KPI Green Energy Limited — Q3 FY25 earnings call

Call held 11 Feb 2025

Management summary

KPI Green Energy reported an outstanding Q3 FY25, achieving record-breaking turnover and significant profit growth across both quarterly and nine-month periods. The company's robust order book of 2.86 GW and strategic expansion into new geographies like Rajasthan and Odisha underscore its commitment to accelerating India's green energy transition. Management expressed confidence in maintaining margins and executing projects ahead of schedule, while also clarifying concerns around share pledging and supply chain resilience.

Highlights

  • Q3 FY25 total revenue reached ₹466.1 crores, marking a 40.6% increase compared to the same quarter last year.

  • Q3 FY25 profit after tax climbed to ₹85.15 crores, up by 68.26% YoY, demonstrating strong operational execution.

  • For the nine-month period, total revenue was ₹1,177.35 crores, a 59.5% increase, surpassing the full-year revenue of the previous fiscal year.

  • Nine-month EBITDA grew to ₹411.44 crores, an impressive 66% increase, and PAT reached ₹221.1 crores, up 86% YoY.

  • The company's installed capacity has grown to over 533 megawatts, supported by a robust order book of 2.86 gigawatts as of January 15, 2025.

Key financials

2 periods

Q3

  • Revenue
    ₹466.1 Cr
    YoY +40.6%
  • EBITDA
    ₹144.54 Cr
    YoY +38%
  • PAT
    ₹85.15 Cr
    YoY +68.3%
  • EBITDA Margin
    31%

9M

  • Revenue
    ₹1,177.35 Cr
    YoY +59.5%
  • EBITDA
    ₹411.44 Cr
    YoY +66%
  • PAT
    ₹221.1 Cr
    YoY +86%
  • EBITDA Margin
    34.9%

What they filed

Q1 FY27: revenue up 30.1%, net profit down 6.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue310 483 488 386 501 +62%511 +6%592 +21%502 +30%
EBITDA82 122 135 148 187 +128%197 +61%246 +82%201 +36%
Net profit37 77 86 72 95 +157%99 +29%127 +48%67 −7%
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

2.86 gigawatts

as of 2025-01-15 quantified

Inflow this quarter

300 megawatts

Execution

Projects like Khavda are progressing ahead of schedule; IPP projects typically have a 2-year gestation but target 12-15 months.

Composition

Mix 3 projects
  • Coal India Limited (CPP) 300 megawatts 46.9%
  • Khavda (IPP) 240 megawatts 37.5%
  • Maharashtra (CPP) 100 megawatts 15.6%

Share of order book by project, derived from disclosed amounts

The company has a robust order book and is well-positioned to capitalize on future opportunities, with projects often completed ahead of schedule.

Source: Prepared remarks

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Cost for 1 MW solar (tracker based) ₹3.25 Cr
    • Cost for 1 MW solar (tracker based) upper range ₹3.95 Cr
    • Cost for 1 MW wind portion (hybrid) ₹6 Cr
    • Cost for 1 MW wind portion (hybrid) upper range ₹8 Cr
    • Cost for 1 MW solar portion ₹3 Cr
    • Cost for 1 MW solar portion upper range ₹3.85 Cr
    • Module price as percentage of capex per megawatt 60 %
    you can say that depending upon the customization, depending upon the size of land and everything, the design, it might go from INR 3.25 crores to INR 3.95 crores depending upon how the land is. If it is a straight land, it will be less cost. If it is a land which is not totally straight, then it will be a little bit costly, because then every row will have a different structure and you have to put a tracker for every row,.
  • Debt Debt disclosed
    • Repayment SBI is in discussion to release pledges related to loans that have been repaid.
    So the price of the share will not -- because the loan that we have from SBI at present is around INR 400 crores to INR 500 crores for the new Khavda project. And the amount of pledge, you can understand, is around INR 3,000 crore to INR 4,000 crores of that.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY25 · High confidence 60%

    Previously 50-70% → 60%

    Yes. So, I said 60% to 70% in the last and Faruk sir said 50% to 60%. So, both have 60% common. You can take 60% as a common factor in both.

    — Salim Yahoo

Capacity

  • Total Participation Capacity · by 2030 · High confidence 10 gigawatts
    And at the group level, we have a target about 10-gigawatts participation up to 2030.

    — Alok Das

Profitability

  • CPP Segment EBITDA Margin Profitability · High confidence 20%
    See, on the CPP segment, I mean, profitability margin at EBITDA level would be around 20%

    — Salim Yahoo

Business Mix

  • IPP Component of Business Business Mix · going forward · High confidence 21-22%

    Previously 13% → 21-22%

    I can tell you that going forward, our IPP component, which at present, I think, is 13% i.e. 13% is IPP this quarter and 87% is the CPP, which we plan to take it to the level of 22% to 21% kind of going forward.

