# 1. Financial Performance ## A. Key Figures * **H1 Turnover:** **₹900 Cr** consolidated (↓ from ₹1,188 Cr) * PAT: ₹122 Cr H1 (↓ from ₹152 Cr) · 13.61% margin (↑ from 12.79%) * **EBITDA Margin:** **21%** H1 * **Net Worth:** **₹1,331 Cr** (↑ from ₹1,209 Cr) * **Fixed Assets:** **₹273 Cr** (↑ from ₹178 Cr) * **Cash & FDs:** **₹213 Cr** * **Net Working Capital:** **₹970 Cr** * **Total Debt:** **₹150 Cr** (Debt/Equity: 0.11x) ## B. Revenue & Growth * **Revenue Decline Explained:** Lower H1 turnover reflects reduced material supply activity compared to prior-year peak; not indicative of underlying demand. * **SECI Order Recognition:** Majority of the **INR1,120 Cr** EPC contract recognized during commissioning, with revenue split across current and next fiscal years. * **Service Revenue Embedded:** Maintenance income of **INR120 Cr** last year was included within project revenue and not disclosed separately. ## C. Margins & Profitability * **Margin Normalization Expected:** Despite strong H1 PAT margin, full-year profitability projected to stabilize at **5%**, reflecting shift from high-margin milestones to execution phase. * **Annuity Profitability Standout:** Annuity business delivers exceptional **80–85% EBITDA margins**, significantly uplifting overall earnings quality. * **Full-Year PAT Guidance:** Target of **INR750 Cr** total PAT, split **INR500 Cr energy** and **INR250 Cr telecom**, despite financial charges pressuring net margins. * **EBITDA Outlook:** Group EBITDA margin expected to range between **25–30%**, with non-annuity operations at **18–20%**. ## D. Balance Sheet * **Low Leverage, Strong Equity Base:** Minimal debt and rising net worth underscore conservative capital structure, bolstered by retained earnings and asset capitalization. * **Asset Expansion:** Fixed assets surged due to commissioning of **Bangalore BESS plant** and **MSEDCL BESS project**, now capitalized on balance sheet. * **IPO Proceeds Timing:** Funds received by 30-Sep-25 but excluded from H1 results; will appear in Q3 post-listing (6-Oct-25). * **Funding Self-Sufficient:** IPO proceeds and project cash flows expected to fully fund execution needs for next **2–3 years**, preserving free cash flow. ## E. Cash Flow * **Working Capital Release Imminent:** Net working capital expected to decline by FY26 end as EPC projects near completion and **retention amounts** are released. * **Working Capital Management:** EPC and supply orders funded via **10–30% mobilization advances**, LC limits, and internal approvals. * **Depreciation Step-Up Ahead:** Annual depreciation to rise sharply from current **INR5–6 Cr** to **INR200–250 Cr** from FY28, driven by large-scale project ramp-up. * **Capex Funded by Cash Flow:** Project execution capex supported by internal cash generation, including contributions from EPC and telecom operations. --- # 2. Order Book & Project Pipeline ## A. Key Figures * **Energy Order Book:** **₹5,869 Cr** · **Telecom Order Book:** **₹3,266 Cr** · **Total Order Book:** **₹9,135 Cr** * **BSNL 4G Order Book:** **₹2,573 Cr** (₹1,300–1,400 Cr in current year, ₹1,200 Cr over 3–5 years) * **Annuity Order Book:** **₹3,300 Cr** (annual revenue of **₹412 Cr**) · **Developer-Model Projects:** **₹3,300 Cr** (annual revenue of **₹420 Cr**, ~85% EBITDA margin) ## B. Energy Projects * **Robust Order Momentum:** Energy segment seeing strong booking activity, with expectation to add ₹8,000–10,000 Cr to order book by FY26 end. * **High-Margin Developer Pipeline:** Four developer-model energy projects delivering **~85% EBITDA margins**, signaling attractive risk-return profile and annuity-like visibility. * **BESS Execution Accelerating:** First MSEDCL BESS project commissioned; targeting 40 of 75 planned sites by FY25 end, reinforcing execution capability in emerging storage segment. ## C. Telecom Projects * **BSNL 4G Backlog Clarity:** Majority of BSNL 4G order book (~50%) to spill into FY27 and beyond, primarily for long-term O&M, supporting multi-year revenue visibility. * **Near-Term Completion Tailwinds:** Tower erection project nearing final completion in Q3, with strong margins already realized in recent quarters. ## D. Annuity Book * **Scaling Annuity Base:** Current annuity order book supports ~₹412 Cr annual revenue, with gigawatt-hour pipeline expected to exceed **10 GWh** upon Facility 3 ramp, indicating significant scalability. * **Recurring Revenue Diversification:** Multiple streams of annuity income confirmed—telecom O&M (**₹200–250 Cr/year**), solar services, and BOO projects with structured VGF disbursement. --- # 3. Capacity & Manufacturing ## A. Key Figures * **BESS Capacity:** **5 GWh** current · **10 GWh** planned (+100%) * **Capex for 5 GWh Expansion:** **₹100 Cr** (utilizing existing infrastructure) * **Total IPO Capex Allocation:** **₹630 Cr** (spending to commence Q3 FY26) * **ICT Investment:** **₹250 Cr** ## B. BESS Capacity * **Strategic Scaling:** Five-year focus on BESS culminates in doubling manufacturing capacity to **10 GWh**, driven by strong order inflows exceeding current capacity. * **Cost-Efficient Expansion:** Backward integration via new container fabrication unit and reuse of fixed infrastructure enable lower incremental capex for second 5 GWh phase. * **Customer & Deployment Momentum:** Primary demand from state discoms and central PSUs for EPC/developer projects; first site operational with **~40 