HPL Electric & Power (NSE:HPL) Q1 2027 Earnings Call

0:04 Ladies and gentlemen, very good afternoon to you all, and thank you for joining us today for HPL Electric and Power Limited's q one f y twenty seven earnings webinar produced by Eleviz. So I'm Shankini. I'm the director of investor relations from Dickinson, and I'll be moderating our call today. Great. So joining us from the HPL management team is mister Gautam Seth. He's the joint managing director and CFO. So before we start, please note that this conference is being recorded and that some statements in this call may be forward looking, subject to current expectations and to risks that could cause results to differ materially. You can also download HPL's investor presentation and press release from the company website or the NSE.

0:51 Perfect. So I'll now hand over to you, Gautam, to begin with opening remarks. Yeah. Thank you, Shankini. Good afternoon, everyone, and thank you for joining us today. Q one FY twenty seven has been a strong start for the year for HPL Electric. Revenue from operations grew 35% year on year to $5.15 crores, our highest ever first quarter revenue and remained above 500 crore level despite Q1 typically being a seasonally lighter quarter. EBITDA grew 9% to 63 crores, while PAT increased to 19 crores.

1:38 More importantly, the quarter further strengthens the two engine growth model we discussed in f y twenty six. Consumer and industrial is scaling as a faster cycle, product and channel led platform, while smart metering continues to provide long cycle growth and order book visibility. Together, these businesses are giving HPL Electric a broader and more balanced growth base. Consumer and Industrial delivered its highest ever quarterly revenue of $2.78 crores, growing 55% year on year and contributed approximately 54% of the revenue during the quarter.

2:26 The important point for us is not simply that C and I has become larger. It is that growth is becoming broader across various product baskets. Wire and cable continues its strong momentum with revenue growing 79% to $1.46 crores. Demand remains diversified across builders, industrial OEMs, solar, telecom, retail, and institutional customers. The business has already achieved more than 40% of its full f I twenty six revenue in the first quarter, and we continue to see increasing evidence of volume led scale. We're we're also seeing encouraging participation from other C and I categories.

3:18 Lighting grew 78% to 56 crores. Industrial switchgear grew 19%. The breadth is important because our objective is to build C and I as a diversified electrical product platform rather than depend on any single category for growth. Our distribution platform remains central to this strategy. HPL Electric today reaches the market through more than 900 authorized dealers and over 85,000 retailers. As the product basket becomes stronger across wires and cables, switchgears, lighting, fans, and other categories, we have an opportunity to drive greater reach through an established network while continuing to invest in products, brands, and channel relationships.

4:13 At the same time, smart metering continues to be an important long cycle growth engine. Metering and system grew close to 17% year on year to $2.34 crores. As the smart metering market matures, we are entering a more stable execution led phase with improving visibility and greater consistency in deployment and execution. Our order book stands at 3,200 crores as on 08/07/2026 with metering and systems accounting for more than 96 of the total orders. This provides a strong medium term visibility and allows us to remain focused on execution, technology, and service levels.

5:00 On profitability, EBITDA grew during the quarter, although e... EBITDA margins moderated to 12.26%. Cash profit increased to 21%... Increased by, 21%. This reflected an input cost volatility, particularly across metals and industrial plastics due to the geographical disruptions together with the changing revenue mix. We have initiated pricing and product mix actions and remain focused on progressively improving margin quality as the year develops. Higher depreciation following our capacity investments also moderated the translation of operating growth into patch.

5:50 The broader direction remains clear. We want to scale both engines with quality and scale. In C and I, that means widening participation across product basket, strengthening channel productivity, and building scale in wire and cables, likewise for other products as well. In smart metering, it means disciplined execution of the order book, technology differentiation, and maintaining financial discipline. As we progress through f I twenty seven, our priorities remain growth with improving margin quality, working capital discipline, calibrated capacity utilization, and continued investment in r and d. Our objective is to convert the scale we are building today into sustainable earning growth and a stronger HPL on a longer term.

6:43 On this note, let's open the floor for questions. Thanks, Gautam. So before we start the q and a session, just a quick reminder on how to raise your hand to join the question queue to ask question. So if you're on desktop or laptop, look for the reactions button at the bottom of your Zoom window. Click on it, then select raise hand from the options. Your name will appear on the queue, and I'll call on you. If you're on mobile or tablet, tap on the more dot dot dot button at the bottom right of your screen, then select raise hand from the menu. Perfect. So we'll start with the first question that's come written in.

7:29 So, Gautam, this question is on the C and I segment. So we've seen some good progressive growth in the C and I segment for this quarter. Can you give us a breakdown product wise on how you are seeing this progress in the next coming two quarters? Yeah. So, so c n... C and I has seen a growth for the last five quarters now. And each time the the absolute value, of sales and the the percentage of growth are getting larger. So, initially, it started off more with the wire and cables, but now, we are seeing the growth happening in switchgears. We are seeing it in happening in lighting also. So overall, we are very confident of the growth, what is happening.

8:25 There has been an expansion in the channel, in terms of dealer, distributor, and more on the retail side where the retailers are expanding, and our products are also expanding in a bigger way. We have also... You know, we have law... We have a concept of one consumer, one family, which encourages dealer and incentivizes them on taking more products and cross selling more of the products within the same channel. So overall, the strategy seems to be working. The numbers are coming up not only in wire and cable, which again looks very strong in the next two quarters, but also, we would see growth on the the lighting.

