Pace Digitek (NSE:PACEDIGITK) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to PACEDIGITEC Q2 FY 'twenty seven Earnings Conference Call hosted by Antics Stock Broken 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. Please note that this conference is now being recorded. I now hand the conference over to Mr. Ishin Verma from Antique Stock Broking Limited for opening remarks. Thank you, and over to you, sir. Thank you, Anam. Good afternoon, everyone. On behalf of Antique Stock Broking, I welcome you all to the 2Q FY 'twenty seven Post Results Conference Call of Pace Digitek Limited.

0:54 We have with us today from the management, Mr. Raji, Home Time Director Mr. Raja Vendal, CFO and Mr. Raji, Head of Investor Relations. We will begin with the brief opening remarks from the management, followed by the Q and A session. Thank you and over to you, sir. Good afternoon, everyone, and thank you for joining Pace Digitek Limited Q2 and H1 FY 'twenty seven conference call. I am Rajiv, Hold Time Director. Along with my team, we'd like to take you guys through the key developments and key figures for this financial year. So on behalf of PACE, I would like to welcome all the shareholders, investors and analysts on this call. I hope you had the opportunity to review our financial results and our investor presentation, which we have uploaded in the exchanges.

1:45 We have delivered a strong performance in the first half of FY twenty twenty seven with growth across both our energy and telecom business. During this period, we have extended our expanded our BES manufacturing capacity. We have progressed in several of our battery energy storage projects and we have reached at a much better stage in all of these projects. I'd like to take you through some of the key developments for the first half of this financial year. Our energy business continues to be the growth driver for this company this year and the years to come. As the demand for BES has increased multi fold in the last one year and the years to come, we are seeing a growth opportunity of about two thirty six gigawatt hour by FY 'thirty two of which we are we want to be the major contributors.

2:45 So we with this we are seeing a good opportunity ahead of us, especially in the PES segment. During our H1 of FY twenty twenty seven, we have commissioned about eight seventy five megawatt hour of best capacity at our project sites. Standing today, have delivered about 1.8 gigawatt hour of best to our customers and we have commissioned about one gigawatt hour at our own project sites. Our execution has spread across different types of contracts, including best supply, EPC, build own operate projects. This gives us the ability to participate across different stages of energy storage value chain from manufacturing to supply and to long term developer projects.

3:33 During the first half, we have also secured significant orders in energy segment, including best EPC orders from NLC India, DBC, PSES, Rajdhani Power and best supply orders from NGSL and more other customers. These orders demonstrate our ability to participate in large utility scale storage projects across different business models. A small key update regarding our manufacturing expansion. In August 2026, we have expanded from 2.5 to five gigawatt hour capacity. And we have also produced about eight forty four megawatt hour of best capacity in this first half of the year. That in numbers, the capacity which that is about 94% of the capacity which we produce in the whole year of last financial year, we have produced in this first half of this financial year. So we are doing great progress in our best capacity and our productions are running at full capacity standing today of five gigawatt hour.

4:48 We have also successfully developed our in house BESS container facility and we have also commenced the production of BESS containers standing today and we will reach full capacity of production by December November or December of this financial year. And with this BSS fabrication facility, we will be able to produce about 50% of the capacity of our best that we are manufacturing in house. We have also successfully commenced production of our two sixty one kilowatt C and I cabinets and we have made sample productions to couple of our customers and we are expecting much bigger orders in the C and I market in the days to come.

5:44 A small note on the telecom business, we have successfully commissioned more than 8,000 sites of BSNL, which is one of our largest projects that we have won in the telecom business. And these 8,000 sites have also gotten into the O and M phase, which we have for the next five years. During H1 of FY twenty twenty seven, we have also secured additional telecom orders, especially in the BSNL and in the BharatNet OFC projects. And we have a couple of more projects in pipeline expected to win later this financial year. Standing today, our order book our executable order book stands at INR 10,735 crores compared to INR 8,528 crores in energy, comprises of INR 8,528 crores in Energy and INR2208 crores in Telecom.

6:44 During H1 FY twenty twenty seven, we have secured inflows of about INR2437 crores, of which INR2173 crores comes from our energy and INR $2.65 crores comes from our telecom business. So I'd like to hand it over to our CFO to take you through the numbers. Thank you, Rajiv. Good afternoon, everyone. Now I would like to take you through the financial and operational performance for the quarter and half year ended 09/30/2026. So starting with the consolidated financial performance, the revenue from operations for Q2 stood at INR808 crores, registering a growth of 51.5% year on year and 45.5% quarter on quarter.