    — Salim Yahoo

O&M Revenue

  • O&M Revenue per MW per year O&M Revenue · per year · High confidence ₹4-5 lakhs
    See, for what we say, C&I CPP, our revenue for O&M, I charge approximately INR 4 lakh to INR 5 lakh per megawatt per year with an escalation of 2% to 3% year-on-year.

    — Salim Yahoo

O&M and Lease Revenue

  • O&M and Lease Revenue for 362 MW O&M and Lease Revenue · High confidence ₹36 crores
    So from you can say once this all matures, you will have around 362 megawatts which will give you INR 36 crores of O&M and lease because we also charge INR 5 lakh for lease per annum per megawatt. So approximately INR 36 crores which would be what we can say a ballpark figure for this 362.

    — Salim Yahoo

What to watch in Q4 FY25

SBI release of pledged shares

next quarter
Current In discussion with SBI for release
Target Progress on release of pledged shares

Why it matters

Resolution of pledging concerns can improve investor sentiment and reduce perceived risk.

SBI has already shown a positive, and they said that they will start releasing this pledge in a peaceful manner. Slowly, they will start releasing. So that proposal is already in discussion with State Bank of India for the release of the pledge.

Risks & concerns

  • Geopolitical tensions and supply chain disruptions

    low

    Management states meticulous planning, contractual safeguards for IPP, and back-to-back tie-ups for CPP mitigate risks.

    Analyst downplayed

  • Anti-provisional duty on glass impacting module prices

    low

    IPP contracts have clauses for price adjustments, and CPP projects use back-to-back tie-ups with manufacturers.

    Analyst downplayed

  • Land acquisition challenges in new geographies

    low

    Management acknowledges challenges but is confident due to past experience, strong team, and existing land bank of over 4,000 acres.

    Analyst acknowledged

  • Impact of US macro-economy and tariff wars

    low

    Management states that as a developer with domestic contracts, they are insulated from international market impacts on manufacturers.

    Analyst downplayed

  • Market rumors regarding share pledging

    low

    Management clarified that pledging is collateral from long ago, not for fund-raising, and SBI is in the process of releasing it.

    Analyst clarified

Q&A highlights

6 direct
Share Pledging Status and SBI Release Direct
This pledging is a collateral. We have given a collateral long back, even before the listing of the company... SBI has already shown a positive, and they said that they will start releasing this pledge in a peaceful manner. Slowly, they will start releasing.

Addresses market rumors about share pledging, clarifying it's collateral and that SBI is in the process of releasing it, which is a positive signal for investor confidence.

Asked by Kush Pranao

Revenue Growth Guidance for FY25 Direct
Yes. So, I said 60% to 70% in the last and Faruk sir said 50% to 60%. So, both have 60% common. You can take 60% as a common factor in both.

Clarifies the company's official revenue growth guidance for the current fiscal year, providing a clear target for investors.

Asked by Garvit Goyal

Impact of Geopolitical Tensions and Module Prices on Supply Chain Direct
We do meticulous planning before taking the orders for the CPP side. And on the IPP side, if there is an increase in the module cost, the tender allows increase in the rate is also equivalent. So, I don't think we will face any problems on the supply chain side also.

Assures investors about the company's resilience to external supply chain and pricing risks, highlighting contractual safeguards and proactive planning.

Asked by Garvit Goyal

Land Acquisition Challenges in New Geographies Partial
I understand there will also be a challenge, but we will face those challenges because we have that experience on how to resolve ROWs and land issues and other issues. At present, it is told that 4,000-plus acre of land bank is there in KPI itself.

Acknowledges potential hurdles in expanding to new states but expresses confidence in the company's experience and existing land bank to manage these challenges, crucial for future growth.

Asked by Hrishil

Impact of US Macro-economy and Tariff Wars on Business Model Direct
See, you need to understand the U.S. market major decision will impact the manufacturers. We are not manufacturers. We are developers. We set up the entire plant and all my contracts at present are within our country, okay? So there is no direct or indirect link to the U.S. market or anything.

Clarifies that the company's business model as a developer with domestic contracts insulates it from international market fluctuations and tariff wars affecting manufacturers.

Asked by Rajat Gupta

Discrepancy between IPP Capacity Growth and Generation Growth Partial
The growth cannot be linked to the new plants when they add the capacity. You cannot add it until and unless at least I think 6 to 8 months or 1 year, you understand that the plant capacity because there are lot of things which needs to be corrected and everything and the plant generation, again, is taken into consideration, the grid availability is taken into consideration.

