Event Participants
Executives (3)
Santosh Shah (MD), Satyakam Basu (CEO), Vicky Kumar (CFO)
Analysts (8)
Amit Bhagat (Tata Digital), Amit Mehendale (RoboCapital), Divyansh Jaju (Trinetra Asset Managers), Kamal (Private Investor), Mohammed Murtaza (Pinpoint X Capital), Ravi (Private Investor), Tejas Khandelwal (Prudent Equity), Vaibhav Mishra (Finvestors)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹78.40 crores | +32% YoY from ₹59.41 crore in Q1 FY26; strongest-ever Q1; execution concentrated on large projects |
| EBITDA | ₹12 crores | +35% YoY from ₹8.9 crore; margin 15.3% vs 14.98%, +32 bps YoY improvement |
| PAT | ₹7.5 crores | +30% YoY from ₹5.78 crore; consolidated net profit (incl. associate) ₹7.54 crore |
| Finance Cost | ₹2.45 crores | Higher YoY due to working capital deployed for project mobilization and ramp-up |
| T&D & Smart Grid Revenue | ₹46.32 crores | ~59% of total revenue vs 27% in Q1 FY26 (₹16.34 crore) — mix shift driven by Patna project |
| Solar EPC Revenue | ₹32 crores | ~41% of revenue; portfolio repositioning toward RESCO/capex + RESCO structures |
| Order Book | ₹807 crores (ex-GST) | |
| Fresh Order Awards | ₹58.67 crores | Across Bihar (₹56 crore ULA/RESCO), Odisha (FPI), and Madhya Pradesh (FPI ₹3.37 crore) |
| Bid Pipeline | INR1,350+ crores qualified; INR1,200+ crores at final stage | Normal Indian seasonality — Q1 is lightest quarter |
| Customer Collections | ₹100 crores vs ₹78 crore revenue | Trade receivables down ₹10 crore to ₹149 crore |
| Borrowings | ₹91 crores (vs ₹68 crore Q4 FY26) | +₹23 crore drawn for Patna project working capital; peak expected ~₹130 crore in FY27 |
| Trade Creditors | ₹30 crores (vs ₹53 crore) | Supplier payments made as project mobilization progressed |
| Fixed Deposits | ₹68 crores (vs ₹50 crore) | Funded from internal accruals |
| Debt-Equity Ratio | 0.63 | Management committed to cap at 1.1–1.2 maximum; cost of debt ~9% |
Geographic & Segment Commentary
Power T&D & Smart Grids: Contributed ₹46.32 crore (~59% of revenue), up from 27% in Q1 FY26, driven by strong progress on the Patna RDSS smart grid project for Bihar's distribution utility — a comprehensive mandate covering infrastructure, equipment, software, and communication. The project is building deep in-house capability in SCADA and ADMS, and the company has already started bidding similar projects in other states. A portion of Q1 billing slipped into Q2 due to project start-up teething issues and minor raw material supply delays.
Solar EPC: Contributed ₹32 crore (~41% of revenue). The portfolio is being repositioned away from pure one-off EPC toward mandates with better structures, longer contract terms, and recurring revenue streams. The Bihar NBPDCL order under PM Surya Dhar's ULA scheme is the first result — a ₹56 crore project combining capex and RESCO basis with a 9-month build phase followed by a 10-year service contract, marking the company's first recurring revenue stream. Similar structures are being bid in several other states.
FPI & Niche Products (Fault Passage Indicators): Fastest-growing segment with >50% domestic market share. Q1 orders executed match the entire FY26 order volume for this segment. New orders from Odisha (FPI + data communicator units, 75-day delivery, new utility customer) and Madhya Pradesh (₹3.37 crore FPI integrated into Indore SCADA control center with 5-year AMC) expand the customer base across states. Auto reclosers and sectionalizers gaining traction with a meaningful pipeline. This segment carries significantly better margins than EPC and margin mix improves as it grows.