7:33 For H1 FY twenty twenty seven, the revenue stood at INR1364 crores, representing a growth of 51.4% over H1 FY twenty twenty six. The Energy segment contributed to about 80% of the revenue, while Telecom contributed 20% to the overall top line. The growth of this top line is supported through higher execution of energy segment, including the best supplies and the project deployment, including the EPC activities. The telecom revenue was supported majorly by BSNL supplies and ongoing O and M operations, so including the maintenance of the four gs network of BSNL. Our employee expenses in Q2 stood at INR37 crores compared to INR24 crores in Q2 FY 'twenty six. And for H1, the employee expenses stood at INR70 crores compared to INR44 crores of the previous financial year.

8:26 The increase in the employee cost is mainly driven by increased the growth in the business operations and with the additional manpower deployed across the energy projects and manufacturing operations. These investments are intended to support the growing scale of the operations of our business and the expanding order book. The EBITDA for Q2 increased to INR 159 crores compared to INR 94 crores in Q2 of the last financial year, registering a growth of 68.5% year on year. H1 EBITDA to debt INR $2.45 crores, registering growth of 40.5% compared to the last financial year. The finance cost increased to INR 36 crores in your Q2 compared to INR 28 crores in Q1. The finance cost also increased primarily due to the funding requirements for the built on operating development project and the increased working capital to support the increased capacity of our bit manufacturing.

9:24 The PAT for Q2 increased by 43.3 to INR 97 crores and H1 profit, H1 PAT stood at INR 160 crores, which is starting an increase of 30.4% year on year. This increase is in line with our deals, keeping the margins constant. So moving to the balance sheet and the subsequent returns. Say, as on September 30, the total equity stood at INR2428 crores compared to INR2252 crores, which is primarily due to the addition of the PAT. The total borrowings stood at INR1371 crores as on September 30 compared to INR $9.61 crores at the end of financial year 2026.

10:11 Then the increase of INR $4.10 crores, the increase of this borrowing is primarily for the requirement of the built on operating project expansion and also the increased requirement of working capital. So to note, as on 09/30/2026, our built to own operate assets stood at $12.58 crores. So which clearly states that our increased borrowing is to support the increased capacity required... Increased requirement of the built on operating projects. The cash and bank balances stood at $51.05 crores, resulting in a net debt of 856 crores as of September thirty eight. The net debt to equity ratio stood at 0.35x compared to 0.09x as on 03/31/2026.

10:57 And as I explained that the increase in this ratio is due to the increase in debt to support the build to operate project. On the working capital front, the total receivables declined to INR 2,177 crores as of September 30 compared to INR 2,442 crores, say, in 03/31/2026. The reduction of this receivables, say, clearly reflects the improvement of overall receivable portion as we keep stating that we started collecting the retention portions of the older projects. Return on equity stood at 13.2%, while the return on capital employed stood at 12.6% for this H1. So in terms of the CapEx plan, as Mr. Raji was explaining, we have expanded our capacity to 10 gigawatt hour And also, are expanding it to 10 gigawatt hour by next quarter. Today, we are at five gigawatt hour. And also, we have established our in house containment fabrication facility. Most of the capital requirements are already taken care.

12:00 The final lots of expenses to be incurred in the next two years' time. The overall approach remains to align the capital deployment with the project execution, the commissioning schedules and the expected cash flow from these assets. Given our H1 performance and the execution visibility, we have revised our FY 'twenty seven revenue guidance upwards to 3,300 crores to INR 3,500 crores range against our yearly guidance of INR 3,200 crores to 3,400 crores. This revision is supported by the 51.4% revenue growth in H1 and our executable order book of INR 10,735 crores as of 09/30/2026. For FY 'twenty eight, we expect the revenue to be in the range of INR 4,000 to INR 4,200 as per the earlier guidelines.

12:48 So with this, I conclude my remarks, and I will now hand over the call to the moderator for the Q and A session. Thank you. Thank you very much. We will now begin the question and answer session. The The first question comes from the line of Deepak Pudar from Safia Capital. Go ahead. Yes, you are audible, you are audible.

13:35 Thank you very much for this opportunity and many congratulations for good set of numbers. So just first I wanted to understand on your margins. I mean we have seen a very sharp improvement in your EBITDA margins. So just wanted to know what led to this improvement and how should we look at going forward? So we what we do is that we maintain the EBITDA margin of about 17% to 19 over the last few quarters. And this also was seen in the last few quarters, not only for last few years, also for the financial year, plus the off yearly performance. This EBITDA margin is a mix of energy and telecom. So today, the last h one, what we have seen is that much of the services in telecom has contributed to the bigger aspect of this EBITDA margins.

