Diamond Power Infrastructure (NSE:DIACABS) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Diamond Cable Q2 FY 'twenty seven and H1 FY 'twenty seven Earnings Conference Call hosted by Monarch Network Capital Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to mister Alok Shah from Monarch Network Capital. Thank you, and over to you, sir. Yeah. Thank you, Alex. Good morning to everyone.

0:47 We we welcome you for Diamond Power's q two FY twenty seven and h one FY twenty seven earnings call call. Today, are joined by Mr. Amit Bhatnagar, Head Corporate Strategy and Mr. Khurdeep Thakkar, the Chief Financial Officer, to take us through the numbers and the performance hereon. Without taking much of your time, I would hand over the call to Bhatnagar sir. Over to you sir. Good morning everyone and thank you for joining the Diamond Power earnings call for the second quarter and the first half of financial year twenty six, twenty seven. I'm Amit Patnagar, and with me on the call are Mr. Umesh Chaya, old time director Mr. Kundit Thakkar, CFO Mr. Ashwini Sarath, the Chief Operating Officer and the members of the senior management team.

1:39 We will keep the opening remarks little short so that we have ample time for your questions. Let me start with the headline. This was Diamond Power's first INR 1,000 crore quarter. Revenue from operations for Q2 was INR $10.32 crores, up 135% over the same quarter last year and up 50% sequentially. EBITDA, including other income, was INR 133 crores, up 189% at a margin of 12.9%. Profit after tax was INR 108 crores against INR 28 crores a year ago, that is 3.9x. Earnings per share for the quarter was 1.87. For the half year, revenue was INR $17.22 crores, EBITDA at INR $2.18 crores and PAT at INR 166 crores. I would ask you to hold two numbers in mind. First is, in six months, we have delivered 90% of last year's full year revenue.

2:40 Second, our H1 profit of INR 166 crores is already higher than the INR 158 crores we earned in the whole year in the financial year '26. You will see eight consecutive quarters of growth. Two years ago, in the Q2 F twenty twenty five, we reported a revenue of INR307 crores and a pack of INR6 crores. This quarter revenue is 3.4x that and the pack is 18x. The scale of the company has changed every single year and is still changing. Three things drove the quarter, and I want to be specific about each. First, the product mix. Growth came from medium voltage cables at eleven and thirty three and from 66 kV EHV and from AM59 conductors.

3:26 The segments where qualification matters if fewer manufacturers compete. Cables were 40% of the revenue, conductors was 31% and the remaining was data center cable. Secondly, a new product line that did not exist in quarter one, Data center cables from our newly commissioned copper cable line contributed $2.42 crores or 23% of the quarter's revenue supplied through EPC contractors building hyperscale campuses, including L and T, Orion Pro, Sterling Wilson, and Blue Star. Three months ago, decline was zero. Copper capacity of 1,500 tons a month is live and is being scaled to 2,500. I want to dwell on September for a moment because it shows what this platform can do once it is funded.

4:12 The QIP funds came into the company in August. In September the very next month, we achieved record production of $5.75 crores plus GST. Of that, our team made and delivered $2.40 crores of data center cables in a single month. That is a historic month of production and sales for the company and it was done with these lines, the same people and the systems we already have in place. Third, operating leverage. Employee and other expenses came down to 5.7% of revenue from 8.2% a year ago. That is why EBITDA margin expanded on two forty basis points even though the contribution margin as a percentage moved from 18.7% to 16.9%.

4:59 The reason for that percentage move is simple. Higher LME aluminum prices increase the revenue base. Our contracts carry price variation clauses, so the absolute contribution per ton is protected. We manage the business on rupee per ton and per kilometer and not on a percentage of metal. I want to be careful about one thing here because this is a quarter in which every cable company in India has reported a big top line number. A good part of that is metal. On LME, aluminum is roughly a fifth of a quarter on a year ago and the copper is up around 40%. And because our contracts are through metal through, the revenue lines carry that inflation. So the honest question for any cable company this quarter is how much of the growth is metal and how much is real?

5:46 Remember, Diamond Power major input is aluminum. If you read the analyst updates from the listed peers, you will see the answer for the industry. Our revenue grew by 135%. Metal and price variation pass through account for perhaps a third of that. The rest is real. On actual production, kilometers of cables and tons of conductors made in dispatch. Our growth is well above 60% to 70% year on year basis. Conductor dispatches were 6,850 kilometers in the quarter. A data center line alone, which did not exist a year ago, delivered $2.40 crores of product in a single month. That is the difference between a company riding a metal cycle and a company adding capacity, qualifications and customers.

