Quality Power Electrical Equipments Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

4 Bharanidharan Pandyan, Rajesh Jayaraman, Sanjog Mhatre, Sarita Jadhav

Analysts

12 Aniket Jain, Ankit Jain, Baidik Sarkar, Bhavya Shah, Charchit Maloo, Darshil Jhaveri, Lovish Soien, Nakul Gupta, Naman Parmar, Rahul Maheshwari, Siddarth Bhamre, Viraj Mahadevia

Financials & KPIs

Table Rules Note: Metrics ordered logically for manufacturing – Revenue → Margin → Profitability → EPS → Order Book → Balance Sheet. Units included throughout.

Geographic & Segment Commentary

• QP Standalone (High Voltage & Power Quality): Revenue more than doubled YoY (₹37cr to ₹69cr), driven by disciplined order book execution above guided margins (25%+ on new orders). Gross margin for coil/reactor products held at ~25% traditionally; aluminum price spike now will reflect in Q2-Q3 due to longer manufacturing cycles (materials bought today consumed 4-5 months later).
• Mehru (Instrument Transformers): Revenue up ~38% YoY to ₹83cr; supplies 1 in 2 high-voltage instrument transformers in India, delivering into Denmark grid and soon Swedish grid. EBITDA at 18% this quarter, below internal target of 22-23% due to copper and oil spike in April; revised sustainable guidance at ~18%.
• Endox (Energy Storage/PCS & Power Electronics): Contributed ₹107cr revenue but dipped slightly YoY due to Eid holidays. Strong BESS/PCS traction with ~$60M PCS pipeline plus another ~$40M expected over 12 months (in line with prior $80M guidance); PCS execution cycle 6-9 months, faster than core business.
• Winwin Specialty Insulators (Acquisition – Pending): Confirmatory due diligence complete with no adverse findings; EV ~₹315cr; consolidation expected Q4 FY27 (SEZ regulatory process). Facility has 40 acres in Vizag SEZ, is CapEx-heavy, and has approval in 15+ countries up to 800kV; type tests up to 220kV complete, 400/765kV in few months; internally targeting ₹200cr orders in next 9 months.

Company-Specific & Strategic Commentary

• Sangli New Facility: Machinery installation progressing; trial production targeted current month (August 2026) subject to approvals (building completion certificate, MIDC, PESO). Facility spans ~600 meters; ~60 global customer audits over ~6 months to full approval; peak revenue potential ₹1,500-1,800 crores. ~₹50cr CapEx planned at Winwin; product launch sequencing prioritizes Adani and Power Grid HVDC approvals first.
• Endox CTC Magnet Wire & PCS Facilities: CTC magnet wire machinery installation commencing; new product line requiring 3-5 months stabilization with full production targeted Q4 FY27. PCS facility civil construction complete; operations to begin Q3 FY27; peak capacity $70-80 million. Plan to bring PCS to India by end of next year for Indian/Asian markets.
• HVDC Strategic Focus: Appointed Mr. Shailendra Kumar as Group CTO (30+ years from Hitachi/ABB in HVDC, FACTS, grid tech). Targeting two HVDC projects — Old Park (awarded, Q3/Q4) and Barmere (tender close this quarter); plus ~6 STATCOM projects across US, Europe, Australia. Successfully qualified for global OEMs/utilities expanding addressable market.
• Group Integration & Procurement: Appointed Group CPO to consolidate purchasing (e.g., aluminum castings across Mehru ₹15-20cr, Winwin ₹50cr, Sukrut ₹10cr) via framework agreements to unlock scale and cost. Moving to common management pool across Mehru, Endox, and QP; engineering/testing protocols standardized; interim dividend declared to support shareholders.
• US Market Entry & Expansion Planning: Fundraise of up to ₹500cr planned (roadshows from Aug 20) for Winwin acquisition closure (~₹315cr), ₹50cr Winwin CapEx, and US sales office/team setup. Long-term vision: become India's "alternative to Hitachi" — complementary global high-voltage technology platform; wire business (aluminum/copper CTC) targeted at ₹500cr+ (aluminum) / ₹1,500-1,800cr (copper equivalent).

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Segment Performance & Margin Trajectory

• Question: Can you give YoY growth split between Endox, Mehru, and QP standalone? Also, can you explain the Q3 margin pressure commentary? (Baidik Sarkar)
• Answer: QP standalone went from ₹37cr to ₹69cr; Mehru from ~₹60cr to ₹83cr; Endox contributed ₹107cr but Turkish companies dipped due to Eid holidays. For Q3 caution — Mehru sees copper/oil impacts in 8 weeks; QP standalone sees aluminum impact after ~6 months, so Q1 aluminum spike flows to Q3. Every order in book is booked above ~25% margin; the Q3 note is cautionary, not a real-world scenario. Stable guidance for coil products is ~20%. (Bharanidharan Pandyan)

New Facility Commissioning & Asset Turns

• Question: When will Sangli coil facility and HVDC magnet wire facility commission, and what peak asset turns can we expect? (Rahul Maheshwari)
• Answer: Machinery installed; awaiting building completion certificate; trial production targeted this month. ~60 global audits will take ~6 months to complete; facility approval requires every customer to audit. Peak revenue potential ₹1,500-1,800 crores. CTC magnet wire: machines on site, new product line requiring 3-5 months stabilization; full production by Q4 FY27. (Bharanidharan Pandyan)

Order Book Execution & Capacity Leverage

• Question: When will majority of order book be executed, and can book-to-bill ratio be maintained? (Rahul Maheshwari)
• Answer: Current order book slated for completion in next 15 months. Won't commit on maintaining book-to-bill; need to deliver from new facilities before committing more orders. BESS at 4GW facility in Turkey — 1GW already ordered. (Bharanidharan Pandyan)