14:25 Considering the fact that bigger service revenues are recorded for telecom, it has a it has a higher EBITDA margin, which has which has impacted the overall EBITDA margins. While we always said that energy EBITDA margins are lower than the telecom. So the energy EBITDA margins stood at about 12% to 13%, while the telecom EBITDA percentages has been consistent in the range of 20%. They combined weighted average was higher in this quarter, whereas with the increased revenue from energy, this EBITDA margin will slightly come down and settle in the range of 16% to 17%.

15:11 Okay. Okay. But this quarter itself, Energy shares were quite high, right? Yes, right. But what has happened is that during this quarter, the services portion of the telecom was higher. Okay. Okay. Okay. Okay. Got it. Mr. My second question is on your I mean volumes. The first quarter, I think your volume was about 90 containers. So just wanted to know, so what was the volume in second quarter? And how should one look at this volume in third and fourth? So we have maintained the same 2.5 gigawatt hours for the Q2 numbers. And Q2, we have done about 91 containers, 91 containers which is sold and another 10 containers just kept in stock.

16:00 So we have done about 100 containers for this Q2. 100. But you're targeting around 200 this quarter? No. Because the increase in capacity has come only in August, where the commercial production has started only in September. So the next quarter, we would expect a higher number. So any number, I mean, this 200,000,000 which you have mentioned, you targeting that in third quarter and fourth quarter? Yes. Third quarter, we are targeting slightly less than 200,000,000 Okay. Okay. Okay. I got it. And just one last thing on your backward integration. Now this will in house container will now form 50%, right, post this commissioning maybe by year end or January.

16:45 So can you throw some light that how will it benefit your margins? I mean in terms of basis point or percentage, how will it benefit you? See, the cost of the containers is expected to come down by about 25%. In terms of the best overall cost, it is expected to come down by 4% to 5%. So that is what is expected. So can one expect 4% to 5% EBITDA margin improvement on your energy revenue? So this is on the gross level. If you consider the EBITDA level, we are expecting about 1.5% to 2%. 1.5 to 2% on your EBITDA level because of the EBITDA level? Yes, correct. That's very helpful, sir. I mean that would be it from my side. Wish you all the best. Thank you. Thank you.

17:36 You. The next question comes from the line of from Green Portfolio. Please go ahead. My first question is about on the container fabrication. On the last call, the management shared that the production of container would start in September 2026. Now the production is planned for November and full production is planned for January 2027. So why there was a slight delay on this front? Can you please share some more color on it? Maybe I slightly correct the understanding.

18:22 The container fabrication facility is already commissioned as per the target that we are, but the commercial production will start only from November. Means now the testing is going on, the plant is already commissioned. Okay. I got that. My other question was around the C and I batteries. So you have like two sixty one kilowatt hour of C and I cabinets and completed customer trials. So what's the order book for C and I particular look like as of now? And how much revenue do you expect in the next one and two years? So the see, as of now, we have supplied sample quantities, sample numbers to our customers in India and in some countries abroad.

19:09 But the production orders and the bigger orders would come sometime end of Q3 or in Q4. But standing today, have developed the product and the product is ready for production and we have also produced and supplied the sample quantities to customers. Okay, sir. So how do you see it ramping up in a year or two? Can you share some more like quantitative guidance on that front? So we are targeting about 30% of our revenues at least to come from C and I in the next financial year. 30% of energy roaming, right? Yes, 30% of energy revenues. Okay, sir. And the margins will be better in the C and Yes, in C and I product margins are much better than the grid scale best products.

20:06 Got it, sir. My other question was about the Saudi Arabia. So after the small shipping of container to Saudi Arabia was done in Q1 as shared. So have you received any further orders on that front? And what is the size of orders or revenue do you expect from Saudi in the near term? So the order book that we have is completed, and we that's a sample containers that we are given. So with this with performance of our systems, we expect higher profit to have increased order book from this particular region, which is expected to come, which is not there as on date. Okay, sir. Just one last question was about the finance cost, which rose in Q2 from $283,000,000 in Q1 to $356,000,000 And long term borrowings went up $260,000,000 to 9,000,000 between March and September. So I just want to understand which projects for this new margin different from where do you see finance costs settling in the coming quarters?