6:34 We are the latter. I would like you to judge us on volumes, not on the rupee conference. One more point on cost. Since you will see in the clear comparisons, Diamond Power does not spend 2% or 3% of sales on advertising and branding as consumer facing cable companies do. We sell business to business and business to electrical consultants, utilities, EPC, data center builders, industry and market for the long term period. Only quality speaks. The industry is presently going through a cycle where quality is considerably compromised under the pressure of maintaining margins and volumes in B2C due to entry of newer players for us, quality is our brand and that is why our employee and other expenses are 5.7% of revenue and that is why our saving goes completely to the bottom line.

7:30 Our other income is 18 crores is treasury income on QID funds, largely fixed deposits and the tax remains negligible because of carry forward losses. The profit and loss tells half the story. The balance sheet is the other half. And in some ways, it is more important one in this quarter. At March 31 this year, our net worth was negative by INR $60.04 crores. At September 30, it is positive by INR $7.64 crores. Net debt of INR $5.27 crores has become net cash of $5.72 crores. Three events that made it happen. The QIP in July, we completed and raised INR $6.14 crores entirely due to the fact that we need to we have to bring down our minimum shareholding.

8:22 The promoter loans, as we mentioned in the last call, have been completely repaid and most importantly, the profit which we are generating. The INR 12 crore of finance cost you see in this quarter is almost entirely healthy discounting and bank charges on a much larger volume of business, a cost of trade, not an actual debt. The resolution plan in September was prepaid for full $50.01 crores cash consideration a year ahead of September 2027 deadline, availing a prepayment discount of almost INR 9.5 crores. The company has exited the MCLT mechanism completely. All plant payments are complete. Lendered NOC release of charges are in process and we are now eligible for a credit rating for fresh bank lines, which are being tied up.

9:15 Let me take you to our orders, customers and the demand. Our firm order book at September 30 stands at 3,735 at quoted value and around INR 4,300 crores at current market prices under the price escalation clause. More importantly, it keeps growing widely executed. Order inflow in H1 was 2,217 crores against a revenue of INR $17.22 crores, a book to bill of 1.29x after 1.63x in residential 2026. The book is 46% conductors, including a INR $9.74 crore order of eight fifty nine for 800 kV HVDC line.

10:02 That is a landmark project which the company is doing. With this quantum of almost close to INR 1,000 crore of HVDC, this will ensure that Diamond Power has all possible PQs which are required to reach out the Indian DBCV players in the global market. 36% of medium voltage cables and the balance is LTE and data centric cables. The conductor strategy is unchanged from what I set out in the last quarter. The book is essentially of AL-fifty nine, EcoConductor and HTLS through our TS conductor partnership building behind it. And we are deliberately not using TSR tonnage. These wins in and around the quarter include additional NV and LT Cable orders from Adani Electricity Mumbai, our third consecutive year of supply, 66 kV EHV cable for a GETCO project in Jahan Nagar, $13.70 crores of 11 kV cables for PGBCL's coastal underground schemes and AL-fifty nine conductors from DGCV supply.

11:06 We served around six seventy customers in the first half of twenty twenty seven across utilities, EPC players, data center and industry. Adani Group entities are 43% of the order book and we hold Adani's share of top line to a stated cap of 20% to 20 over time with every Adani order placed at market price on a reverse auction basis. We have built national marketing organization. We have put our city teams in place. We have put the key accounts group. We have now put a separate conductor desk and more importantly, a separate export team, which is drawn from most of the successful competitors who compete in the export market. I can assure you, financial year 2728 will contribute a large contribution can come from export.

11:57 We have already put a very large distributor in place in UAE and Middle East. And also, I can happily report to you that this quarter, Adani's sales are less than 30% of our top line. So we are on track to build our customer profile as we had promised to you. We continue to be very bullish on the medium voltage cable segment. Last quarter, I said that Diamond Power is becoming a medium voltage and increasingly an extra voltage cable company with a premium conductor franchise besides it. Q2 bears that eleven thirty three kV cables were 79% of our cable revenue outside data center and 33 kV alone was our largest product line.

12:45 I want to spend a few minutes on why we remain bullish on this industry and we were as we were in August. I will take you through the important demand drivers, which we have discussed in the past and are now building out. First, the grid build out. India is in its largest ever transmission investment cycle and for us that is the conductor business. 46% of the order books, which is INR 17 crore and INR 18 crore, $17.18 crore. In the last year, we have supplied over 40,000 kilometers of conductor to TBCV developers and to power grid. As I mentioned to you, the single largest order this year is HVDC 800 CV, and we have a long term backup arrangement with TBCV suppliers so that their wins flow to us.

13:38 In the last quarter, the important thing we have done is because the number of TBCV players in the industry is growing substantially. We have now started a back to back arrangement, which is pre bid, which assures us that we get orders when the TBCV bid is awarded to a player. Second, I'll talk about the renewable evacuation. The clear example is Kaura in Kutch, the world's largest renewable park, where our AL-fifty nine conductor carries the evacuation and our cables run inside the Adani Solar Park. Beyond Kaura, solar is now a product line for our own. 3.3 kV solar cables were INR 39 crores in Q2 and are INR $2.21 crores on the firm order book position from key developers like Tata Power Solar, which we have now classified as a key account in the October, considering the fact that we are expecting very large order inflows from Tata Power.