9:11 MCBs are set to grow, which is the final... The complete range of final distribution product accessories, and also on switches. If you see our deck, in fact, last month, we did launch of our new range... New generation switches of, by the name of Cairo. That is one segment again, which we are looking to launch in a bigger way, across Pan India. We have three more states launch, lined up for August. So overall, the next two quarters seem to be, pretty good for the C and I segment. We see a growth as well as a channel expansion going forward. We are also monitoring, sales based on, existing channels as well as the the new channels. Sales are monitored separately just to main... Just to ensure that the efforts of channel expansion are, you know, getting us the results. So there are a lot of changes what we have done within the team, within our strategy, and also on sales and marketing and the digital marketing as well, so to reach out to our consumers.

10:23 Thanks, Gautam. We'll take the next question from the line of Viraj Mahadevia. Hi, Viraj. You can go ahead and ask your questions. Hi, Gautam. Congratulations on the fantastic growth, in the business. Thank you, Viraj. To a new execution plan. But but something that I noticed, which is highlighted in the deck, gross margins have compressed from 38% last year to 30, and that was probably driven by the raw material inflation. So what steps is the company taking to ensure that we can get up to historical margins? Are you entering into hedging contracts going forward on the day you take the order? Because presumably, these were legacy orders taken at a different price, and then when you actually go and buy the raw material, you face the price hike.

11:10 No. So, yeah. Yeah. So if you look at the results and, more, importantly on the margins, the way, we look at it, the the revenue growth has been good. C and I, as, know, earlier, we had talked about also in our last, two, three calls. The the the momentum on C and I is building to a bigger level, and, we see the growth going forward. Even the smart meter is, because last year, sequentially, we grew four quarters. Even now from here on also, we see the good growth coming in, of course, more at a matured level. But, again, both these segments are set for a good growth on a revenue point of view. Now when we look at the margins, primarily, there's a single point, like, on the cost of materials that has gone up, and that has gone up, mainly from February onwards because of the the West Asia conflict, the... All... Mostly on the geopolitical issues.

12:11 So for that, we are, looking at... There's a lot of work happening in our r and d, especially when we look at the smart metering where the contracts are fixed, the sales prices are fixed, and then the, the variable part is the cost factor. So we are, having, of course, we have long term contracts which protects us sometimes on the pricing. We also are looking at couple of design changes, which is, of course, a continuous process, but sometimes driven by external factors, we take it in a bigger way. So there are ways to ensure that alternative materials can be used within the same specifications. Even other than metering in the consumer and industrial also, a lot of work is going on on, alternate materials, alternate designs.

12:57 Of course, these have to be, it takes time. Plus, the prices are... The price increases are also getting passed on to the consumer. So, like, we've just had couple of increases in the, wire and cable. Of course, that is much more you know, the prices get passed on much more quicker than if you look at the switch gears and lighting. But even in lighting in the in the past quarter, we have seen certain increases happening, which have been first time in last, I think, seven, eight years, we have seen first time an increase happening in the lighting because till now, historically, only the prices were going down. So, the the pass on in the consumer and industrial is possible, but with a time lag. So there are couple of various things, I would say combination of them happening to ensure that we come back on the margins. And, at the same time, we just hope that maybe these conflicts see some logical end in the next, one or two quarters, and maybe the prices cool down. But in the meantime, the teams...

13:58 The the supply chain teams are making full efforts to ensure that the margins are back. But if you look at, the other things, the the finance cost has, come down in the next... Even in absolute terms in the last three quarters, the... Even the other expenses have been flat, though, there has been a 35% increase in the top line. So there are a couple of positives. Although depreciation has gone up, and that is mainly because of the investments, the higher investments, what we have done in the last two, three years. So that has gone up. But overall, the cash profit is... There is a growth in cash profit. And the, the best thing is that because it's the start of the year, q one is typically, you know, much slower. C and I also, it's the weakest quarter normally. So we have been able to get off to a good start. And the revenue visibility in both the segments, even in the near term, seems to be good. So I think we we are all set for a good year in... This year for sure.

14:58 Thanks, Gautam. So, you know, I just checked. Had you done the same level of gross margin as earlier on your delivered top line, your EBITDA margins would have been as high as 20, 25%. Right? So that's really the operating leverage kicking in on a normalized raw material cost basis. But when you take an order, do you fix the the the prices and the the the raw material inflation is not a pass through and and and normalizes with a lag of one quarter where you take the price increases in accordance with the raw materials? How does that work? No. So, no. You're talking specifically for meters or for Meters, I guess. Yeah. So meters, have to realize that, you know, you know, the competitive scenario has been changing.

