Schneider Electric Infrastructure Limited — Q2 FY25 earnings call

Call held 18 Nov 2024

Management summary

Schneider Electric Infrastructure delivered a strong Q2 performance characterized by double-digit growth in both top-line and order inflows. The company is successfully leveraging megatrends in data centers, energy transition, and government schemes like RDSS. Management remains bullish on the 'India story' and is expanding capacity through the upcoming Kolkata factory to sustain its 20% historical CAGR.

Highlights

  • Revenue for Q2 FY25 reached ₹599.7 crores, representing a 21% YoY growth.

  • Order backlog stands at a robust ₹1,389 crores, up 14.3% YoY, providing strong revenue visibility.

  • Q2 PAT stood at ₹54.3 crores, up 26.7% YoY, despite the transition to a full tax regime this year.

  • Gross Margin expanded to 38.8% in Q2, up 240bps YoY, driven by better pricing and productivity.

  • H1 PBT saw a significant jump of 66.9% YoY to ₹129.8 crores.

  • Kolkata factory for vacuum interrupters is on track for commissioning by April 2025 (Q1 FY26).

  • Export revenue contributes approximately 14% of total sales.

  • Services segment showed strong order intake momentum at 17% of total orders.

Key financials

2 periods

Headline

  • Revenue
    ₹599.7 Cr
    YoY +21%
  • PAT
    ₹54.3 Cr
    YoY +26.7%
  • Order Inflow
    ₹572 Cr
    YoY +16.3%
  • Order Backlog
    ₹1,389 Cr
    YoY +14.3%
  • Gross Margin
    38.8%

H1

  • PBT
    ₹129.8 Cr
    YoY +66.9%

What they filed

Q1 FY27: revenue up 4.7%, net profit down 70.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue600 857 587 622 650 +8%1,029 +20%590 +1%651 +5%
EBITDA74 140 87 69 84 +14%173 +24%45 −48%34 −51%
Net profit54 111 55 41 52 −4%97 −13%22 −60%12 −71%
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

SegmentTransactionServices
Sales Mix (Q2)19%11%
Order Intake Mix (Q2)23%17%

Guidance & targets

Capacity

  • Kolkata Factory Commissioning Capacity · Q1 FY26 · High confidence April 2025
    It is actually coming up sometime around the first quarter of next year. That will happen. And it will perhaps start maybe in the last quarter of this year, and we will sort of conclude the other -- installation of other furnaces by Q1 next year.

    — Udai Singh, MD & CEO

Revenue

  • H2 Seasonality Revenue · H2 FY25 · High confidence Better than H1
    Two, H2 is always better. H2 is always better historically for any company, and we are no different... and I'm seeing this year will perhaps be no different.

    — Udai Singh, MD & CEO

Other

  • RDSS Scheme Investment Other · Medium Term · Medium confidence ₹300,000 crores
    Now one of the major drivers is this RDSS scheme perhaps which you are referring to, which talks about INR300,000 crore lakhs of investment in India.

    — Udai Singh, MD & CEO

Risks & concerns

  • Political Deferment of Projects

    medium

    Management noted that state-level political situations can lead to deferment of certain RDSS projects.

    Management acknowledged

  • Raw Material Price Volatility

    medium

    Better pricing and productivity in raw materials helped margins this quarter, but volatility remains a factor.

    Management acknowledged

  • Taxation Headwinds

    low

    The company is now in a tax-paying position compared to last year, which impacts PAT growth relative to PBT.

    Management acknowledged

Areas of evasion (2)

  • Specific numerical impact of the new factory on growth rates.
  • Granular TAM for data center equipment.

Q&A highlights

1 direct
Conflict of Interest between Listed and Unlisted Entities Direct
There is no conflict of interest between various operational entities in India of Schneider.

Investors often worry about business being diverted to unlisted group companies; management explicitly denied this.

Asked by Raj Rishi, DCPL

Addressable TAM per Megawatt for Data Centers Partial
It's very difficult to give you a ballpark number in terms of how much business potential will a data centre throw up per megawatt of IT load... but data centre does offer a very positive thing going forward for us.

Data centers are a key growth driver, but management's inability to provide a per-MW TAM makes it harder for analysts to model the specific revenue upside.

Asked by Rohit Maheshwari, Tata AIG

Impact of Kolkata Factory on Sales CAGR Partial
Calcutta is going to have a positive impact on us. But how will it impact the run rate of 20%, not in an actual situation to tell you as of now.

The company has maintained a 20% CAGR; investors are looking for a 'leg up' from new capacity, which management acknowledges but refuses to quantify.

Asked by Aditya Deorah, Divisha Investments

1 min read 5 chapters

Detailed narrative

Strong Order Momentum and Backlog Visibility

Schneider Electric Infrastructure reported a robust order backlog of ₹1,389 crores, which is up 14.3% YoY. H1 order inflows reached ₹1,104 crores, a 17.5% increase over the previous year. This growth is driven by strong demand in transactional business and transformers, particularly from data centers and state-run DISCOMs modernizing their infrastructure.

Margin Expansion Through Efficiency and Mix

Gross margins for Q2 FY25 expanded to 38.8%, up from 36.4% in the previous year. This 240bps improvement was attributed to better product mix, strategic order pricing, and productivity gains in raw material usage. H1 EBITDA margins also saw a 2.3 percentage point improvement, reaching ₹167.4 crores.

Strategic Capacity Expansion in Kolkata

The company's new factory in Kolkata, focused on vacuum interrupters, is on track for commissioning by April 2025. Management expects to begin installing furnaces in the final quarter of the current fiscal year. This facility is expected to support the company's long-term growth trajectory and potentially improve the export-domestic mix.

Data Centers and Digitalization as Key Drivers

Management highlighted data centers as a major megatrend fueled by AI evolution and digitalization. The company recently secured a significant order for a transformer with a 10-year AMC for one of India's largest upcoming data centers. While management declined to provide a specific TAM per megawatt, they emphasized their deep engagement with hyperscalers and colo developers.

Export and Service Segment Performance

Exports currently contribute approximately 14% of total sales, with management focusing on India as a global technology hub. The services segment is also gaining traction, representing 17% of Q2 order intake. The company is pushing its 'EcoCare' subscription package to drive recurring service revenue and improve customer engagement across the product lifecycle.

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