14:37 We are now a dedicated servicing team for Vale, Acme, CleanMax and Rich. Demand from solar parks is strong enough that we are building a 1,000 kilometer a month single core 3.3 gig cable plant, which will get on stream in the next eighteen months. Third demand driver is underground cabling, and this is where our NV cables go. Medium voltage cables are $13.28 crore of our order book position, which is 36%. In Mumbai, Adani's equity has placed INR 152 crore LOE on us. Accordingly with that, we have PGVCL rated contractors who have ordered almost INR 195 crores of these cables in the last quarter itself.

15:26 Our 66 kV underground program is also on track. We received INR 154.5 crore EHV order for Jamnagar and further 66 kilobytes in pipeline, and we are expecting a good inflow on 66 kilobytes in the next ninety days. More importantly, we have now started working in newer markets like the South and East. In Bangalore, we have seen more than 5,000 kilometers of 33 kilobytes tenders which are now coming up. I'm sure it being a dominant player, here, we shall be focusing on that market in a big way. In short, Diamond Power is now more ahead of Adani and Western India and Northern India and now the focus is Pan India. We desire to build a market which is equally segregated across the geographies in India. Coming to the fourth, which is the data center. As I mentioned to you in last quarter, we have made a dedicated data center team and I can proudly tell you that most of the leading consultants in the data center space, now Diamond Power is approved and we are now the preferred vendor considering the fact that we delivered INR240 crores of data center cable in one single month in September.

16:45 The fifth is the industrial CapEx. The Yamuna Expressway, Undraport, Delhi International Airport, NTPC, Indyachal, the Bio CNG plant at Zadjarpur Reliance, These are some examples of declines which we have worked on. Our recent 132 kV supply to Siemens India, duty Goran Port and Indian oil tanking is a validation of how we are now planning across the market and dealing with very sensitive industries like port and refineries. Our industrial names this quarter was A and S, JSW, SAIL, Bulkarosteen and Serum Corporation of Serum Institute of India. So we are now across the spectrum, across the industry.

17:31 Green hydrogen and offshore cables is something which we are now focusing upon, and I can assure you that we will be able to share with you some good news on these markets very shortly. We are also focusing on ESP cables in a very big way and we are now focusing on exports and especially exports in medium voltage and extra high voltage. We have already started building our Middle East market and now we are working on prequalifications in Europe and US market. It is worth remembering that nine of the world's top cable manufacturers are manufacturers who make NV and USB cable. Scale in this industry is one on medium and extra high voltage, where qualification and cost takes years to build, and that is precisely where we have spent the last three years building it.

18:23 Now coming to our CapEx and what infrastructure we are building. This is what we call building the next diamond. I will spend some more time on this section than usual because two things are new since the last call. We have ordered a six CCV line and we have frozen the design of a polymer compound backward integration, which will be the real differentiator between us and any other cable company in the country. Let me start with calling us because this is the project investors have asked us most about. The insulation and shipping compound is between 35% to 40% of the cost of a cable. More than that, the conductor material in most of the constructions.

19:11 We already make our own PVC compound in house. What we have never made and what no Indian cable manufacturer makes today is the cross linked polyethylene polymers for cables above 66 kilobytes. Most of the peers make compounds up to 33 kilobytes. We are setting up an integrated polymer complex, which is INR 170 crore of investment in a 1.5 lakh square foot building with no land cost because the land already we have, the combined capacity of the project will be 84,500 tonnes. The Phase one is six ammonia lines, which will cost us INR 78 crores, two PVC lines, two silane lines, one master base line and one ferro oxide base line with a capacity of 6,500 tons a year. They will make PVC, FR, FRL achieving compound, bedding compounds, silane XLP for 1.1 to 11 kV and peroxide for 33 kV. All of Phase one output is captive. It replaces the compound we buy today.

20:17 The PVC and catalyst signed commission first and the full phase is on stream to be commissioned between June and December 27 progressively. Phase two is the masterpiece in the entire investment of CapEx with Diamond is making. It is a Swiss engineer reciprocating line, the same low shear mixing platform that global compound makers use, making super clean peroxide XMP insulation for 66,132, two twenty and four hundred kV lines. This is going to be 18,000 tons capacity. The line is bought with its know how package, its formulation and its cleanliness acceptance, eight commissions in early twenty twenty eight after the pilot trials on our own raw materials.

21:08 The most important part here is Super Clean. When we say Super Clean, the compound has zero impurities and there is nothing which is impure 100, less than 100 microns. In the HV cable, the electrical field concentration is very important and because the life of the cable is forty years, utilities approve the compound and the compound itself is a brand and a prerequisite for making that cable from the end customer. And this is where Diamond investment in ESG compounding plant, the first of its kind and probably the sixth of its kind in the world will make us a differentiator among everybody else. Presently, we have certain data which tells us that in this compound, the margin is more than 15 rupees a kg.