21:12 What I would request to see is that because the warrants are specifically for the built on operate projects. So the built on operate project asset stands at about 1,300 crores against the borrowing of INR $9.50 crores, the long term borrowings. So the INR $9.50 crores of long term borrowings is being spent to create the asset of INR1300 crores. So that's how we should see. So it's basically to build our build, say, the assets for the built on off rate project. And this particular asset has been commissioned for about 50%, I would say 50% of the asset is commissioned. And the complete project is expected to get completed by December or January 2027, with which the revenue from this asset will start flowing in. The revenue from this asset is about INR 197 crores per annum.

22:09 So which is expected to say come for closing all these borrowings. So the asset is borrowing is supported with the fixed asset that we have created. The borrowing sorry, the increase in finance cost is again because of the same reason. Okay. So sir, do you mean in the coming quarter, we could see finance cost going back again to the Q1 or maybe? This particular loan, the specific loan that we are talking about is expected to go down, but we have other projects in place. There are another three built to own operate projects, which is just keep started. So for that, again, there'll be a borrowing for about 70% of the overall assets. So by the end of March twenty twenty seven, we expect the borrowing addition for about INR 1,000 crores.

23:03 So which will be adding a substantive back to back assets for about another INR 1,600 crores. Okay. So that is very helpful. Just one small question from my side. I want to understand what the progress has been made with the on making their products in India and pairing them with your business. Can you share some more color on the capacity? Yes. So we are working on products, best products and power products for data centers with MiGMAET and the product development is still in progress. So commercial orders will still further take some time, but we are still in the development of the product. Okay. So my could you share some time line of this expectation of completion of the product phase?

23:53 So this, I think, would take another one more year to have this product commercially ready. Okay. And sir, can you just guide on the potential you could expect from it, if that's possible? There is a huge, very huge demand for data centers. And data center power itself by itself will be a big opportunity for across India and across the world. So with this product, we are seeing good entry of our power and best products into the data center segment. All right. So that's very helpful. I must congratulate the entire management again and wish you all the best for the coming quarters. Thank you. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two per participant.

24:55 The next question comes from the line of Kushi Rathore from Anandrati Institutional Equities. Please go ahead. This is Shweta. Congratulations on a very good set of numbers. Thank you. Thank you, Shweta. Sir, two questions. One on the stand alone business level. We see a sharp decrease in the EBITDA margins. Any color to that if you would like to highlight it up? And I want to understand why there's a sharp decrease, especially when the telecom services business is up this quarter. Yes. For the stand alone PACEDIGITK, there's a decline in the EBITDA margin because we have started two different projects. One is the project from Mahjenko for the supply and erection of solar panel. The other one is the project with Gondola, which is again a built on sorry, balance of systems order of solar.

25:45 So these two projects we have started, wherein the initial expenses are higher than the revenues, but the subsequent project milestones will have a better margin. But the initial margins, which is in terms of the mobilization of the and the initial supplies, were at a lower lower EBITDA margin. So that's the major reason for a lower EBITDA margin for PACEDIGITK. Got it. And then when I look at the segmental EBIT, we there's a sharp decrease again for the energy business. Ex of other income, if if you could, you know, give us the number, I think it's... The skew is happening due to other income there. Yeah. See, again, as I stated, the energy margins are lower than telecom. Telecom, we enjoy better margins with the projects that what we have got some two years back.

26:38 The EBITDA margins ranges between 20% to 23%, while the O and M margins are at about again 25%. So these two are better to the margins in terms of a blended number. But when I come to the energy projects, as I stated, the initial two projects that we have kick started at a lower EBITDA margin because of the initial And specific to the best project, again, it is considering the fact that we have just started our next capacity. The initial cost in terms of the production was slightly higher. And moreover, the lithium ion cell prices have increased in the last quarter. And this quarter again it has reduced, but last quarter we have seen an increase for about I would say 20% increase in the last quarter. So it has again impacted our energy project margins because we use our own product for the project.

27:36 So that's the major reason for the different energy margin, but it is expected to slightly come up in the Q3 because lithium mines prices have now started coming down and it has stabilized pricing. Understood. Sir, any impact do we see with the change in the China's policy towards technology transfers with respect to our own cell r and d as well as the cell import that we are doing currently from China? So on the sell import, yes, from January 2027, there is a reduction or elimination of export rebate. But what we expect is that the reduction in lithium ion prices will get offset with the reduction in this export rebate. So about 6% of the export rebate is getting cut from January twenty So twenty this is one major highlight.