15:47 The customers are, of course, buying repeatedly. The volumes are big. So certain prices have been coming down. And even historically, minus the the the the specific, this war situation happening, the prices also... The cost also have been coming down in the last two years. And, even the the end customers, because typically they are big AMISPs, so they also understand the trends what are happening. Now here, specifically, we have seen certain prices going up. So when we take an order, especially the semiconductors and certain critical electronic components, more on the active and the passive components, so those are... Typically, we book them. And some of the supply, like, the time period for supplies for certain semiconductors are even going up to fifty two weeks. So they anyway have to be booked in advance, as we get them. But then the exchange rates are fluctuating. So there are some factors in it. But, I would say more or less, if you, because we have been reviewing the way our procurement systems are. So more or less, we are well covered under that.

16:54 The margins have been fairly good, but you will see that in this quarter, there's been almost a 3% drop in, the margins on the metering side, which is mainly because of the sudden price hikes, especially on the industrial plastics, which have gone up and which are more crude dependent, then the metals have gone up for sure. The copper is high. All the the aluminums, everything. Almost every metal has been at a high. But I think these are these are things which are out of the control of anybody, but they cannot be hedged because every time... So although we gain many times on the prices going down, but we also sometimes lose. But the critical parts are more or less covered, you know, and which is the semiconductor and the ICs and everything. So those are typically covered at the time when the orders are received.

17:43 Understood. So so going forward, would you be able to pass these on in terms of the new metering tenders? Yes. For sure. Because the main... Metering tenders, prices are open. And even with the newer requirements, are coming, definitely, I think our teams are highlighting the the price increases with the AM ISPs. But, again, it's it's a competitive scenario. The customers are also... They understand it, but they also understand the value of having, you know, strong, partners like us who understand technology, who have consistency in supplies, in quality. And I think that is how the, it is emerging out. So maybe, in future, definitely, as a company, we would be hopeful that, certain price increases would be given in the further orders as they're getting finalized, and we are already asking them and highlighting the same. But, again, I said it's a competitive scenario, and it's a trade off between, you know, for them going on, whether it's on getting some cheaper prices or going for a experienced partner like us. But, one has to also understand that, the competitive scenario on the smart metering is also changing. And it's personally my view and the way I look at the market that people, the AMISPs, those bigger customers, they will understand the relevance of going with experienced players who understand technology, who have been, you know, who are able to give products

19:15 which actually are top in quality, which will work for the ten year warranty period. So I think those type of, benefits or perceived benefits, what are there are definitely, I I would say, HPL, we qualify for that. And, that that is going to definitely help us. It is helping us to get better pricing, better... More orders in future. So I think, overall, things should be good. So this could be a temporary, maybe one or two quarters, certain disruption on the pricing part or the cost part could be there. But overall, the, the industry is steady. The demand is very strong. And, the next one, two years, again, we should see a very good growth in the smart metering part.

20:01 Perfect. Thank you. I'll come back with more questions. Yeah. Sure. Thank you. Thanks, Viraj. Our next question written in is more on the CNI wire and cables. So we've seen some really good growth in CNI wires and cables. What are we doing to invest more in the channel network and growing this segment? Is it sustainable for next quarter? Yes, sir. I think, when we look at the wire and cable, we've been seeing an all round growth because, although there has been, an increase in the commodity prices, but, if you look at our specific growth numbers, q four was well over 80%, 78% in q one.

20:49 So the levels, even in terms of tonnage of copper, what we are using have really gone up. It's almost one and a half, two times than what we were doing just a year back. So, from... The the volumes have gone up, and we've seen an all round growth, whether it is in the solar part, in industrial, in real estate, and retail for that matter. So what you are talking about the channel part we look at the retailer, dealer, distributor network, so that has been growing. And while this is hap... So this is really growing, and we are also investing a lot into the into BTL marketing. We are also doing a lot of activities at the last mile sales front.

21:37 You know, supporting this whole concept, we also have our, third... You know, what we have, the last mile sales team, which is the the third party manpower, what we say, which is, which has a beat plan, going into each and every retail market. So there has been a... It's a combination of a lot of thing. And, definitely, it's sustainable. In fact, not only sustainable, you will see growth on the retail front happening not only in this quarter, but as we go forward also, we... It's a long term expansion, ultimately, what we are looking at. Since when we look at the, the way we have seen the growth in the next, in the last five quarters, so that definitely gives us certain, you know, we are also, filled with enthusiasm when we look at it. And now the strategies are much more stronger, not only to grow the wire and cable, but also to, put all HPL consumer products in a basket, whether they are switch, lighting, fans, wires, altogether into the retail network. So I think we are definitely seeing certain, interesting times, and the consumer and industrial will see a growth, as we go forward. Yeah.

22:48 Thanks, Gautam. We'll take the next question from Kunal Dube. Hi, Kunal. You can go ahead and ask your question. Hi. Hi, Gautam. How are you? I'm fine. Thank you. Gautam, great set of numbers. Congratulations. I had two questions, a follow-up from the previous participant. If I have been hearing con calls from Polycap wires or KEI, the wire company, they see AI being the next big thing for cable demand and all. Your view in our CI and I segment about the cable industry, you see, we catering to that segments as of now or any plans on that? Because that is one big thing which which is there in every cable company is ConCall is the first question that I Yeah. So so by AI, you mean is on the data centers?