22:01 And at our current volumes, this will relieve an additional EBITDA of INR 120 crores when we use it on a captive consumption basis, and that is going to be a major impact on us. The project model shows a 30% post check IRR on a consolidated basis. This project is being funded by INR78 crore funding from the GCP account of the QIP and 100 crore from internal approvals and a small amount of debt if we feel we need to get it. The other projects we're already running is the balancing equipment project, the doubling of the copper cable capacity, the fifth and sixth CCV line, which is going to get commissioned.

22:51 And these are very important projects because all these projects are very long term and we already have the equipments virtually in place. Our LV cable project as promised is going to be commissioned before April 2027, which will get us a very large in road into LV cables. Additionally, the single core cable project which targets the solar infrastructure is already on stream. On our last call, we indicated the financial year 2027, our revenue will be INR 4,300 crores to INR 4,500 crores. We are still standing by with that number. With INR $7.22 crores delivered in H1, we have to get you INR 2,580 crores in H2.

23:36 The season itself is half as strong. As my new CFO, Mr. Kundeepakar, told me yesterday that most of the cable companies do 40% of revenue in quarter one and two and 60% coming quarter three and four, I'm sure his analysis and our capacity and understanding will stand good. Diamond Power is constantly now focusing on increasing the manpower bench strength. We have a new Chief Operating Officer and a new CFO, both of whom have a fantastic industry experience. We have now started working on succession planning and a director's office has been made so that in the next five to seven years, we get our GenNext to come on board and start being part of the decision making process in the company.

24:26 To sum up, our first 1,000 quarter, a half year that has already out earned all of last year, The balance sheet that has gone from negative network to a positive cash flow. The 3,735 crore order book position and the capacity program that moves up step by step, voltage class by voltage class. I can only sum it up by saying Diamond Power is a five decade year old company, and it is is the best of the next decade. I want to thank our team and about and about 2,000 people at Baroda and Diamond Power employees across the country and our shareholders for their existing confidence and the future confidence on us. Thank you very much for listening me out.

25:13 Now we are open to questions. Thank you. We will now begin the question and answer session. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Nishant Bhagrecha with Incred Capital. Please go ahead. Yeah. Good morning, everyone. So thank you for the opportunity.

25:59 Firstly, congratulations to the entire team on crossing the 100 crore quarterly revenue milestone. Sir, I have a couple of questions. Firstly, on the order book and the education visibility. So, Arun, your outstanding order book currently stands at around INR $3,007.35 crores. So could you please provide some color on the order inflows, momentum and the inquiry pipeline across MB and EHV cables, conductors and data center cables? I mean, also, how much of your FY twenty eight revenue target is already backed by the existing orders or a visible pipeline? So as we mentioned to you, the market value of our existing orders is around 4,300 crores, and we are targeting to do almost INR 2,500 crores till March.

26:44 So the remaining is obviously for the next financial year. On an average, our order intake is between INR $3.50 crores to INR 400 crores and always the H2 and H3 and H4 is the period when the order inflow increases considerably because all the budgeted tenders of the government gets finalized in quarter two and in the beginning of quarter three and that inflow comes to us through the EPC contractors. So we are confident that by the time we end Q3, we will have 50% of next year's target in And by the time we end Q4, we will have the next year's order book with us. Sure. And just a follow-up on this, as you mentioned, the data center cable contributed almost $2.44 plus in Q2, which is accounting for a meaningful share of a quarterly revenue. So it is largely driven by the execution of a large large project, or are you seeing this evolve into a sustained business opportunity?

27:49 I mean, what kind of revenue potential do you see particularly from this data center segment over the next two two, three years? And are you increasingly engaging directly with hyperscalers and data center developers? See, two things. One is in the current year, I'm expecting to do $7.50 crores out of my top line from data center customers for which I think I already have the orders from there. Number two, we've been tracking data center across the country. My director of marketing told me last week that there are 66 cities in India where data centers are coming up starting from 20 megawatt and going up to now in terms of gigawatts.

28:34 So we have instructed our teams across the country that now you have a great prequalification, you have approvals in place. We need to scan every data center across the country. So starting from 40 megawatt to gigawatt is using the entire market we are scanning. This 66 cities as per the last data available with us, there are more than two thirty developers who are developing these data centers. And let me assure you that we are at the back of every potential opportunity. Sure, sir. So secondly, my question is on the competition. So, again, with the several several established cable players stepping up investments in particularly in the and capacity, so I think the competition is likely to intensify over the next three to five years.