28:28 And on the technology transfer, yes, there is a restriction for solar, but there is nothing of for this battery energy storage system technology to come in India. Also, are exploring the technology transfers beyond China and in other countries. So we are not completely dependent on China for the technology transfer. So do we foresee any cost increases with... Or any timeline changes with respect to our own backward integration for BESS? No. We are keeping the same timelines on. We are we are still working on that. As we also already stated in the previous call. The R and D center is working towards technology transfer, supply chain built up and also the alternative technologies available, including the technologies available from the other countries.

29:21 So R and D center is steady, but still we are in the same state as compared to the last quarter. Maybe in the subsequent quarters, we may have some sort of visibility. And the expansion to 10 gigawatt is also in line. And I think in this quarter, we would see it we would complete the setup of five gigawatt expansion. Thank you. I'll join back in the queue for more questions if I may. Thank you so much for that. Thank you. Thank you. The next question comes from the line of Pace Digitek from Pace Limited. Please go ahead. Yes. Good morning, sir, and congratulations for a strong set of results.

30:07 Sir, I just wanted to understand either in terms of EBITDA or PAT margins or, let's say, PAT margins for FY 'twenty eight now, do we expect these PAT margins to sustain in the region of 11.5% to 12%? For the FY 'twenty eight, we expect that the PAT margins to remain at about 10%. It is not going to be 11%, 12%. 11%, 12 is, as we stated, because of the projects, the turnkey projects of telecom, which is completed in this finance year. But for the next finance year, where energy is going to play a bigger role, the past margins will be kept at about 10 Okay. So the benefits from this container manufacturing will not add to this one, it's already factored in? Yes, it's already factored.

30:53 But what is going to happen is that, say, the top line of the business will increase with the increased capacity. So in terms of the absolute numbers, PAT will have a significant improvement, but the margins will have a slight reduction. Okay. And even in the C and I, so the blended EBITDA margins you said about 16% to 17% for energy. Now even when C and I is quite a significant proportion, the blended margins are expected about 16%, 17%? No. With C and I's addition, the blended margin will increase further at least by 1% or 2%. But again, so standing today, we are still working on the utility, the bigger best products. So we cannot answer on the C and I side. But yes, with the C and I business growing, yes, the margins will improve at least by 1% or 2%.

31:50 And therefore, the PAT margins will not be impacted? We will improve. Definitely will improve. With higher C and I products, so with contribution to the revenue, yes, PAT numbers will also improve. But as of now, you're guiding for about 10%? Yes. Yes. About 10% to 11%, that is our guidance, standing today. So as these as the C and I business comes in and more of the fabrication and other backward integration happens, these numbers will increase. Right. On the lithium sale prices front, are we still struggling? And how is the utility market faring out now? So the lithium ion prices have increased in the last quarter, but this quarter, it's again started coming down.

32:38 Maybe we are trying to see that it will it implies at this particular range. And the tenders that we have started bidding for the last three to four months time is with the new prices. So we expect that this price will get stabilized. That's what we expect. Understood, sir. Sir, in terms of your cash flow from operations, the first half has been negative largely due to this financial lease receivables, which will be, I believe, your build on operate model. Yes, right? So this what is the project IRR and the return on equity on this build on operate model? So the project IRR is about 10% and the equity IRR is about 15%.

33:26 Okay. And when do you expect this consolidated operating cash flow from operations to turn positive, sir? See, I would I would request you to see in the way that if you see my cash flow from operation, as you also rightly stated, removing the, say, finance lease receivables, which is only for the accounting entry, we keep it as a finance lease receivables. Removing that, we are already positive in terms of the cash flow from operations. Right. Right. Right. And sir, you said about the free run operate, the revenue will start going in from next year. What quantum did you mention? I just missed that. From the project that we are doing today, is 197 crores, but there are other two projects which we are getting commissioned by March 27, which again will increase revenue from these built to operate projects by another 200 crores.

34:15 FY 'twenty eight, we expect somewhere around $303,125 to 375 crores as a revenue from this particular built on operate projects. Right, sir. And going forward, sir, your focus, is is that towards more manufacturing supplies and C and I, you know, sector or utility still continues to be a utility plus build and operate? So our core business is manufacturing and projects. So we will continue to concentrate on manufacturing on selling the product directly to the third party customers. And the second priority is to do the projects, our own projects. Build to own operate is a need of the when we when we enter into the best segment, so we have entered into it.