23:43 Yes. Yes. Yes. On the data centers. Yes. So we have studied those segments. So we are coming into certain, like, certain new cables, which would be more, specific to the data centers. So, we don't have the full range right now. And, but, hopefully, by May, June of next year, we should be having those kind of cables with the international certifications, are required. Because a lot of these data centers have, international customers or international consultants, so they do require that. But that is a segment which we we would definitely be looking at. Currently, looking at our existing product portfolio, we don't have the full range, so we are not focusing on that, while we are focusing on many things. But that is one segment, and it's a long term segment again. Next five, ten years is going to see a huge growth in the data centers even in India and globally as well. So I think we we should be out with those products next year for sure.

24:44 Gautam, on the second question, which you just highlighted a couple of back, EBITDA margins have dropped. But now what I understand, this is your commentary, you say that it will improve from this. It will not worsen off. Right? Should improve. I I cannot comment on geopolitical things, but, yes, hopefully, if if that's the worst level we've reached, so we are making efforts to make sure that we go better from here for sure. Yeah. But, please, I I think you still have some question left. Yes. But my question was, like, if you see q two as such, the crude price was basically in the range of $80.85 dollars, compared to q one. So I see crude had come off a little from q one.

25:29 So my question is, like, I just want to understand when you said you cannot assure, what is the lead time as such? What is your ordering? Do you order a couple of months in advance? How is the lead time as such you determine? Is there a lead time around it? Yeah. There is... No. Our lead times... Because we have, you know, proper standard suppliers of PVC plastics and all, and some of them are international suppliers. So the lead time could be anywhere between fifteen days to even two months, you know, because some of the... Especially especially the the polycarbonates are all imported. So they could have up to two months because they come in containers from outside. But the local suppliers are typically... You know, ten, fifteen days is the time, and they're all very large suppliers in the country.

26:18 Okay. Yes. That that is it. But No. Actually, there's some --. Kunal, there's some background noise. I request to keep yourself on mute while going through the pricing. Yeah. Kunal, can you just mute it? Yeah. Yeah. So that that is it. But, typically, the the crude would have direct impact on the inputs what go into it. So let's say for a PVC, the the resin or the DOP or those things have a direct impact, and probably those impacts will come into the PVC in next thirty, fifty days. So, you know, it's not that if crude goes down today, that the price would become cheaper. And similarly, when it goes up, I guess there is a typical time lag. So I do... Will not know the...

27:08 Too much on their, supply chain, how it happens, but it takes a time for things to go up and as well as come down, when you look at the play... Industry plastics. That said, Gautam, from my side, I wish you the very best. Thank you for your time once again. Yeah. Thank you. Thank you. Thanks, Kunal. Our next question will be from the line of Chandresh Chimalpani. Hi, Chandresh. You can go ahead and ask your questions. Yeah. Hi. Thank you for... So much for the opportunity. Sir, my first question is on the... You know, like, since you mentioned in your last phone call that Adani is our, you know, bigger customer. So, sir, since Adani, you know, acquiring Intelismart now and also he's... There are news that he's going to acquire an OEM, which will have a meter manufacturing capacity.

27:59 So how are you seeing this overall, you know, scenario with, you know, the biggest MISP? Is there a threat, you know, where he will acquire a player and the quantum of orders that, you know, HPL is going to cater in the future would have some impact or your your view on this thing? Yeah. So, on the first part of news that, they have acquired the IntelliSmart, I think that has been a very positive for us because, we were preferred vendors and, approved in both of them. So I think that consolidates our position with them, as a combined entity. So I think that is good. That's been very, very positive for us. So that that is it. On the second part of them buying, okay, it's it's a news right now.

28:47 I'm not sure how that is going to do that. So... But, you know, we are right now with every independent AM ISP. And so anybody so so our business is pretty spread out, and so we're not dependent on one or two just AM ISPs for our for our business volumes. So that is it. So as the business... Let... Let's also hope and see how how that really closes, but I won't be able to comment more on the the second part of your question. Okay. Got it, sir. But, directionally, let's say, Danny was, you know, let's let's... In three or six months, he was in a process to acquire a player. So how has in our ordering with them? Like, has it been steady state?

29:36 Or I'm not asking absolute numbers, but just a directional view you can give because our order book has remained more or less around 3,000 odd crore rupees in smart metering since last four, five quarters, I guess. So just directionally, you can help us understand. Yeah. So if you see the order flow is continuous, but I've said it even two, three years back that the the time of big orders is from the AMISP. So you... What you have to understand is that a lot of... Let's say, you talked about one AMISP. So maybe let's say they are sitting on 4 crores of orders or 5 crores of meter orders. So they are not going to give away... The ordering now process is like any regular business, which is typically given out based on requirements, which they see... Specific requirements, which they see in the next three to four months. You know, it's not going to be the next two, three year requirements are given to one player and locking the price. So it's not going to be like that now. That is how when an industry matures, that is how it is going to see. There, we stand to gain more on that, in the the way the current process is because, our product speaks for itself. Our technology speaks for itself.

30:47 And the more we are supplying with more AM ISPs, the more we are getting preferred. And, the way I see the disruption in the next two years, I would definitely see a bigger consolidation happening even at meter, you know, meter manufacturer level. The bigger and established players who are consistent with quality and technology stand to definitely gain out of that. And sometimes, the not so focused players or certain smaller players may definitely, you you know, leave out of the industry or, may not, you know, grow the way they are looking to grow. So there is already certain level of consolidation happening at a meter manufacturer level. And I think our quality and technology speaks for itself, and, that is going to get us the further business. So the more repeat orders are there, the more AMISPs become strengthened here. And I think the volumes are large. It's a huge game. No company can today look at only one supplier and work based on that. So this is just how I look at the market.