Company-Specific & Strategic Commentary
New Verticals — Transmission & BESS: Transmission tenders in final stage of finalization; first breakthrough expected imminently with revenue contribution from H2 FY27. BESS re-engagement follows a deliberate step-back when market pricing was volatile; now targeting smaller, dispersed projects (identified in Rajasthan and Bihar) where competition is limited and execution expertise aligns with existing capabilities. BESS and transmission expected to be meaningful revenue contributors from H2 FY27 onward.
Product Development Pipeline: Compact FPI at advanced stage with launch imminent — technology transfer discussions underway with one European and one Asian company to expedite development; if materialized, launch expected within 2–3 months. VCBs in prototype development with type testing expected; rollout likely in ~1 year. RMUs at initial stage. Additional capex required only for VCB/RMU (FPI requires none).
Financial Discipline & Working Capital Management: Management highlighted active working capital management — collections of ₹100 crore against revenue of ₹78 crore, receivables down ₹10 crore, fixed deposits up to ₹68 crore from internal accruals. Tools being deployed include purchase invoice discounting, surety bonds (instead of bank guarantees), and trade credit optimization. Management sees no equity raise needed for FY27 or FY28 as fully resourced for the ₹1,000 crore target.
International Expansion: Initial exploration of Africa opportunities underway; Sri Lanka not being pursued.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY27 Revenue | ₹600 crores | Reaffirmed despite Q1 growth of 32% YoY — Q1 slippage (Patna project teething issues, supplier material delays) is a timing deferment, not a shortfall; Q2 will carry its own numbers plus the slippage |
| FY28 Revenue Target | ₹1,000 crores | Reaffirmed; requires unexecuted order book of ₹2,000–2,500 crores by end FY27; management confident given bid pipeline (₹1,350+ crores), demand availability, and adequate financial facilities already sanctioned |
| EBITDA Margin | Stable at current levels (15.3%) | Expected to be sustained; EPC margins may compress with scale but high-margin product business (FPI) growth will compensate — margins could even improve |
| Order Book (FY27 exit) | ₹2,000–2,500 crores | Required to support FY28 revenue target; order inflow management is selective — "execution is the biggest challenge," not order availability |
| Segment Mix at ₹1,000 crore | T&D 40–45%, Solar 40–45%, Products/Other 10% | Product revenue target of ~10% of total by FY28 |
| Peak Debt FY27 | ~₹130 crores | Cost of debt ~9%; debt-equity capped at 1.1–1.2 |
| Bid Strike Rate | 15–20% | On tenders in qualified pipeline; lower (10–15%) in new states initially, improving with penetration |
| Product Margins | Higher than EPC | FPI segment carries significantly better margins; FPI, compact FPI, VCB, RMU expansion expected to lift overall margin profile |
Risks & Constraints
| Risk | Context |
|---|---|
| Revenue Seasonality & Slippage | Q1 is structurally the lightest quarter due to Indian outdoor business cycles (monsoon). Q1 FY27 witnessed revenue slippage into Q2 from Patna project start-up issues and raw material supply delays. Management views this as timing deferment, not demand destruction — FY27 guidance of ₹600 crore reaffirmed. |
| Receivables Concentration (Government Counterparties) | DSO of ~180 days is endemic to the T&D distribution segment where government entities are the customers. Receivables at ₹149 crore declined only ₹10 crore in Q1. Management acknowledges collections from government entities face structural hurdles (strikes, treasury closures at year-end) and expects gradual improvement, not a step-change. |
| Working Capital Intensity | Borrowings rose ₹23 crore to ₹91 crore in Q1 funded for the Patna project. Management caps peak debt at ~₹130 crore (FY27) and debt-equity at 1.1–1.2, but further growth in project scale will pressure liquidity. Mitigants: surety bond adoption, invoice discounting, trade credit optimization. |
