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    Schneider Electric Infrastructure Limited

    SCHNEIDERGood
    Capital Goods·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

    8

    • 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.

    What Changed1

    vs Q3 FY25

    Guidance items4 → 3 (-1)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹599.7 Cr+21%YoY
    2. 02PAT₹54.3 Cr+26.7%YoY
    3. 03Order Inflow₹572 Cr+16.3%YoY
    4. 04Order Backlog₹1,389 Cr+14.3%YoY
    5. 05Gross Margin38.8%

    Segment breakdown

    TransactionServices
    Sales Mix (Q2)19%11%
    Order Intake Mix (Q2)23%17%
    Heatmap· 2 shared metrics

    Guidance & targets

    3
    CategoryTargetPriority
    Capacity
    Kolkata Factory Commissioning
    April 2025
    		High
    Revenue
    H2 Seasonality
    Better than H1
    		High
    Other
    RDSS Scheme Investment
    ₹300,000 crores
    		Medium

    Risks & concerns

    5
    RiskSeverity

    Political Deferment of Projects

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

    medium

    Taxation Headwinds

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

    low

    Raw Material Price Volatility

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

    medium

    Areas of Evasion(2)

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

    Q&A highlights

    3

    “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

    1 min read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.