31:53 So I think I think that that... That's how the competitive scenario is. But we definitely are at an advantage right now, and our teams are really working hard to make sure we keep keep those advantages with us as we go forward. Okay. That was helpful, sir. Then second question is on the, you know, overall industry wide tendering and execution. So there's no, I mean, no meaningful tenders that have come into the market. So what is your view? Because Tamil Nadu has also kind of, you know, halted their tenders. So what's your overall view? Because in your in your earlier mention... Earlier question, you mentioned that how the ordering flows if, you know, MIsp sitting with a four kilometer order. So how this will will flow?

32:40 So on the first part is the tendering part, and second, the execution. I think in q one, the execution on the in the con... At the country level has gone down. So how how are you seeing this year comparative to f y twenty six? No. If you look at the figures, what what are there in the in the public domain, I think almost seven crore meters are, right now installed as we talk today because it was 6.9, the last official, figure. So I think there there is no, it's a continuous process that is happening. And, for us to, you know, we are dependent. We are a meter supplier. So if there are AMISP tenders coming out or no, that does not affect us because there is enough orders already finalized on EMI SPs, which can take care of our requirements, our future growth in a very aggressive manner the next two to three years.

33:44 So I think it doesn't bother us. Already, we are sitting on large orders. There are a lot of orders. Still, the AMISPs are holding for themselves. So right now, the pipeline is very strong as far as we are concerned. What you're talking about, tenders not coming out or maybe slow, but I'm not so aware of that. But that is more for an AMISP to think for them. But if you look at the overall number given out by the, the ministry, so a large part of the first phase of installation of 25 crore meters have already been tendered out. So, I think the... That's the prop... That's a cycle by the industry. So that does not bother us. Even if you look at the next three to four years, there is enough volume still available for a meter manufacturer like us here.

34:31 Okay. Got it, sir. And, sir, one last question. I guess two years back, we signed an MOU with a Chinese player for a relay... Local assembly and manufacturing of relay. So are we, you know, manufacturing relay, and how much captively are we doing it for our smart meter? Yeah. So I think, you know, one thing for sure that we are making efforts to, you know, to ensure that, we go into backward integration. Couple of, components are identified, which, you know, we would be directly or indirectly ensuring that they are available and they are, know, backward integrated into our processes. So as I have more information on this, currently, won't be able to share much on this particular transaction, but as we have something more, definitely, things are in progress. There are some things happening.

35:29 But as we have more information, we would be sharing it with that here... With you all of all of you for sure. Okay. But currently, we are not having a manufacturing setup. Right? No. Not as of today. Okay. But, yes, there are, you know, in a... Probably in a different... You know, the way we structure the thing, the the... That's how we will be. We are working on that. But there... Definitely, there is work on the the particular components, work on the technologies going on definitely. Okay. Got it, sir. Thank you, and all the best. Yeah. Thank you. Thanks. So, Gautam, we'll take another written question. So this question is pertaining to margins again.

36:15 The question is, are we looking at any backward integration in order to derisk from supply supply chain disruptions? Yes. So as far as, possible, if you see HPL, you know, historically, if you look at even the last twenty five years, every of our product division, we have seven factories, all of them are very well backward integration. So while we are into switch gears, lighting, wire cable, metering, if you see, we are very strong on, right from tool rooms. We have three tool rooms. We have over a 100, injection molding machines. So entire industrial plastic manufacturing is very well backward integrated.

37:03 We have electronic manufacturing, which is very large. In fact, just two years back, we expanded that to a totally international level in terms of quality and scale. The sheet metal is, again, very well backward integrated. So most of the critical components, whether they are copper or, sheet metal, are manufactured in house that ensures, not only a supply chain, continuity, it ensures quality, it ensures that the right pricing is happening. So that is a underlying philosophy of HPL where we have always been, you you know, very well into manufacturing and backward integrated manufacturing. Now coming to your question, I think it's... It probably, it's more because of the metering part, what we were talking in the earlier question. So here also, if you look at the existing metering, many of the components are today all manufactured in house, which are regular. Now when we look at these relays or some of the critical components, which till now were not being manufactured in India, so with the... You know, the government also has been giving directives on ensuring that the maximum components of smart metering need to be made in India. So we have also been making efforts, conscious efforts to ensure that these are to be made in India. So I think you will hear from us as we... Because these are long... These are highly technical products.

38:30 They are long... You know, they have a long drawn process of ensuring the specific machines are coming in or all. So certain actions have been taken, but as we come close, as we have more material information, definitely, we will be sharing it. Thanks, Gautam. We'll take another written question. So the question is, could you share some details on r and d, especially on the switchgear side? Which new products are we looking at to launch this year? How are our new products like ATS three seventy, three ninety, and ACB accepted in the market in comparison to big companies? Yeah. So I... Yeah. So so, like, we have our metering r and d, where we have one seventy people working in the metering r and d. Even switchgear r and d has now become much more bigger and meaningful, and we are working on new products. There have been...