additional sites planned within 4 months** to validate performance. * **Full Utilization & Site Progress:** Existing BESS facility operating at full capacity; second energy facility (5 GW) under construction, targeted for commissioning by **Q3 next fiscal**. ## C. Facility Expansion * **Asset Growth:** Addition of ₹95 Cr to fixed assets reflects ongoing site development and execution of expansion plans. * **IPO-Funded Progress:** First project site from IPO proceeds already commissioned, with broader fund deployment beginning in Q3 post-listing (6 Oct). ## D. Capex Plans * **Capital Efficiency:** Confirmed capex of ₹120 Cr (ex-land) for full 5 GWh plant designed for three-shift operations, highlighting scalable unit economics. --- # 4. Product & Segment Mix ## A. Key Figures * **Energy Segment Revenue:** ₹160 Cr prior FY · ₹500–550 Cr expected current FY * **Total Company Revenue Target:** ₹2,600 Cr current FY * **Energy Segment Pipeline:** ₹3,300 Cr project pipeline (₹150 Cr developer model revenue expected next FY) * **ICT Revenue:** ₹200–250 Cr annual contribution ## B. Energy Segment * **End-to-End BESS Player:** Operates across manufacturing, EPC, and asset-owned (BOO) models in energy, with factory operational since June. * **High-Margin BOO Model:** Developer/BOO projects to deliver **85% EBITDA margins** due to low operating costs, despite longer payback concerns. * **Margin Divergence:** Product and EPC margins significantly lower (15% and 10–12%, respectively), creating mix-dependent profitability. * **Revenue Recognition Clarity:** Net project cost for MSEDCL reduced to **₹1,567 Cr** after GST credit, improving return profile despite **₹197 Cr annual revenue**. ## C. Telecom & ICT Segments * **Africa Expansion:** Strategic push into Kenya and Africa driven by rising demand for power and hybrid telecom solutions. * **Stable Segment Margins:** Telecom products (15–18% EBITDA) and EPC (13–14%) show margin resilience, supporting overall mix. * **ICT Contribution:** Represents a **material ₹200–250 Cr** annual revenue stream, part of broader product diversification. --- # 5. Customer & Supply Chain ## A. Key Figures * **Import Cost Share:** **50%–60%** of containerized system cost from imported lithium-ion cells * **Import Duty:** **20%** on complete BESS containerized solution · **10%** on BESS packs ## B. Supplier Tie-Ups * **Vertical Integration Advantage:** Backward integration enables product control and reduces supply chain dependency to cells only, enhancing competitiveness. * **Secured Cell Supply:** Strategic partnerships with **four top-10 Chinese lithium-ion cell manufacturers** ensure supply stability and mitigate disruption risks. ## C. Import Dependency * **Cost Efficiency Lever:** Lower effective duty burden on cell imports versus fully assembled systems provides a structural cost advantage. * **Domestic Manufacturing Mix:** Majority of containerized system (40%–50%) is manufactured and assembled in India, supporting localization and margin resilience. --- # 6. Risks & Market Competition ## A. Key Figures * **Debt:** **₹2,100–2,200 Cr** (70% of total project cost) at **~9% interest** (₹200 Cr annual interest cost) ## B. Pricing Pressure * **Intensifying Competition:** BESS market competition has surged recently, driven by entry of global and infrastructure players, resulting in an aggressive pricing environment. * **Pricing Resilience:** PACE maintains pricing power despite pressure, though recent tenders in Rajasthan and Gujarat saw bids as low as **₹170,000 per MW/month**, highlighting market intensity. ## C. Input Cost Volatility * **Cost Mitigation Framework:** Company insulates against lithium-ion cell price volatility via **back-to-back pricing agreements**, locking in supplier costs upon order receipt. --- # 7. Guidance & Outlook ## A. Key Figures * **FY26 Revenue Guidance:** **₹2,600–2,700 Cr** (+11–15% implied growth) · **FY27 Target:** **₹3,100–3,200 Cr** * **PAT Margin Guidance:** **11–12%** (FY26 & FY27) * **Total Annuity Order Book:** Expected to reach **₹1,000 Cr** * **Peak Revenue Potential:** **₹6,000–7,000 Cr** from 10 GWh capacity ## B. Revenue Targets * **Seasonal Revenue Build:** H1 typically contributes one-third of annual revenue, with H2 delivering the bulk, supporting back-end loaded execution ramp. * **Segment Contribution:** FY26 revenue to be driven primarily by telecom and ICT, with energy segment contributing ₹500–550 Cr; annuity income begins in FY27. * **Order Book Conversion:** Current order book (including 5,869 and 3,266 in telecom) expected to convert into revenue over the next two fiscal years. ## C. Margin Projections * **Annuity Margin Advantage:** Annuity contracts to deliver higher margins than other segments, with net PAT margins targeted at 11–12%, supported by stable cash flows. * **BESS Margin Profile:** EBITDA margins projected at **13–15%**, with product supply marginally above project execution. * **Market Discipline View:** Management sees current low bidding levels as unsustainable, anticipating a market correction due to uneconomic pricing. ## D. Funding Plan * **Capital Allocation:** ₹820 Cr IPO proceeds to fund asset-owned developer projects, including ₹630 Cr for one anchor project and ₹120 Cr (net) for two others. * **Leverage Strategy:** Projects to be financed with 70% debt and 30% equity, enabling capital-efficient scaling of high-return assets.