35:06 But but considering the capital intensive nature, so we have given a pause for the build to own operate projects. Unless otherwise we get some extra investment, the built on operate projects are of not a much interest to us. Our core priority is to manufacture and sell the product and do the EPC. So these are the two main priorities, say, other than this built on operate, which is, again, the least priority for us. And your EBITDA margins on manufacturing, what is your Pace would be, sir? So EBITDA margins on the manufacturing is about, say, currently because of the initial higher cost, the EBITDA margins were about 8% to 10%, but it is expected to go up to 13% to 15% over the period of time when we stabilize our operations.

36:01 Okay. And on the EPC bit? EPC bit, it it would be about seven to seven to 10%. Okay. Understood. So then your EBITDA margin on the energy when you said 16 to 17%, how was that, sir? So if you if you consolidate because we have our own product supplying to the... Our our own project. So we have margins at both the legs. We have a sub... Say, product margin. We have a EPC margin separately. When you blend these two, it will be about 15%. Understood, sir. Fair enough. And just last question, man. The Peak debt, you mentioned you will have another INR 1,100 crores on top of what we already have. Will that be the peak debt by the end of FY 'twenty seven? Or is the debt expected to go up further?

36:52 No, that's the peak debt that is expected by FY 'twenty seven. And as I stated, it will be again supported by the build to operate assets, which will again increase by 1,600 crores. So the further we grow build to operate projects, I think this debt would increase because for every build on operate project, we take a debt of about 70%. Other than that, we don't see an increase. So the further we increase more into more projects and build on operate, this debt would increase. And these projects you said are about 10% project and about 15% return on equity? Yes. Right. Alright, Fair enough, sir. Thank you so much. I'll come back. You. Thank you. The next question comes from the line of Keval Shah from Sanctum Wealth PMS. Please go ahead.

37:49 Sir, coming back with the cash flow bit. So this first half year negative INR $5.49 crores. So by the end of this full year, do we expect that this cash flow will turn positive for full year FY 'twenty seven on consolidated base? Sir, as I was, say, answering the other participants. So when we come to the consolidated cash flow from operation, I would like I would request you to consider the cash flow from operation, excluding the finance lease receivables, because finance lease receivables is nothing but asset built up. Only for the accounting treatment, it is called as finance lease receivables. So if you exclude that, our cash flow from operation is already positive. The same trend is expected to be there in the year end also. Okay. Okay. And sir, in terms of the BES overall macro, so how is the bidding competition environment right now? So is it improving or still there's competition like there was before?

38:46 It has improved a lot, I would say, compared to the scenario six months before where there are much bigger players, a lot of players bidding. And today, we see standard names of six to eight participants for every bidding compared to 25 to 30 participants in the bidding before some six months' time. So today, it has I would say, it has come to a consistent level where only selected names are participating in the bidding. Okay. So there would not be any kind of pressure on the margin or realization side because of the competition. Is that a fair statement to make? There is a pressure on the margins, but not as before because, say, if you see our order book that we have not added much of the projects, say, six months back because of the heavy competition that we had. And as we also stated that build to operate projects, we are not bidding where there is a intense competition.

39:49 But today, we keep our margins required margins and only then we bid. If we don't get our required margins, we don't bid lower than that. That's what the call that we take. So that this required threshold margin would be, sir, that would be keeping the minimum threshold for bidding? So I know it it varies from bid to bid. Right? It depends on the type of combination of products and EPC and the build and operate. So it varies from bid to bid. We take that call, you know, before bidding or before the all of these projects go for reverse options. So before the reverse option, we tend to decide, okay, this is our threshold and we don't go beyond that. We try to maintain our blended, like we mentioned earlier, our blended EBITDA of 16% to 17% and a PAT of 10% to 11%.

40:46 And that's how we make sure that these projects we don't go lower than that. Okay. Sir, in terms of competition, so the new players or smaller players which had added to the joint competition few quarters back there, the competition would be decreasing. But is there any increased competition coming from large players like you said, are these incrementally you're seeing them competing with you guys for the building? So like I mentioned earlier, right, the demand for BEST has increased multifold. This financial year capacity would be about 30 to 35 gigawatt hour, which we are expecting to increase about two thirty six gigawatt hour by FY 'thirty two. So there is enough demand for this, for all the big players executing. We have an advantage because we have the manufacturing readily available and we're running at full capacity. So that is an added advantage for us. But we see enough demand being there even with bigger competition.

41:55 So this 10 gigawatt capacity for Bestech will reach. So in, say, 0.25 itself, will it be running at almost full capacity utilization? It will come to full capacity, say, by end of Q4. Starting Q4 will be the production of this complete 10 gigawatt, but full capacity of 10 gigawatt probably will take one quarter to reach. Okay, sir. And sir, you have revised the guidance for this financial year. For next year, your returns remain flat. So that's integrate translates to lesser expected growth in FY 'twenty eight. So is it like you would later on look at it or you're just contending the revenue expectation in this year? No. So we since we saw the increase in this financial year, we revised the guidance for this financial year. Next year's guidance, we have not revised it as of today.