Explains that initial capacity additions do not immediately translate to proportional generation growth due to various factors like grid availability and plant stabilization, providing context for observed metrics.

Asked by Pavan

Plans for Green Hydrogen Vertical Direct
On the hydrogen, yes, you will again see a surprise on the hydrogen side. We'll be shortly, I mean, giving you a smaller plant, we will be setting up. We'll be doing the prototype and everything. But we are coming very strong in the hydrogen space also.

Signals the company's intention to enter the green hydrogen sector, indicating a new potential growth vertical and future strategic diversification.

Asked by Mitesh Vora

Exclusivity of MOUs with Rajasthan and Odisha Direct
Basically, what happened, those who have signed for MOU with that particular state. The state has got certain moral obligations to provide the resources. What we have asked out of that MOU, we need certain resource creation to establish the projects, these 2 states.

Clarifies the nature of MOUs with state governments, indicating a degree of commitment from the states to provide resources, which is crucial for project development.

Asked by Krishn Kumar

3 min read 8 chapters

Detailed narrative

Q3 FY25 Financial Performance Highlights

KPI Green Energy reported a strong Q3 FY25 with total revenue reaching ₹466.1 crores, marking a 40.6% year-on-year increase. The company's EBITDA stood at ₹144.54 crores, reflecting a 38% YoY growth, while profit after tax surged by 68.26% to ₹85.15 crores. This performance underscores the effectiveness of operational execution and strategic financial planning, despite a slight quarter-on-quarter dip in EBITDA margin attributed to seasonality and billing milestones.

Nine-Month FY25 Financial Performance

For the nine months ended December 31, 2024, KPI Green Energy achieved a total revenue of ₹1,177.35 crores, representing a 59.5% increase over the previous year's corresponding period. The nine-month EBITDA grew by 66% to ₹411.44 crores, and profit after tax reached ₹221.1 crores, an 86% increase. These figures indicate that the company has already surpassed its full-year financial performance across all key parameters from the previous fiscal year.

Robust Order Book and Capacity Expansion

As of January 15, 2025, KPI Green Energy's installed capacity has grown to over 533 megawatts, supported by a strong order book of 2.86 gigawatts. Key projects include a 300-megawatt AC solar PV project for Coal India Limited (valued at ₹1,300 crores), a 240-megawatt DC solar project at Khavda (valued at ₹900 crores), and a 100-megawatt AC solar project in Maharashtra. The company also has approximately 1.3 gigawatts from GUVNL, with a total project value of ₹2,650 crores for Coal India, Khavda, and Aditya Birla projects combined.

Strategic Expansion into New Geographies

KPI Green Energy is actively expanding its footprint beyond Gujarat, with strategic MOUs signed with the governments of Rajasthan and Odisha. In Rajasthan, the company aims to create local employment and cater to small and medium-scale industries, with plans for 500-megawatt wind and solar capacity. Similar efforts are underway in Odisha, with a target of 1,500-megawatt solar potential. Management expressed confidence in navigating land acquisition and other challenges in these new states due to their extensive experience and strong team.

Operational Efficiency and Supply Chain Management

The company emphasizes meticulous planning and back-to-back tie-ups with module manufacturers to mitigate supply chain risks and price fluctuations. For IPP projects, tender clauses allow for price adjustments based on module cost changes. Management highlighted that their integrated approach, including in-house manufacturing of components like MMS structures and windmill towers through KP Green Engineering, provides a competitive advantage in executing projects within or ahead of timelines.

IPP Segment Strategy and Profitability

KPI Green Energy's IPP segment involves investing its own capital to set up plants and sell power, with sufficient order book and tied-up debt capital. The company aims to increase its IPP component from the current 13% to 21-22% going forward, which is expected to help maintain PAT margins. While current IPP realization is around ₹6 per unit, new GUVNL projects are at ₹3 per unit, leading to an average blended rate of ₹4-4.5 per unit, with lower costs ensuring sustained IRR.

Pledging Clarification and Debt Management

Management clarified that the existing share pledging is collateral provided long ago to institutions like PFC and SBI, not for fund-raising. The total pledge is around 21-22% of the company's shares, with the loan for the Khavda project being ₹400-500 crores against a pledge amount of ₹3,000-4,000 crores. SBI has indicated a positive response and is in discussions to release the pledges, which is expected to happen gradually.

Future Growth Outlook and New Verticals (Hydrogen)

The company is positive about future growth, targeting 10 gigawatts of participation by 2030, aligning with India's net-zero goals. Beyond solar and hybrid projects, KPI Green Energy is exploring new verticals, with a particular focus on green hydrogen. Management indicated plans to set up a smaller prototype hydrogen plant shortly, signaling a strategic move into this emerging sector and promising further surprises for the market.

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