29:27 Right? So what sustainable competitive advantage do you believe can build in this space and particularly in the terms of technology, like customer approvals, your manufacturing capabilities, and also the cost competitiveness. So on the completion. So you will see two, three things. One is we have... We had driven conviction that the future lies in ME and EHVQ, that is where we are putting our money in. So when we did the QIP in August, we had five lines, CCV lines. And as you know that the standard delivery period of a line is almost two years. We have already ordered our sixth line and you will see that we have managed that the delivery is within one year because we had an opportunity to buy it out from an existing order which was given by international player.

30:17 Similarly, we are now focused on two, three things. One is, we are doing a very major backward integration on polymers. Now that is going to 35% to 40% of the cost of a medium and extra high voltage cable is polymer. If if I'm assuming that the polymer manufacturers because I have data of almost five players, one which is the Indian player is making between 13 to 14 net profit on his MB and EHV compounding business. And the four other global players are making an unbelievable profit more than 20%. Even if I assume to get my scale, I'm going to pass on 3% to 5% of my polymer benefit to my customer. And I'm left with 10% additional profit on the polymer part. I'm looking at increasing my EBITDA by 3.5% once my polymer project is implemented.

31:15 That is number one. Number two, with 11 medium voltage cable lines. I already have the scale and I already have the capacity to consume the polymer which I'm making. See in every product there is a minimum breakeven which is required for this industry. If you want to really make XLP compounds of the scale and type which we are now wanting to make, you should have minimum 10 operational lines. Otherwise, you will have to sell your compound to others. So that first mover advantage we have already put in place. I'm sure there are competitors who are going to add the line. It will take two, three years to reach the number I already have. And by that time, I would have doubled my numbers.

32:00 So Diamond Power from 2028 to 2022 is in pipeline by the next... The fourth quarter of the year when we talk to you, we will share with you our roadmap of 2028 to 2032. And I can assure you, we will always be ahead of every other cable company in the country when it comes to medium voltage and its time within capacities and capabilities. Sure. Sir, just on this capacity expansion, so you have indicated earlier that you have planned to add five new MB lines every year from 2028. So what is the incremental CapEx and revenue potential for line and how do you ensure that the capacity additions are supported by adequate demand particularly in the second business?

32:51 Nishant, we as I mentioned to you, we will come in detail on that at the end of quarter four because presently we are negotiating with the global players, the quantum of lines we want, the numbers we want, obviously, want a really good price and we want an assured delivery. So once we are out with the plan, we will share with you. Sure. Sure. No problem, sir. Thank you. And I'll Vishal, one thing one thing I... I'm sure I'm sure I I have seen a note which you released regarding our numbers for the quarter two. I think we've done better what you've been... What you projected. Yeah. Definitely, sir. Sure. That's it. I'll give to you to them, I think. The next question comes from the line of with Asian Market Securities.

33:41 Please go ahead. Hi, sir. Thank you for the opportunity and congratulations on great set of numbers. My first question is pertaining to the data cables, data center cable. So could you please elaborate on the nature of this business, particularly on the proportion of repeat orders versus the project based orders? And second, can you call out the margin difference in the conventional cables and data center cables? First and foremost, data center cables are not anything different than what normal cables are, but they are mostly single core cables. They are made with aluminum or copper depending on the intensity of the power which data center will require.

34:26 They are usually 33 kV cables and in some cases 1.1 kV cables depending on the construction and nature of the data center where it is. In some cases, data centers are also transmitting power through HDLS cables and some of them are using 400 kV and two twenty kV compounds also. So this is one on the nature of cable. Coming to the margin, well, only extra margin you can get is because the prequalification terms and conditions are very stringent and data center consultants and data center companies are very finicky and very choosy on whom to approve, whom not to approve. So, obviously, there is a there is a is a entry barrier there.

35:19 So this entry barrier leaves at least 2% extra margin for you. Got it. Very helpful. Secondly, the tax part. So given that the company is currently has significant carry forward tax losses resulting in a negligible tax outgo. So could you quantify the tax shield available and indicate us how long we expect this to continue benefiting from these accumulated losses? And in which financial year do you expect the company to start paying normal corporate taxes? As on March 31, our carry forward loss was $14.32 crores, right? Going forward, the manner in which we are growing in the projections we have done, I think quarter one of twenty twenty nine, we will have to start paying tax.

36:11 Thanks a lot, sir. That's helpful. All the best and the very greetings to the team. Thank you. The next question comes from the line of Natasha Jain with Philip Capital. Please go ahead. Thank you so much, sir, and congratulations on a good set of numbers. So my first question is, can you just quantify? So in terms of a 100 rupee sales value, what 84 rupees is your raw mat and offset? Could you just split the metal cost, PVC cost, any others? So it depends on the nature of the cable. If it is a medium voltage and extra voltage cable, the metal is 40% or in some cases even 35% and the polymer is 35%.