42:52 But we are definitely seeing a much better guidance than what we have provided. Okay. So I'll get back in queue. Thanks so much for answering. Thank you. Thank you. The next question comes from the line of Niraj Rajaer from Crunch Business Ventures Private Limited. Please go ahead. Hi. Hi, sir. I just wanted to continue the last answer that you gave, which is why the 10 gigawatt is going to get operational by the Q4 of this year. So assuming and you don't want to build more of the BOO. So assuming a 2.2 gigawatts of that capacity goes there. Then also 5,000 to INR 6,000 crores will be the minimum turnover that you'll be reaching just from the vessel.

43:39 So not sure how the INR 4,000 crores your current guidance of So FY 2028 what we expect is that there'll be a mix of orders that we wanted to do because, say, there'll be a lot of, say, heavy working capital requirements for 10 gigawatt hours. So what we want to do is that we wanted to have a mix of product sales to the EPC. Three, the job work. We want to do a quantum of job work for about 20% of the capacity, which is going to have a sort of reduction in the working capital. In same time say maintaining the margin. So job work is something which we are trying to have about 20%. And also say as we stated that once we have some sort of investors in place, we will again start bidding for the build to own operate project, which we are again keeping a sort of say 10% to 15% of the capacity for the build to own operate projects.

44:36 So this is what we have considered to build the revenue projection. Also also, if you see that the revenue realization is different, if it was 100% of direct product sale, it is the your number of 5,000 to 6,000 crores is correct. But then all of our most of our product goes into projects, EPC projects or build and operate projects, which run for a period of two years. So the realization of revenue is for a duration of two years. So the that is why it is not about 5,000 to 6,000 like you mentioned. But yes, if you do 100% capacity of only product sale, yes, we would reach that revenue. Okay. Understood. But just on the job work, if you are going to do the job work, why you in the earlier reply said that 10% PAT margin because job work will have significant margin. So if someone is giving you the sale and then you are just doing the job work of putting into the left container, the active pack and that thing. So that you'll have such significant higher margin. So you won't be able to maintain it.

45:44 See, when somebody is giving the job work, comes from the biggest players. And usually, what happens, they all go with the exact exact costing of whatever we do today. We tend to get the same level of EBITDA and same level of patent in the job work. We we don't get much beyond because even the finance cost, they tend to take to their side. So we expect that the margin levels are protected with the job work, not the increased margin. Say, we expect maybe EBITDA margin of additional 1%, not more than that. And and can you walk us through the five projects? What stage is it? Has the financial project achieved or not? I'm sorry to interrupt you, sir.

46:37 The next question comes from the line of Sam from RRJ Company. Sir, you're not audible. The next question comes from the line of Kapil Agarwal from Daksh and Associates. Yes. So my question is regarding the data and trade payables stage. Actually, it seems elevated.

47:25 So can you explain and how we look, how we see that after a year or two, how it will pan out? See, standing standing as on September 30, you can see that we are our receivables of you're talking about the debtors, right? Receivables and the payables both. Yes. So, standing today from September 30, you can see that our receivables have come down. The receivables are higher in as on 03/31/2026, majorly because of the reason that we had much of telecom revenues in the last preceding two years, where telecom has a portion of retention for the defect liability period, which is for about 5% to 10% for different sets of projects.

48:18 Whereas energy sector projects doesn't have such a long gestation period of retention. The retention comes majorly, say, comes for a period of ninety, max one hundred eighty days. So when we change our mix from bigger of telecom to a bigger of revenue, say, revenue from energy, this particular working capital cycle, we expect it to ease down for us, say, over a period of time. So compared to the FY 'twenty six, FY 'twenty seven would be better and again FY 'twenty eight would have the same state of receivables because the energy is going to have a, say, net working capital cycle of about ninety to one hundred twenty days. That is what is expected from Energy segment.

49:05 So this is expected to ease down over a period of time with the Energy revenue growing up to the and contributing to the overall top line. And the receivables from telecom for the older projects comes down because now we started achieving the milestones and the retestions have started coming down, say, progressively. Okay. And where we see like for March 26, the data days are approximately two eighty six days, we can say. So where it will be settled in, we can say FY 'twenty seven or FY 'twenty eight, FY 'twenty eight? So we can see that about it can settle down at the range of one and fifty days is something around hundred and fifty days is something which we can consider.