39:32 What... The products on ATS, what you just mentioned, those are new products which have come out. If you see, since last couple of years, maybe last twenty years, we've been, a market leader on the changeover segment. And, the ATS is a natural progression in in technology because, again, it does a similar function, but on a, automatic basis. So the electronics, the controllers, what we have are new. So that's that's a growing segment for us, and, this helps us to be abreast with technology. This is a much more global product launch, which we see to sell into many countries here. And this will help us to maintain our market share and our, sales growth going forward. Yeah. Apart from that, we are also working on a lot of, integration of, electronics and communication into the existing switchgear. So those are, I would say, drawn projects which are there, but that's a future, and, we would see in the future that, a lot of work happening in panels, a lot of work happening with electronic integration.

40:41 So those are projects which are ongoing right now, and you should see the results maybe in the next two to three years. Some immediately, but some, could be much more longer drawn. Thanks, Gautam. Another written question. So with EU FDA happening at any time, how are we positioned in terms of product certifications, channel partners to tap into this market? No. So sorry. Can you just Sure. Yep. Yeah. So with the EU FDA happening at any time, how are we positioned in terms of product certifications, channel partners to tap into this market? Yeah. So so so even our current products, if you see, our...

41:29 Most of the products, entire switchgear, a lot of even certain wire cables and others are all already IEC compliant. So we have certain certificates. Like, our MCB is already, DECA certified. DECA is again a European standard and a test house. So even our lab... Even the lab in our factory is Decra certified lab right now. So, that entitles us to sell to almost 55 countries with the certification. So a lot of our products are compliant. They are already certified. But as we get more opportunities, which are more country specific and which may require certain certain specific testing, so we can do that. Obviously, there is a cost, there is a time involved in each of them. But broadly, if you look at our switchgears, they are, IEC compliant as per that. And even if you look at the Indian standards, most of the standards are today based on IEC. So, I I think that ensures that the compliances are already there.

42:33 Thanks, Gautam. We'll take the next question from the line of Ankur Golati. Hi, Ankur. You can go ahead and ask your questions. Hi. Sam, are you audible? Yeah. Go ahead, Ankur. One quick question. With the cost... Normally, the cost up on the metering side in the current order Can you be louder, Ankur, please? Yeah. With the cost going up on the metering side, should we now work with whatever EBIT margins we saw this quarter on the metering side? Is that the new baseline for current order? Yeah. So, you know, on a conservative basis, know, on an immediate... Let's say, on a... Quarter, maybe that could be a much more conservative way. But although we are looking to improve our margins, but it could take some time, maybe another...

43:22 An extra quarter more. But, currently, the levels what we are, I think that would be, you know, like a baseline right now for us to pursue, although efforts are there to increase, enhance them further. And the new orders that you're bidding for on the weekend side, are coming in at what 11 quarter plus whatever you're the... You have. Yeah. So, definitely, we are pitching in. So... But as the new orders are coming in, they also have a, you know, lead time for supply. Like, in the sense, orders if we receive today, maybe the supplies would start maybe in December, January, or even later to that. So there is certain lead time which would happen, you know, until they are pure repeat orders, with similar specifications by MISP.

44:08 So so so, right now, when we look at it, the... Yes. The margins have come down in metering, and, it's it's more very specific to the, the geopolitical issue. But let's see. But even the actions what we are taking, they will have certain time lags. You know? And on the CNS side, like, in by q three motion, you guys will be able to get back to 11 plus module. Yeah. Hopefully, we look at that. Because there, certain costs are getting passed on for sure, and certain changes we can do immediately. So until... Let's assuming that, let's say, the the copper or these prices more or less remain at these levels, which are again high. But let's say even if they remain like this, it gives us a good window to, you know, improve our margins as we reach q three. That that is possible for sure.

45:08 Thanks, Ankur. We have some time for some more follow-up questions before we take a written question. We'll take our next follow-up from Viraj Mahadevi. Hi, Viraj. You can go ahead and ask your follow-up questions. Hi, Gautam. Thanks for taking it. So, Gautam, with the current smart metering build out, how many years do you think this goes on for? And is there a new wave of smart metering coming in terms of a new RDSS scheme? So is this a three year or five year or a ten year runway in terms of smart metering? And beyond that, what are the other growth vectors that you see coming in play, whether it's getting impaneled for smart metering supplies to Middle East, Africa, other such markets, or, you know, other growth engines?

46:00 Yeah. So I think it's a very long term story. The meter one point o, I think, in six years it gets over, thereafter, you will see a two point o coming in for sure. And... But maybe it will have a gradual replacement. So it may not be that, you know, the entire 25 crore meters is gonna get replaced because some of it is installed in the first, second, third year, and some of it could be in the fourth or the fifth year. So everything will not go into replacement at the same time. This is what I I just believe that would happen. But for sure, the smart meter market is here to stay. We will... We should see certain consolidation. And even the two point o will have a different level of technology, a different level of communication and all, which will be much more better. So, you have to realize that while the one point o, this... The smart metering is happening, a lot of factors of collecting data, ensuring that proper household data is actually available for installation, a lot of primary work is happening here.