36:59 If it is a LV cable, then polymer is 20% and metal is 35... 45% to 50%. So there is no single problem we have to say that what is the percent. It depends purely on the construction of the cable. Got it. And sir, when you say these percentages, you mean it as a percentage of raw material, right? Or do you mean it as a percentage of sales? Got it. No. No. Percentage of raw materials. Got it. And sir, my second question is on the EHV side. So could you tell us what's the market size currently? And what is the market size that you are eyeing here? And also give us some sense in terms of margins, how different is the EHV margin, both domestically and if one had to export versus say LV or NV or even HV, which is lower than your EHV?

37:47 So to give you an example of the EHV market, last year, Gujarat Energy Transmission Company purchased 900 crores of EHV cables. In this year, in the first seven months, they have floated tenders of 3,200 and another 900 crores we closed this month. Right? So this is one utility how the preference is changing from overhead to underground. Now if you want me to put a number to it, it's very difficult because I I do not actually have the number. Our assessment is that we want our extra voltage cable to get into double digit double digit in the quarter three and quarter four of our top line.

38:33 That is our target. Got it. Understood, sir. That's helpful. And could you just talk about slightly about the margin differential in EHV versus the normal cable portfolio and non EHV? So so EHV cable is always a single core cable, and medium voltage 33 and below 1.1 are usually multi core cables. So when you are making multi core cables, the expense of making those cables probably, if you consider per kilometer or per lakh is more than single core cable, number one. Number two, the technology and the entry barriers and the type of people you require to make the HV cable. The, obviously, it's an expertise product.

39:22 So the differential is usually 5% to 6% between a medium voltage and the HV cable and almost 10% between LV and HVD. Understood, sir. That's extremely helpful. And my third question is on the polymer side. So you could you also talk about the polymer import market size and what is the plan to capture eventually? Are we even planning to export or just use it for our own purpose? So as I mentioned to you that the capacity we are building is meant for 100% capital consumption. Got it. And could you just give us a little bit of sizing in terms of this clean polymer market? No. We have not looked at it because we are making it with our intention of doing a backward listing.

40:13 So we've not gotten to prediction of the market. What we have focused is what is the margin the players are getting and how much EBITDA we can add to our books. And based on that, we have taken the decision. And when we are seeing completely a 10% difference, 10% additional margin we can make on the polymer side, it's a no brainer for us. Fair enough. And sir, one last question on exports. So while you've touched that you start an export team and and already doing it in Middle East, could you talk about where are we in terms of US, which which leg of the entire value chain are we there, and what are we going to export a little bit on that? We are... We have already made our application for UL approval for medium voltage simmers when it comes to The US market.

41:04 And we have already done our... We have already send our samples for type testing when it comes to the Europe market. We have created a dedicated team within the organization comprising of people who are coming from marketing, operations, production, quality assurance, so that we have actually quantified what is required to be qualified completely without any hurdles when it comes to the export market. And I can tell you before the end of March twenty twenty seven, most of the prequalification would have been overcome. Great. So that's great to know. And lastly, these export cables, would they be more copper cables? So it again depends on the market you are targeting. If you are targeting Africa, it is aluminum cable. If you are targeting Europe and US, it is copper cables.

41:58 Got it. Sir, this is extremely helpful. Thank you, and all the very best, and wish you happy to validate your team. Thank you. The next question comes from the line of Archan Lohade with Nuvama Holdings. Please go ahead. Yeah. Good morning. This is Archan Lohade from Nuvama Institutional. The first question with respect to the NV cable, if you could help us understand in terms of the market size and what has been the growth in the first half in your estimate for NV cable? Yes. As as we have already stated in the real calls, there are basically five to six fundamental drivers which are growing demand in MB Cable.

42:43 The first being renewable. The second being disaster management. Third being vertical urbanization and underground gaming projects, fourth is data center, fifth is the railways. And if you split my order book position, you will see that almost 90% orders are coming from these segments and just 10% orders are coming from the traditional industry segment. So till 2022, we had demand from power plants and petrochemical and steel industry, which still continues. But these five segments which I mentioned to you are now equally big and comparable to the market segment of INR25000 crores to INR30000 crores, which was there in the year 2022 with the traditional industries.

43:30 So if you as you will see the numbers for medium and high voltage cables in terms of growth will get captured and will shine every other segment of the cable industry. And I can tell you I can tell you with confidence that it will be even faster growth than optical fibers when it comes to the medium voltage high voltage. Got it. But in your estimate, first half, what would have been the growth for the industry in, you know, as per your estimate, sir? I'm not estimating anything because everybody's numbers are not out. But I can tell you that almost I can tell you about the type of inquiries we are getting. Right? We have presently 32,000 crore worth of inquiries which are live to be finalized in the next ninety days by various customers across the country.