49:53 So, will be 50% of current of FY '26 we are seeing. Right. And what about the payable days for March 26 our payable days quite high six zero three days. So what is the reason? Why such kind of long table are pending? It's not it's to be considered this way that the payables are compared because we have payables for both metals and services. And moreover, normally what we do is that when we say 10% of the retentions from the customer, we will have the same 10% of the retentions with the vendors also. So and that is the reason that our payables are increasing and also it includes certain provisioning requirements as per the standard. And again, as I explained with the energy turnover coming in, this payable again will get reduced. We expect that the payable cycle time for about two to three months time.

50:51 Means when I say one hundred eighty days is the receivable time line, the payable days would be sixty to ninety days. So the net working capital, we expect about ninety to one hundred twenty days. No. But right now, you're saying sixty to ninety days payable, and right now, it's six hundred days payable. So it's 6x of your expectation. So how five hundred day payable will reduce? I'm can you explain, Malab? I'm not able to understand that. So, as you stated that the retentions of the projects have started coming in. So, when we receive the retentions from the customers, we also release the retentions for the payables. No. No. But if you see that our debtors have been reduced from 267 crore to $71,792 crore in...

51:39 From March to September. But our payables, there is no much difference in payable. It's around 2,100 in March also and in September also. So there is no such reduction in payables. So I would request you to see the consolidated payable, which is I would say that And see, it's still consolidated on. It's still consolidated Yeah, so consolidated payable was about INR 1,800 crores, which got reduced to INR 1,500 crores in December. So as I stated, if you see the receivables and payables, it will have a similar reduction. Okay. Okay. So you want to say, like, if it will be three, we can say ninety days, then it will be... We can say five... It will be settled down at 300 crore only from 1,500 crore, potentially.

52:25 So 1,200 crore kind of retention is there including So it will it will come down to about 800 to 900 crore, the payables. 800 to 900 crore. Okay. Okay. Thank you. Thank you. Thank you. The next question comes from the line of Pishan Verma from Antique Stock Broking Limited. Please go ahead. Yes. Hi, there. Thank you for taking my question. Can you give us some color on the current best system pricing for the grid scale versus the C and A and versus the imported best? See, we the best pricing as of now, the Indian domestic manufacturing price, we are competing directly with the Chinese imports.

53:18 And the landed price of the Chinese bit is almost in line with our manufacturing cost plus the margin. So the sales price of our base is almost competitive with the Chinese landed prices after the transportation, after the customs duty. Is this the answer you expect from your question? No. On C and I, I think C and I, like we said, the C and I margins are better than the full scale best products that we are selling now. But these margins, we would start seeing once commercial bigger sales happen. Okay. And now with the container manufacturing in house, how are we seeing the reduction in the overall system cost or like the improvement in lead times?

54:11 And what portion of our best bill of material is still imported? So the container fabrication is expected to reduce our say, increase say, improve our EBITDA margins and reduce our cost by about 4% to 4%, that I would say. And yes, it will also significantly improve the lead time, which is again taken care. And as we also explained that 50% of our capacity would be met with the container fabrication and balance anyway would get imported. This is the answer to your first question. And second thing, we are again trying to localize much of the components. And in the next two quarters, we wanted to have the lithium ion cells and the BMS imported and balance that's all we wanted to have it localized in India. So that's the target that we are working with.

55:10 Okay. Got it. And lastly, sir, just if you can share some update on the four kilowatt hour PLI application status, like any time lines or CapEx for that? The PLI tendering, I think it is expected by mid of November. And as we also explained that our CapEx plan for the cell manufacturing is on and our R and D center is studying the required transfer of technology. And once things settle down, we expect to kick start in the next financial year. Okay. Got it. Thank you. Those are my questions. Thank you. Thank you. Ladies and gentlemen, we will take this as the last question for today. I now hand over to the management for closing comments. Over to you, sir.

56:06 Yes. So I think thank you, everyone. Thank you for this call and for a very good session. And I think as a closing remark, we would say that we are looking rest of the financial year and years to come look very good. And especially with the growth in the energy segment, we are seeing a much, much better growth of our company and much better growth in our revenues. And we are very strong with our guidance and we are very confident about our guidance whatever we have provided. And we are targeting to expand further into the energy business and grow the energy business to a much better state.

56:57 And I would like to thank all of you for joining this call, and thank you. Thank you. On behalf of PACEDIGITK Limited and Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.