Positron Energy — Q2 FY26 earnings call

There were lots of spot purchase of gas and in the first quarter, we were securing our long-term contracts. That was all over the world the long-term contracts to finalize for the large players, we're taking time with respect to the scenarios, which I were building on a geopolitical level. So, we were keen to continue and maintain our revenues and top line. So, we have to end up into some spot purchase, some mid-term purchases. And there were becoming a bit of price sensitive. Also during that period when the competitive fuel that is crude oil were at over an all-time low, which otherwise were at some good numbers. That always have the risk for a very short-term period or mid-term period that always have that impact of alternate fuel prices and we always compete with crude and other mainly crude oil derivatives. So that were going a bit low. So, two things happened at the same time, wherein we were to keep our top line intact, we have to source the gas, and we wanted to sell the gas. And in order to, as we always say, we always want to keep a margin between 3 to 5.5%, so were at rock bottom. So from there onwards, if I answer your second question first. We continue to maintain that only between something 3% to 5%, that would be the range we'll be maintaining our margins.

Analyst questioned the H1 margin compression, and management explained the reasons (spot purchases, competitive fuels) and provided forward guidance on margin targets (3-5.5%).

Asked by Mukesh Panjwani

For this financial year, with the current numbers and current market prices because they're all linked prices and everything, we currently look somewhere at 150 crore to be added to our book for this financial year from that contract. And rest all are the long-term purchase, and which will be having a spilling-over effect, coming into play in a month or two months, and over a period of time for coming upcoming years from 2 to 10 years.

Analyst asked about the impact of recently disclosed large purchase/sales agreements (23,000 MMBTU/day purchase, 9,000 MMBTU/day sales) on next FY revenue (estimated ₹900 crores). Management clarified that only ₹150 crores would be added to the current FY, with the rest having a longer-term impact due to ramp-up.

Asked by Mukesh Panjwani

Your observation is absolutely spot on, but a few things that we need to understand with respect to gas sourcing agreements, there are a lot of clause mentioned with respect to the ramping up of the volumes as well right? So, basically based on the declaration you have directly taken the volumes, and you have calculated those numbers, right? Wherein we are still continuing to mention that in the current year, we would be between 15,000, there would be plus or minus 5-10% additional volumes that we will be able to draw from our suppliers, and which we will be putting into the market, right? The total volume, if you put it on a kind of segregated manner for the entire tenure, and you calculate it, it does come to the numbers what you are mentioning. But there is a ramp-up in the contracts, that is point number one.

Analyst challenged the company's H2 FY26 revenue guidance of ₹250 crores, suggesting it could be ₹350-450 crores based on new sourcing contracts. Management explained that the guidance is conservative due to ramp-up clauses and flexibility in contracts.

Asked by Saurabh Shukla

Yes. We endeavour to get a 5% kind of margin. But, as Rajiv mentioned during his presentation as well, the, you know, there are a lot of parameters, external and environmental impacts, the geopolitical situation, the situation in the market and all, that conditions will be kept, but Positron team is, you know, having a continuous underworld in terms of maintaining the margin that we have been targeting right from the beginning. So, this time around, we had been in the bottom of the curve. Seems to have been a cause of disappointment for our valuable shareholders. But somewhere, we want to pass on that confidence. Yes, we are there, always trying to get the max out of the contracts that we have, and the market position, whatever, is put forth in front of us so that efforts will always continue. We'll try to get the maximum from the market. That would be the status for us.

Analyst sought confirmation on achieving a 5% net margin given new long-term contracts. Management affirmed the endeavor but acknowledged external factors, emphasizing continuous efforts to maximize market returns.