44:33 You said 32,000 crores? 32,000 crores worth of inquiries, which needs to be finalized by various clients with orders under pipeline, which will go to some of the other cable players. And these are across cable, right, across types of cables, right? Or just the... Across medium voltage and x-ray voltage. Okay. Got it. The second question, with respect to the polymer, what is the typical asset on in this business if somebody was to set up for third party? What would be the asset on in this business, sir? EBITDA? No, that is the revenue from, you know, the $1.70 crores investment. And total, I think you said $2.70 crores.

45:28 I Total $1.70 crores. Total $1.70 crores. So this $1.70 crores CapEx can give what kind of revenue if you were to sell it outside? Around INR800 crores. 100 crores. You could help us, you know, with respect to the second quarter number, if I see the revenue growth was 135%, but the margin improvement is only 70 basis points. So are there any one off costs which kind of impacted the profit numbers? Because theoretically, you should have had even bigger operating margin improvement, right, sir?

46:15 No. It's because the... All the contracts are price escalation based, and the the time line of getting the escalation is thirty days prior to the date of dispatch. So if I am dispatching something in September, I will get the price of August. If I'm selling something in August, I'll get the price of July. So when your metal prices are falling, the lag impacts your contribution between... It depends on the level at which it is falling, but always there is a plus minus of 1% on your EBITDA on the basis of this aluminum prices and that is the impact you see. But if you compare it with the original contribution, which was envisaged when we took the order, means that the contribution remains constant.

47:05 That's basically cost plus kind of a contract. Sir, one minute. Mr. Kundeep, Patra would like to say. Yes, because sales price has gone up, so denominator is higher, and that's how in percentage terms, is seen as lower figure. But in absolute value, we are making the same then. Perfectly. It's more like a conductor business, right? So where it is more of a kind of a margin and not like a cable where the margins tend to be percentage wise similar. Is that right? No, it is percentage wise, but if you when you are talking about EBITDA, it is a differential number. And in the growing prices of commodity, the percentage may be lower because the absolute value of the revenue goes up. But when the prices go down, the reverse will be happening. The margin percentage will go up.

48:00 But absolute value still remains more or less same. Got it. And just one last question with respect the conductors to cable mix in terms of the tonnage. What would that be as of now? And how would that change, let's say, for FY 'twenty eight? So it is broadly around 3130%, 31%, and it will not change. This is what we are envisaging for the current year and for the next year, because the cable business will grow faster than the conductor business, we're expecting it to be 2575. Got it. Thank you and wish you all the best. Participants, in the interest of time and fairness to others, please restrict yourselves to two questions.

48:52 For any more questions, you may rejoin the queue. The next question comes from the line of Abhishek Basumalik with Alpha Street Intelligence. Please go ahead. Hi. First of all, congratulations on a great set of numbers. I had one quick question. You have you're talking about a big quantum jumping revenue over the next three to four years. So one is, what is the kind of CapEx that you think will be needed for the next three, four years? And secondly, what are the big risks that you can see that can actually create problems in terms of not able to reach that reach the goal that you have for yourself of INR 10,000 crores of top line?

49:45 Two things. First is that to reach that top line, we already have our CapEx and infrastructure in place. Now whatever additional amount of CapEx we are doing, which is broadly around INR $3.66 crores over six, seven projects, They are all projects aimed at increasing the margin. Right? It is backward integration. It is getting additional value added products. So if you say train many lot to increase the top line, I don't think except the balance in equipment 73 crores, 75 crores, rest is not going to add to the volume. What we are focusing and investing on is where we can go and hit our EBITDA margin. That is the first thing. Now coming to the risk. Well, there are every business has a risk and the especially when it comes to infrastructure business, which is the power, road or businesses, which at the end of the day are 60, 70% dominated by government or controlled by government.

50:46 There is always a geopolitical risk which is associated. But as you see things now, is there any alternative to power? Fortunately, we are in a space where there is no other alternative. And as things are moving ahead and fossil fuels are getting faster, more and more focus is getting into new energy, more and more focus is getting into methods by which the traditional source of energy, which can be fuels, which can be other ways are now getting converted into green energy. And at the end of the day, everything is getting converted to electricity. And the most important thing is that we are the people who carry the power. Right? If we don't carry it to the customers, all this investment which is acting across every segment of the electrical industry will not be there. So to that extent, our segment of the industry, which is cables, is irreplaceable when it comes to the growth driver or growth engine of the entire country. So we are not seeing any major risk, which can turn the apple cart overnight.

51:55 I would like to add that the geopolitical risk is having a positive impact on our industry just because as the crude prices go up, more and more new energy is getting traction. So government of India or elsewhere, if you see, the focus is on new energy. And when we talk of new energy, the solar wind capacity comes up very fast compared to the thermal and evacuation need to be planned very quickly. So the demand for cable and all the equipments related to that are likely to continue and the geopolitical risk is actually fueling it further.