47:13 So when you see in the future, it is only going to be restricted more to replacing the old meter with the new meter. So the the base work, which is a very long term, thing, that is happening, which is going to be very good for the country as a whole because the entire household data, the metering data is going to get compiled. It is going to be mapped. And thereafter, whenever they want to change the meter, it becomes much more easier. So I think that effort is actually... You you know, probably, sometimes we find that there is some, slow in the... Slowdown in the, installation. It is only because a lot of primary data and coordination with the utilities is happening. But once that data comes on board, then to change and to enhance the, let let let... Let's say, the the technology and also to use that... Or rather to use the smart meter to its fullest capacity based on technology also becomes much more meaningful in future. So smart meter is here to stay. It's not a five, seven year. It's going to be even more, maybe ten, fifteen years as long as we see electricity consumption and households using it.

48:27 I guess that's going to be longer time. We are also... In export, we are also looking at certifications. We... In fact, you just mentioned Middle East. One of the, the utilities in Middle East has just approved our, metering. This is very recent. So already, we are now moving to the international markets. Thanks to the scale and technology what we are using in India, that would actually make us eligible to go anywhere in the world and look at the smart metering opportunities. So as probably, you know, the Indian market matures, it gives us an opportunity to look out, which we already have started, and then that can be a very, very big opportunity going forward. You know? Just picking up one or two, first world countries also will, really can take us to a different level for sure.

49:16 Fantastic. Good to hear. So, basically, the growth vectors are growing consumer and lighting, wires and cables Mhmm. Smart metering for the next four years. After that, replacement demand within India and newer markets opening up in India. If you see the global trend, which even we will follow, but, you know, we need to, know, make sure that we are better, you know, grounded in each part. Like, we've come out with... Like, typically, international oil metering companies are into electricity, water, and gas. Typically, these are the three things like this. So we have come out with water meter. Now we... It will take some time while we get the approvals, while we stabilize on technology, and then hit meaningful volumes on that.

50:02 Probably gas can be the next one like that because, typically, the technology, the measurement technologies, communication, electronics, a lot of it can be leveraged with the existing staff what we have. So Yeah. I think one of your competitors is quite bullish on gas, I think, Gautam. Yeah. For sure. So eventually, you know, that's a window we will be also looking at probably, but we have internally discussed it many times. But then again, I said that, you know, as HPL, we are very clear that once any new category is launched, until we reach a meaningful, you know, business size in that and other things, we just don't like to jump on the next one. You know? There are Understand. But do you have the capability in gas to make these gas meters, or is it you need to acquire the technology or tie up with someone? Say, when we look around, I think we would have the capability. But then there are... You know, in today's time, we are very open on Partnerships. You know, any partnership. So if any technology needs to be bought or, you know, if somebody needs to do that, I think today, with the the the way the businesses are structured and with our own strengths, so I think anybody would... We can get the technology. We can buy the technology or even develop it in house. So I think those options remain, but only thing is putting the business plan and, together. But right now, with electricity going in a big way, and once that is maturing, then it gives us a window to look look into the other part, which we've already taken a step on the water meter. So

51:33 it will take time, but then we really establish that and get in the numbers over there. Right. Great. One more question, Gautam, is regarding the cash flows and the CapEx. So now that, presumably, of your CapEx is behind you to produce whatever 1.2, 1.4 crore smart meters annually. What is likely to be the CapEx in '27, '28, or '29? How do you see that playing out? Annual CapEx, maintenance plus any new CapEx? No. So, yeah, we would find maintenance CapEx because, you know, tools and dies are a big CapEx point, which get replenished, you know, because there's a lot of injection molding items, even sheet metal going into that. So right now, I think from a metering perspective, it is going to be more on the, maintenance part because we have the capacities now, and they were necessary to, bring us to the scale and the volumes and what we are looking at. But there are, there's another, you know, different projects we are working at, which will, which may entail certain, CapEx, but they would have a different revenue stream, maybe different categories or something like that. So I think as we have more information on that, we will definitely be, giving out in public domain. And then...

52:51 But whatever CapEx, specifically would happen, they would have separate revenue streams, coming forward for that. Understood. So can we say 50 to 100 crores of CapEx for the next year or two? It shouldn't be more than that. Right? No. It... Depending on the project. But Okay. As the time comes, you'll hear about it, but there will be definitely certain natural progression from our existing products. So it's not something totally out of the way. It is something which naturally will help us to grow, you know, certain of the divisions or the segments. So as that comes out, we'll put that in the public domain. Yeah. Okay. Great. Thank you. All the best. Yeah. Thank you. Thanks, Suraj. We'll take the next follow-up from Chandresh Malpani. Hi, Chandresh. You can go ahead and ask your questions.

53:43 Hi, Chandresh. You can go ahead and ask your questions. Yeah. Looks like he's busy. That's fine. So, before we wrap up, I think, before I hand over to you, Gautam, for your closing remarks, I'd just like to let all our participants know that we'll keep you posted on any upcoming management interactions. We're planning something soon. So look forward to hosting you there. And I think, Gautam, if we have time, can I take one more question? We have one Sure. Sure. We have the time. Okay. Great. Hi,. You can go ahead and ask your question. So thank you for the opportunity.

