Captains Speak     

Published: July 31, 2024
Updated: July 31, 2024

Hitachi Energy India

FY24 earnings ease debt positionrural loans

Despite a substantial debt reduction of Rs 1.25 billion last year from Rs 2.75 billion, Hitachi Energy had a debt of Rs 1.50 billion on March 2024. But because it has a cash reserve of Rs 1.28 billion, its net debt has been less about Rs 22 million.

According to him, in the quarter ended March 31, 2024, orders totalled Rs 1,406.7 crore, up 13.9% QoQ and 11.5% YoY. Industries led the charge with electrification and digitalization of energy networks, across sectors from steel to silicon. The contribution from transmission projects followed, with orders from EPCs. Orders for hydro, wind and solar plant operations and integration continued the renewables momentum. Service and export orders were up 43% YoY each, maintaining their strong contribution to the overall order book. Service orders included replacement equipment, Annual Maintenance Contracts (AMCs) and upgrades, as well as innovative solutions like RelCare and RelScan for remote condition monitoring and maintenance. Exports of transformers, power quality technologies and other key products to markets like the Middle East, Southeast Asia and neighbouring countries in South Asia accounted for around 25% of the order book.

ORDER BACKLOG

As of March 31, 2024, the order backlog stood at Rs 7,229.5 crore, providing revenue visibility for the coming quarters.

As regards financials, he revealed that at Rs 1,699.2 crore, sales grew 33.1% QoQ and 27.2% YoY, and the company delivered a strong revenue performance. This was a result of solid order execution and reflects a diverse revenue mix and focus on continuous improvement in operations.

A mitigation of external supply chain challenges also supported margin and profit recovery in Q4FY24. At Rs 172.6 crore or 10.2%, operational EBIDTA was in double digits as a result of a favourable revenue mix, operational excellence and digitalization efforts. Profit before tax stood at Rs 152.2 crore, up 133.8% YoY, and profit after tax was at Rs 113.7 crore, up 123.7% YoY. For the full year ending March 31, 2024, orders were at Rs 5,536.3 crore, up 14% (excl HVDC) from the corresponding last 12 months, while revenue stood at Rs 5,246.8 crores with a 17% increase during the same period.

POOR QUARTERS

The first two quarters of the year were impacted by supply limitations such as delays in procurement of semiconductors and other key electronic components. While continually monitoring the situation, the company has also deployed strategic initiatives to mitigate the impact of supply chain turbulence to the extent possible.

In parallel, commitment to becoming carbon neutral by 2030 in its own operations drove the transition to green electricity through Power Purchase Agreements (PPAs), in-house solar and buying International Renewable Energy Certificates (IRECs), apart from taking measures to reduce overall energy consumption through various energy conservation projects.

Its HVDC team has successfully completed HVDC-Dielectric for the Adani Mumbai HVDC project, which is completely manufactured at its newly inaugurated factory at Chennai.

India’s installed power capacity is expected to reach 616 gigawatts by 2027 and 900 gigawatts by 2032, up from 442 gigawatts in March 2024. Growth drivers for Hitachi Energy remain intact and tracking upwards. In FY 23-24, renewable power grew at 11%, including large hydro, from 173 gigawatts to 191 gigawatts.

KEY SEGMENTS

On the transportation side, metro, high-speed rail, rail electrification and rolling stock upgrade fuelled the growth of transport segment, which clearly shows that all these segments, which the management within Hitachi Energy calls a high-growth segments, are trending in the right direction.

Energy transition projects are spread across segments, and their multiplier impact is only possible when brought together by a flexible, digital, and secure grid. India’s sheer size and its huge scope for growth means that its energy demand is set to grow more than that of any other country in the coming decades. As per the International Energy Agency (IEA), to continue its energy transition journey, India needs to add a grid the size of the European Union by 2040. Fundamental market drivers remain intact despite sporadic macro-economic challenges. This provides medium- to long-term opportunities for power technologies, especially in its identified high-growth segments – renewables, HVDC, data centres and transport.