Asked by Saurabh Shukla

So, with respect to data centers has the way it has been poised in India too, because as you rightly said, India is also trying to work out on the large data centers in central part of India, basically and something in western part of our country. The fuel requirement, or the energy requirement, is currently on entire on the grid, because it's all data centers, if you're aware, for this country, India, what is promoting to be one of the welcoming people for setting up their data center, so... Why we are doing it, that we are giving a grid power. And if you need to understand, our grid power today also, unfortunately, we are like 65-70% or plus we are on coal still, okay? So, unless and until the power ministry or the power outlook of this country don't change, we'll be not able to say that would that lead to demand or not. Today, the gas-based power demand is to best of my understanding, is on a peaking power demand. It's not a constant supply demand because of the flexibility in the gas pricing, which is very much indexed to the global indices. Link to the global indices so, we cannot give a constant rate power, but having said that, all gas-based power plants are still working, supporting towards the total power requirement but our predominant dependence is on thermal, and nuclear. So, nuclear power, again, is going up, so we don't have a direct demand correlation like in US, because US does not have other source of, US do have coal, but they don't want to go buy coal, they want to use their own gas, which they have already drilled and kept it a bay. So, that's what it looks like. So, there is no direct correlation. Can we convert it? But we have seen in, in a recent time that an increase of these independent power plants for typical for 3 days, 5 days, 6 days. That's set to be continued for a longer period, that's what only what we can understand as of now.

Analyst inquired about the potential for natural gas to power data centers in India, similar to the US. Management explained that India's data centers primarily use grid power (largely coal-based) and gas-based power is for peaking demand, indicating no direct correlation or immediate market opportunity.

Asked by Saurabh Shukla

Now, when we were looking at a 400% growth, I think if you minutely look into the numbers, even over the 10-year April to August also, we have mentioned that, this is where we had reached, right. You know, the total values were mentioned, we have given the numbers for August. What we wanted to communicate to the market at that point in time was, yes, Positron had been working on the long-term stuff, which we regularly were, providing all the updates when the contracts were being signed. There was never any intent in terms of giving any misrepresentation of sorts. That was never the intent. We always believed that, you know, whatever progress we were making, we were prudently putting it across to the market. Even if you look into the August figures, you can understand very clearly, you know, from August onwards, we are starting building the kind of the numbers. From 97 crores, if suppose you look into April to August, and out of that, 37 crores was coming from this. Currently, also, you have the September figures available. You can understand, August & September was the period where we have really ramped up the volumes. In the previous questions, already we have addressed the fact, what has happened during this particular H1. We were working on the contracts. As the situation had been for the previous financial year, the contracts that were running, they all came to an end by 31st of March. It is a continual process, no doubt, but previously, we were always working on short-term to mid-term contracts. That always poses a challenge, you know, for H1. Even last year also, if you look into the H1 was always kind of, you know, on a lower side, and then H2 progressed. So basically, the idea and the intent is in terms of getting the molecules in place, and then pushing it onto the market, so that you have a sustainability. So this H1, our entire focus was to have some long-term contract which provides the sustainability, and this kind of a scenario doesn't happen in future.

Analyst questioned why margins were not disclosed alongside the 482% YoY volume growth in August, implying misleading information. Management clarified that the intent was to show progress on long-term contracts, acknowledging H1 challenges due to contract expiry and emphasizing the focus on sustainability.

Asked by Miten Shah

Miten, you mentioned that you have experience in the oil and gas sector, so I am sure you might be tracking the gas the aggregation business for other segments also. Have you seen any place going overboard and getting huge mark in spot probably would have been expecting and all those. Somewhere, you can always mention that, it's prudent in terms of questioning about how we will be handling this thing. That all makes sense, no doubt, but you need to understand that we have been in the oil and gas sector, all three of us for now, decades on It's not that we don't understand the market. We understand the market very well, and if we are there and looking in terms of getting the value out from the market, certainly it is not untapped. You understand that? So that's very, very clear. But I still take your suggestion on record, if suppose that makes sense. It's not that you meet three of us, that doesn't mean that the team ends out here. There is a huge team with respect to operations, sales, and everything, which is already there on board, into the front. So, I don't think so that's a cause of concern at this point in time. We are working with respect to the implementation of strategy on a very, minute basis in terms of building the organization, and we continue to do that. You know, I rest my case over there. Thank you.

An analyst with sector experience expressed concern about the company's execution despite strong technical capabilities. Management acknowledged the feedback but emphasized their deep market understanding, experienced team, and continuous strategic implementation, downplaying the concern.

Asked by Miten Shah