| BESS Market Uncertainty | Prior attempt at BESS was abandoned due to volatile pricing and long-tenor quotation uncertainty. Re-entry is cautious — only smaller dispersed projects targeted where competition is limited. Should pricing volatility recur, this new segment could underdeliver. |
| Margin Pressure at Scale | Management acknowledges EPC margins typically compress with scale. Mitigation is the high-margin FPI/product business growth, but product revenue is currently a small base — if product ramp-up slips, blended margins could fall below the 15.3% achieved. |
Q&A Highlights
Margins, Order Book & Strike Rate
Question: Are 15.3% margins sustainable, and what is the expected closing order book for FY27? (Vaibhav Mishra, Finvestors)
Answer: Management confident margins are sustainable given internal process/systems efficiency, and product business growth will further support margins. Product orders in Q1 alone matched all of FY26 product order volume. Order book closing is hard to predict precisely — bid pipeline is ₹1,350 crore with a 15–20% strike rate, but many more tenders will be bid. "Enough business is available in the market — booking orders is not a challenge; executing in time and getting payments realized is." (Santosh Shah, Satyakam Basu)
Question: Out of the ₹1,200 crore tenders previously mentioned as under evaluation, how much has been awarded? (Vaibhav Mishra, Finvestors)
Answer: ~₹70 crore awarded so far; remaining still under evaluation, with clarity expected in 1–2 months. Strike rate guidance of 15–20% confirmed. (Santosh Shah, Vicky Kumar)
Customers & Receivables
Question: Receivables at ₹159 crore, only ₹10 crore received in Q1 — how big a problem is this? (Amit Bhagat, Tata Digital)
Answer: Government customers in this industry typically have ~180-day DSO across the board — company is on par with industry norms. Improvement is a gradual process, not a sudden fix. Working capital is not a current concern; tools like purchase invoice discounting, surety bonds instead of bank guarantees, and trade credit are being leveraged. Company has established payment realization processes for government counterparties. (Santosh Shah)
Question: With borrowings increasing, will margins face pressure? (Amit Bhagat, Tata Digital)
Answer: No — while the quantum of borrowing will rise with scale, the borrowing-to-revenue ratio remains positive. EPC margins may compress with scale, but high-margin product business growth will compensate. Margins expected to stay at current levels or potentially improve. (Santosh Shah, Satyakam Basu)
FY27 Guidance & Growth Trajectory
- Question: What explains only ~30% YoY Q1 growth vs the ₹600 crore FY27 guidance (100% YoY), and how confident are you? (Kamal, Private Investor)
- Answer: Two reasons: (1) Patna project only started in the quarter with initial teething problems — revenue booked in June slipped to Q2, and Q2 will carry both its own numbers and the slippage; (2) minor raw material supply delays. This is deferment, not shortfall. Fully confident in the ₹600 crore guidance. (Santosh Shah)
Segment Mix & Capital Structure
Question: At ₹1,000 crore revenue, what's the expected segmental split? (Amit Mehendale, RoboCapital)
Answer: T&D and solar will each contribute 40–45%; the remaining ~10% from products/other businesses. Product revenue target of 10% of total by FY28. (Santosh Shah)
Question: Any equity raise plans, and what will debt levels look like at FY28 year-end? (Amit Mehendale, RoboCapital)
Answer: No equity raise planned for FY27 or FY28 — company is fully resourced for ₹1,000 crore revenue. Current debt ₹91 crore; peak debt in FY27 ~₹130 crore; debt-equity will be restricted to 1.1–1.2 maximum. (Santosh Shah, Satyakam Basu)
BESS Strategy & Value Chain
- Question: Where in the BESS value chain is the company entering, and how are pricing trends? (Mohammed Murtaza, Pinpoint X Capital)
- Answer: BESS re-engagement follows a deliberate year-long pause when prices were volatile and 5-year quotation certainty was poor; market has stabilized somewhat now. Targeting smaller, dispersed projects (tenders identified in Rajasthan and Bihar) where competition is minimal and existing execution expertise (scattered district/state-wide projects) applies. BESS contribution is entirely incremental to the ₹600 crore/₹1,000 crore guidance. (Santosh Shah)