54:30 So how do we look at revenue and margins in the coming years, sir? No. So so the the revenue, if you see from both the segments, have a strong outlook. So I I will not put a specific number, but if you look at smart metering, they have a, know, a a strong visibility. If you look at this year, next year, the next three to five years seem to be a strong visibility. We are sitting on orders. We are already preferred vendors to most of the AM ISPs. So, overall, the smart metering should see steady revenue growth, what we are seeing since the last four quarters. So that would happen. The only thing there, the pace of sales depends a lot on execution.

55:23 So time and again, we have seen certain execution challenge not faced by us, but by the AM ISP. So, typically, they are our customers. So it's dependent on that. But overall, with only seven kilometers installed, a lot to go, so it's it's it's got a good revenue visibility. When you look at consumer and industrial, there, I would say the next twelve to eighteen months will be very strong. The the cable and wire segment has been... We've been growing well well above the... In fact, volume growth so far exceeding even the value enhancements what we see due to the commodities. So that is it. So I think that momentum we are looking to maintain, of of course, for a long term, but at least the visibility on the twelve, eighteen months, we see that. So that should be a high double digit growth.

56:13 And so, hopefully, you should see good revenue growth coming in in the next couple of quarters here. And can we go back to 16, 17% margins if the Middle East situation engages? Yes. I think if that happens, for sure, we can do that. But right now, you know, these are out of our control, but whatever best we can do to still get back our margins. So already the teams are doing that. But, yes, if the situation ends and, let's say, supply chain disruptions also come down and the crude comes down, so definitely... That will definitely help us to resume and come back to the margins what we've been making here. And in fact, why come back? Even look to grow those margins as the... Especially if you look at C and I with the volume growth also happening.

57:05 So that also will give us certain triggers of that. So one more point on the... If you see on the margin front, which somehow it's... That's missed out is that there have been... If you look at the manpower cost, so especially in Haryana, one has seen that the... There has been almost a 40% increase in the minimum wages, by the Haryana government in May. So... And since most of our manufacturing is there, so that has also added to the cost on this. But even I think the other neighboring states of UP and others have also gone into that. So that's also one of the factors where the manpower cost has gone up quite drastically in the first quarter, if you see. But overall, we are aware of this thing. And with the volumes and the... You know, once the revenues are growing in a good manner, it gives us a lot of opportunity and window to ensure that the costs are at a minimum level and the margins are there. So I think we are working towards that, and let's hope that this geopolitical situation eases out.

58:15 Okay, sir. Understood. And the order book of 3,000 per year, it's 90% from SmartMeters. Right? Yeah. Yeah. Because... Yeah. Because, you know, consumer and industrial does not have long orders like that. So so those orders are coming month on month. You know? But now they are also becoming substantial because, typically, we are, on a month to month basis, reaching either highest order books or highest sales. So I think that momentum is there, but they will never, you know, ever have very large orders just sitting, on the books. You know? And when can we expect the execution of these smart meter orders? Typically, one and a half, two years, they should get executed. But, again, sometimes...

59:06 Yeah. Typically, they should get executed, but only it's... The execution speed also matters. But, normally, the visibility would be two years, let's say. And any major CapEx that we are planning? CapEx, no. In the, let's say, the metering and existing product categories, it's mainly the maintenance CapEx, which also sometimes because of the tools, dies, and others that gets substantial. Plus, there is a lot of work on automation happening. And, so recently, we've just commissioned a new machine, especially for MCBs, which is, you know, it it... The the single machine does the work of 44 workers. And these are machines which can work for twenty four hours almost practically without any person there, manufacturing almost 18,000 MCBs.

59:59 So I think there are... These are good level... International level automations what we are doing. So we just put in overall seven to eight machines in our factories. So there are couple of... Of things. And now especially with the... Even the, you know, the minimum wage going up in almost every state, so it would make a lot of sense to come into more automations, which we are looking at. And these typically machines have an ROI of three to four years. So that also it makes financial sense to actually invest and go into those. That is great, sir. Thank you so much, and all the best. Yeah. Thank you, dear. Thanks, Dia. Thanks, Gautam. What we'll do now is hand over to you for closing remarks, and then we'll go ahead and close the call. Go ahead.

1:00:44 Yeah. So, yeah, so thank you everyone for your questions and your continued interest in HPL Electric. Q one FY twenty seven reinforces our confidence in the direction of the company. Both growth engines are scaling. The business mix is broadening, and our focus is on converting the momentum into better margin quality, cash generation, and sustainable growth. We are also encouraged by the near term outlook with the coming quarters looking positive and remain confident that the efforts underway across the business will increasingly translate into stronger operating performance. So have a good day ahead, and thank you for being part of HPL Electric's growth journey. So thank you very much.

1:01:33 Thanks, Gautam, and thanks to everybody for joining us today. For any more follow-up questions or requests on, the numbers, please feel free to write to me, on the email ID on the last page of the deck, and we'll be happy to answer you and also set up more interactions with, Gautam and the management team, as required. So once again, thanks for joining us this afternoon, and like Gotham said, being part of HPL's growth journey. We'll see all of you soon. Thank you, and have a great day ahead. Cheers.