52:46 The next question comes from the line of with NBS Brokerage. Please go ahead. Hello, sir. Congratulations on the strong set of numbers. Sir, as you have mentioned, that 60% of our projected FY twenty seven revenue of 4,300 crores is expected in h two. With margins now already expanding, so can we see EBITDA margins moving from 12.9% in q two to, say, 15% or higher in h two? And over the next two, three years, what kind of margin target have you set? 18 to 20% or above? So one guidance on that. And lastly, sir, what is our capacity utilization in h one f a twenty seven, and what levels are we targeting for the next two, three years? Thank you, So EBITDA margins will always remain between 11% to 13%.

53:34 Once our Polymers gets on stream by December 2027, in the next year, we will will like to give you a band of 14% to 16%. Till then, don't think there's going to be a major change in EBITDA percentage, but the growth will get you more numbers. Value will get you more numbers. So return on investment, return on capital employed, that will really improve further. Okay. And next question was on the capacity utilization, sir. So capacity utilization is approximately 45% of what it will be when the entire balancing equipment is operationalized.

54:26 Okay, sir. The next question comes from the line of with Eco Quantum Solutions. Please go ahead. Yeah. Thank you for the opportunity, and congratulation on a good set of number. So I want to understand the total addressable market for the HDLS reconducting in India in terms of circuit kilometer and specifically the existing a c r s... ACFR lines that can be replaced with HDLS? And also, what portion of this market is already covered by AL 15 and conductors? First and foremost, we are... We have not made a single case of ACSR conductor for last five years. So we are... We have a strong conviction that ACSR conductor has no future.

55:14 Right? Our focus is on AL 59 eco conductors. Coming to FCLS conductors, well, this is basically a very specific segment of the market which is addresses. If you... If if 100%... If 100 volts of 100 electrons of power is moving through a circuit and you want 120 to move, that is where STLS can be replaced. Today, the scenario in India is that all the lines are already 20 to 25% overloaded. Right? So STLS, as for us, and our internal understanding does not have a does not have a very bullish future. Right? It is probably going to be 2% to 3% or 4% of the conductor market.

56:06 The underground MB cable and EHV cable is the one which is competing with HTLS and being underground, it ensures that the power test etcetera, it is one upon them. So we are not very, very bullish on the future of the HTLS cable. As per our data and understanding, this year around INR 5,000 crores worth of STLS tenders have been floated there in the market around INR 2,800 or 3,000 have been awarded and the others will be awarded. But at Diamond Power, we are very clear. We have a two member team to focus on STLS, but we've also targeted that it will not be more than...

56:52 It is a product where it is going to be less than 5% of our top line at its best. Okay. Understood. And so my last question is on the legacy receivables side of INR 1,000 crores. So in the last call, we have said that we are in the process of recovering INR 300 crores in FY '27. So any update on that? How much receivables have been recovered? We did not say that in 'twenty seven. We said that INR $9.57 crores is the legacy receivable. We are positive on recovering INR 300 crores, out of which around INR 116 crores is now quantified process of recovering that in terms of liaison, in terms of presenting it to the customer.

57:40 To the extent of INR 116 crores, we have confirmation from customers that, yes, that is payable. The remaining is going through reconciliation, arbitration process, negotiation process. And we are confident that we will recover this money. If you want a timeline, I'll put a timeline of twenty four months. The next question comes from the line of Sanjaya Satapati with Ampersand Capital. Please go ahead. Yes. Thanks a lot, and fantastic. So in terms of turnaround and top line growth, and you have already given a lot of things about your margin trajectory. Just wanted to kind of a little bit more on that margin. So most of your peers have gross margin in excess of something like 20%, 25%, 25% type. So do you think you will be able to go closer to that?

58:36 Well, let me tell you that I've already given you what margin we will do. We will do between 11% to 13% EBITDA and once the polymer comes in between 14% to 16% EBITDA. Of late, we have seen that the market is facing serious quality issues, right? There is lot of undercutting, which is being done in terms of consumption and quality of the product. We are medium, multi and extra voltage manufacturers. We are not spending any money on branding. Right? Our competitors are spending between 2% to 3% of their top line on branding. We are spending on quality. And I can tell you that the realization which we are getting is same realization everybody else is getting.

59:24 We are ensuring that our quality will speak on a longer period of time. I can only tell you that the margin which we are having presently is the most reasonable margin which you should expect from us. Understood. As far as the tax is concerned, till what time do you think you will have this shield of not paying taxes? Quarter one of twenty twenty nine. Understood. Understood. Thank you, sir. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Alok Shah for the closing remarks. And thank you, participants, for joining in and for this early discussions. On behalf of Munath Network, we will conclude this call. Amit, sir, you would have any concluding remarks, or we can conclude the question? No, thank you very much. I think Mr. Kudithakar would like to say something.

1:00:20 Just to add to that, in case your questions are not answered or we have not been able to do that because of time constraint, you can write to us, and we will get them back to you one to one. You, sir. Ladies and gentlemen, on behalf of Monarch Net Worth Capital India, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.