Product Development & Capex
- Question: What's the status of FPI technology partnerships and product development timelines? (Mohammed Murtaza, Pinpoint X Capital)
- Answer: Compact FPI in advanced development — technology transfer discussions with one European and one Asian company; if materialized, launch within 2–3 months. VCBs in prototype stage with type testing next; rollout ~1 year. RMUs at initial stage. Additional capex needed only for VCB/RMU; quantum not yet finalized. Market potential significant given government aggressive smart grid conversion of Tier 2/3 cities. (Santosh Shah)
Expense Growth & Peak Debt
Question: Employee benefit expense nearly doubled and other expenses more than doubled while top line grew 30% — why? (Tejas Khandelwal, Prudent Equity)
Answer: Expenses are investments in line with the full-year target; at year-end, revenue growth will outpace expense growth. "First, we have to invest and then only we can get the returns." (Santosh Shah)
Question: What's peak debt and cost of debt for FY27, and what order book is needed for ₹1,000 crore FY28 revenue? (Tejas Khandelwal, Prudent Equity)
Answer: Peak debt ~₹130 crore; cost of debt ~9%. For FY28 ₹1,000 crore revenue, ₹2,000–2,500 crore unexecuted order book needed by end FY27. Management expects to achieve this as order inflow is a continuous process — they will be selective and wait for easier-to-execute opportunities. (Santosh Shah, Vicky Kumar)
Order Book Breakdown & International
Question: Is the ₹807 crore order book with or without GST, and how long will it take to execute? (Ravi, Private Investor)
Answer: ₹807 crore is net of GST. Majority of orders have 18–24 month project completion timelines; existing order book provides 18–24 months of visibility, with fresh orders contributing additionally. (Santosh Shah)
Question: Do you plan to explore Sri Lanka or other international markets? (Ravi, Private Investor)
Answer: Africa opportunities being explored at initial stage; Sri Lanka not being pursued. (Santosh Shah)
Qualification Cycle & New State Entry
- Question: How does the qualification cycle work for new geographies, and what's the repeat-rate improvement? (Divyansh Jaju, Trinetra Asset Managers)
- Answer: Eligibility criteria are technical and financial. If the company doesn't meet criteria alone, they form JVs with qualifying partners or have a PSU partner bid and take the project back-to-back. In new states, strike rate is 10–15%; it improves to 30–40% after establishing inroads. Majority of current ₹807 crore order book is from repeat customers. (Santosh Shah)
ROE Outlook
- Question: What is the sustainable ROE for the next 3–4 years? (Amit Mehendale, RoboCapital)
- Answer: Last year's ROE was 30%. Projections not yet formalized — offered to discuss offline. (Santosh Shah, Satyakam Basu)
Key Takeaway
Sugs Lloyd delivered its strongest-ever Q1 with revenue of ₹78.4 crore (+32% YoY), EBITDA margin of 15.3% (+32 bps), and PAT of ₹7.5 crore (+30%), while maintaining a robust ₹807 crore order book (2.7x FY26 revenue, ex-GST). The quarter was characterized by strategic execution: the ₹56 crore Bihar ULA/RESCO order under PM Surya Dhar introduced the company's first recurring revenue stream (9-month build + 10-year service contract), FPI orders in Q1 matched all of FY26 product volume, and receivables improved ₹10 crore to ₹149 crore with collections of ₹100 crore against ₹78 crore revenue. Management reaffirmed the ₹600 crore FY27 and ₹1,000 crore FY28 revenue guidance, citing ₹1,350+ crore bid pipeline, a 15–20% strike rate, adequate sanctioned facilities, and no equity raise plans for either year. Key priorities include transmission and BESS entry (targeting smaller, dispersed projects with limited competition), compact FPI launch via technology partnerships, and maintaining debt-equity ≤1.1–1.2 with peak debt of ₹130 crore. Watch points are receivables DSO (180 days with government counterparties) and the pace of high-margin product revenue scale-up to offset potential EPC margin compression at scale.