traction in select international markets
    In the next two years, we expect to start seeing some traction in select international markets.

    — Gautam Seth, Joint Managing Director & CFO

Debt

  • Debt Reduction Trend Debt · next 2-3 years · Medium confidence similar trend to continue (reduction)
    Over the next two to three years, we expect a similar trend to continue.

    — Gautam Seth, Joint Managing Director & CFO

Profitability

  • Margins Profitability · going forward · High confidence sustain and enhance margins
    Going forward, margins are not only sustainable but should improve. Our wide product portfolio allows us to focus on higher-margin products, and new launches are typically positioned in the premium segment to drive better realisations. So, with these multiple efforts, we are confident of sustaining and enhancing margins.

    — Gautam Seth, Joint Managing Director & CFO

Risks & concerns

  • Project execution delays by AMISPs and monsoon-related disruptions.

    medium

    Q1 revenues were impacted by delays in dispatch clearances and slowdowns due to monsoon, which are timing issues beyond direct control.

    Management acknowledged

  • Operational challenges faced by AMISPs at the field level.

    medium

    As installations ramp up, AMISPs will continue facing operational challenges, whether from utilities, field conditions, or other factors, which can impact HPL's delivery schedules.

    Management acknowledged

  • Competitive intensity and pricing pressure in the smart meter market.

    medium

    The market is open and competitive, with new players entering, but HPL emphasizes its 30+ years of experience and zero-defect products as a competitive edge, alongside cost optimization efforts.

    Analyst acknowledged

Areas of evasion (1)

  • Direct comparison of HPL's Q1 execution delays with peers' performance.

Q&A highlights

2 direct
Q1 performance and outlook for Q2/H2, specifically regarding execution delays in metering. Direct
Yes, we did see certain delays in the lifting of materials from the AMI SPs. These were largely due to monsoon-related disruptions and also because the SPs themselves were still ramping up their execution. The pace has now started picking up, with the government closely monitoring progress on a weekly basis and pushing the SPs to accelerate execution. ... We expect to be back on track within Q2 itself.

Addresses the primary reason for Q1's subdued performance in metering and provides a clear timeline for recovery, crucial for investor confidence.

Asked by Mr. Viraj Mahadevia

Comparison of HPL's Q1 execution delays with peers who reported good ramp-up. Partial
I can't comment on what others may have experienced, but yes, we did face some delays, and not just from one or two, but across most of the AMI SPs we supply to. Unlike companies that may have a dedicated platform or a single large AMI SP relationship, our business is spread across multiple SPs. That means our pace is naturally linked to their individual execution timelines.

Highlights HPL's diversified client base as a factor for varied execution pace compared to peers, but avoids direct comparison or explanation for why others might have performed better.

Asked by Sahil Patani

Long-term strategy and terminal value beyond the current 5-6 year smart meter opportunity. Direct
After this initial cycle, there will be a natural replacement opportunity. Based on our 25 years of experience in metering, we know that once the 8-10 year lifecycle of these meters is complete, the market will again open up for upgrades and replacements. Moreover, technology will continue to evolve, faster communication, smarter features, which will further drive recurring demand. ... Alongside the domestic market, we are also preparing for international expansion.

Provides a clear vision for sustained growth beyond the initial smart meter rollout, addressing concerns about the cyclical nature of large government projects and outlining diversification strategies.

3 min read 6 chapters

Detailed narrative

Q1 FY26 Consolidated Performance and Profitability

HPL Electric reported a slight decline in consolidated revenues by 2.5% year-on-year for Q1 FY26. Despite this, profitability saw significant improvement, with gross margins expanding by 230 basis points and EBITDA margin by 85 basis points. Net Profit After Tax (PAT) increased by 8.5% to ₹18.5 crore, indicating a shift towards higher-margin products and initial benefits from scale. The management attributed the revenue dip primarily to temporary timing issues in the metering segment rather than structural concerns.

Metering & Systems Segment: Delays and Long-Term Outlook

The Metering & Systems segment experienced lower revenues in Q1 FY26 due to delayed dispatch clearances and monsoon-related disruptions. Management clarified these are timing issues, not structural, and expects a pickup in H2 FY26. The smart meter order book remains robust at over ₹3,000 crore, backed by government initiatives. With only about 3 crore meters installed out of 22.5 crore sanctioned, and an estimated total requirement exceeding 30 crore meters, the company sees a strong 5-10 year growth horizon for this segment, with HPL equipped to handle double current business levels.

Consumer & Industrial Segment: Strong Growth Driver

The Consumer & Industrial segment delivered a strong performance, with revenues growing 16% year-on-year, EBIT up 23%, and margins crossing 11%. Wires and cables led this growth with a 35% increase, while lighting also grew 7% YoY. This segment, supported by a network of over 900 dealers and 85,000 retailers, provides stable earnings and strengthens cash flows due to its shorter working capital cycle. Management targets this segment to cross ₹1,000 crore in revenues by FY28 and achieve 100,000 retailers by FY26.

Working Capital Management and Debt Profile

HPL has shown steady improvement in its working capital cycle over the last 1-2 years. Debtor days reduced by 28 days in the past 12 months, and overall net working capital is down by approximately ₹60 crore despite sales growth. This improvement is driven by better-structured payments from AMISPs and the inherently stronger working capital profile of the C&I business. The company's debt-equity ratio stands at a comfortable 0.69, with borrowings reduced over the last 12 months, and further reductions are expected in the next 2-3 years, aided by recent rating upgrades.

R&D, Automation, and International Expansion

HPL is significantly investing in R&D and automation across all its verticals. A new R&D center was opened at the Kundli factory for switchgear and lighting, complementing over 100 engineers dedicated to metering. Production lines for metering are fully or semi-automated, and a new automated line for MCBs is expected by Q3. The company is also pursuing international expansion, with plans to see traction in select markets within the next two years, leveraging its 10-year product lifecycle and zero-defect processes honed in the challenging Indian market.

Competitive Landscape and Margin Sustainability

While acknowledging the competitive nature of the smart meter market with new entrants, HPL emphasizes its 30+ years of experience and ability to deliver zero-defect products, which is critical for AMISPs bound by stringent SLAs. The company's investments in R&D and capacity, including a new electronics area at its Gurgaon factory, position it strongly. Management is confident in sustaining and enhancing margins through cost optimization, design improvements, centralized procurement, and a focus on higher-margin products and new premium launches.

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