BESS/PCS Scalability

• Question: Current capacity and scalability of BES/PCS facility at Endox? (Aniket Jain)
• Answer: ~$60M PCS orders in pipeline, another ~$40M expected in 12 months (consistent with prior $80M guidance). Focus on operationalizing facility; demand outstrips supply as few global players. IGBTs remain bottleneck. Planning to bring PCS to India by end of next year for Indian/Asian markets. Execution cycle 6-9 months — fast-moving product with correspondingly quick working capital. (Bharanidharan Pandyan)

Winwin Acquisition Rationale & Turnaround

• Question: What is the rationale for Winwin acquisition beyond backward integration, and how do we plan to turn it around? (Lovish Soien / Aniket Jain / Viraj Mahadevia)
• Answer: Insulators are a global demand-supply mismatch — very few manufacturers globally (4-5 in India, 8-9 worldwide), no new entrants. Winwin solves internal insulator needs (~₹40-45cr/year internal demand) and becomes strategic leverage with global OEMs. Facilities include 40 acres SEZ Vizag, approvals in 15+ countries, KEMA type tests up to 400kV composite. Internal target ₹200cr orders in 9 months; margins stabilizing at 15-25% within 4 quarters post-acquisition. Consolidation targeted Q4 FY27 due to SEZ bureaucracy. (Bharanidharan Pandyan)

FY27 Revenue & Margin Guidance

• Question: Can we reach ₹1,400cr revenue this fiscal, and what's the margin guidance? (Darshil Jhaveri)
• Answer: Stick to 20% revenue growth guidance for now; may revise at Q3. Don't want to commit what we can't honor — factories yet to be commissioned fully; quality/people/systems need time. Model 20% EBITDA (high-teens). For FY28 50% growth — look at order book and delivery timelines. (Bharanidharan Pandyan)

Mehru Margin Reset & BESS Margins

• Question: What drove Mehru margins, and how do Endox/BESS margins look? (Naman Parmar)
• Answer: Mehru delivered 18% vs internal target 22-23%; copper/oil spike in April hit immediately. Revised guidance for Mehru at ~18%. Endox product lines (STATCOM, SVC, automation) typically ~25%; BESS products still shipping, so blended margin guidance to be provided in Q3. (Bharanidharan Pandyan)

Fundraising & Deployment

• Question: What is the timing and use of the ~₹500cr raise? (Charchit Maloo / Naman Parmar)
• Answer: Roadshows starting Aug 20; raise targeted this month before AGM for bureaucracy efficiency. Group debt is low (₹23cr, mostly working capital). Proceeds: Winwin closure (₹315cr), ₹50cr Winwin CapEx, US sales office/team funding, and next-gen technology investments. Total raise less than ₹500cr. (Bharanidharan Pandyan)

Chinese Competition in HVDC

• Question: Government allowed 4 Chinese companies to bid for HVDC contracts — how does this impact us? (Bhavya Shah)
• Answer: The Chinese players are non-operational factories (mostly shut for 7 years), will take years to re-qualify. Government hasn't relaxed local sourcing norms (60-70% domestic content required). Not a near-term threat; QP is a supplier to TVA Power Transformers via Sukrut, and if Pinggao/Taikai enter GIS, QP supplies components developed with Yawsam. (Bharanidharan Pandyan)

Long-Term Vision & Revenue Mix

• Question: What is the 2030/2035 vision, and how will revenue mix evolve across power products, power electronics, and ancillaries? (Rajat / Rahul Maheshwari)
• Answer: Vision is to be India's alternative to Hitachi — complementary, investing in high-tech businesses (BESS, HVDC, FACTS), generating free cash to acquire complementary high-voltage businesses. Revenue mix: power electronics will grow fastest (BESS, less supply-chain dependence), then high-voltage products; ancillaries (CTC wire, Sukrut components) support other two at scale — CTC wire targeted at ₹500cr+ (aluminum) / ₹1,500-1,800cr (copper equivalent). (Bharanidharan Pandyan)

India AS 29 Asset Base Clarification

• Question: If we add back hyperinflation expense, should we also adjust asset base in Turkey, and what is that number? (Nakul Gupta)
• Answer: Data not on hand; management committed to providing written response before end of day via email. (Bharanidharan Pandyan)

Key Takeaway

Quality Power Electrical Equipments Ltd delivered a strong Q1 FY27 with revenue of ₹256.4 crores (~20% YoY growth) and adjusted EBITDA of ₹72.5 crores (28.3% margin, excluding ₹7.82cr India AS 29 hyperinflation impact), with all order book executable orders booked above ~25% margin guidance. The consolidated order book stands at ₹1,945 crores (1.9x FY26 revenue), backed by a ₹1,500-1,800 crore peak-capacity Sangli facility targeting trial production in August, an Endox PCS facility commencing Q3 with a $60M+ BESS pipeline, and the Winwin insulators acquisition (EV ₹315cr) progressing to consolidation by Q4 FY27. Group initiatives include a group CPO for procurement synergy, shared management pool, and new Group CTO (Shailendra Kumar) for HVDC/FACTS capability; fundraise of <₹500cr (roadshows from Aug 20) will fund Winwin closure, its ₹50cr CapEx, and US market entry. Management guides conservatively to 20% FY27 revenue growth (revisable at Q3) and high-teens EBITDA margin, with temporary Q3 margin moderation expected as Sangli fixed costs front-load ahead of utilization ramp over the next 15 months; key watchpoints include raw material volatility (copper/aluminum), IGBT supply, and regulatory approvals for new capacity.