Pace Digitek Ltd Q1 FY27 Earnings Analysis

- FY27 revenue guidance is Rs. 3,200 crores to Rs. 3,400 crores, with further growth expected in FY28 to Rs. 4,000 - 4,200 crores. - Energy segment, especially utility-scale BESS projects, is a major growth driver, comprising ~78% of the order book. - Manufacturing capacity to ramp up from current 2.5 GWh to 10 GWh by October FY27, enhancing product-led revenues. - Expect 75%-80% utilization of manufacturing capacity by end of FY27, supporting volume growth. - BOO (Build-Own-Operate) projects contribute significant order book with revenues expected to be Rs. 1,000 crores from MSEDCL project alone in FY27. - African market entry expected to generate 300-500 MWh orders starting FY27, growing 20-25% in FY28. - Focus on diversifying into grid-scale BESS, Commercial and Industrial (C&I) segments, and telecom infrastructure for further revenue expansion. - PAT margin for BOO business targeted around 10%, supporting profitable growth.

- FY27 Expectations: - Confident of achieving growth and topline targets based on strong order book and execution visibility (Page 23). - PAT margin expected in the range of 10% to 11%, slightly lower than previous year due to higher contribution from energy segment which has lower EBITDA margins compared to telecom (Pages 20 & 7). - Operating cash flow expected to normalize and turn positive by September 2026; CFO positivity anticipated in FY28 (Page 17). - Medium to Long Term: - Expansion of BESS manufacturing capacity from 2.5 GWh to 10 GWh by October 2026 to support higher volumes and improve operating leverage (Pages 4 & 3). - Anticipated revenue guidance of Rs. 4,000+ crores in FY28, with conservative estimates considering 75-80% capacity utilization (Pages 18 & 17). - Targeting PAT margin of around 10% at BOO segment level; overall growth driven by increasing product-led manufacturing alongside project execution (Pages 18 & 17). - Revenue expected to grow from strong opportunities in utility-scale BESS, telecom modernization, and digital infrastructure (Pages 4 & 3).

- Expansion of BESS manufacturing capacity from 2.5 GWh to 5 GWh, expected operational from July 2026. - Further expansion to 10 GWh capacity by October 2026, advancing earlier plans due to strong demand and order book visibility. - In-house fabrication of BESS containers to optimize logistics and reduce costs, with plant operational from July 2026. - Investment in building strong internal teams for manufacturing, field operations, and project execution to support scaling. - Strategic inventory buildup as of March 31, 2026, to mitigate raw material (lithium-ion cells) cost and exchange rate risks. - Plans for upcoming cell manufacturing facility announced as "very much on the cards" with details to be shared soon. - Increase in debt from Rs. 161 crores to Rs. 961 crores to fund BESS manufacturing expansion, energy asset creation, and project execution.

- The company is currently funding existing Build-Own-Operate (BOO) projects primarily through IPO proceeds and internal accruals. - Out of the four BOO projects, the first three are funded via IPO funds or internal accruals. - The fourth BOO project is being funded through external debt resources. - There are no plans to initiate further BOO projects without external investment in place. - For FY27 and FY28, the focus will be on increasing product business and selling to the external market rather than on new BOO projects. - No mention of planned new equity fundraising or warrants issuance was made. - Overall, no immediate fresh fundraising through debt or equity is planned beyond what is already in place for existing projects.

- Total executable order book as of May 25, 2026: Rs. 11,338 crores - Energy orders: Rs. 8,854 crores - Telecom & ICT orders: Rs. 2,484 crores - BESS order book: Around 6 GWh (including BOO and EPC projects) - BOO segment: 2.72 GWh - Energy order book constitutes approximately 78.1% of total order book, telecom & ICT 21.9% - Key projects include - BOO projects with approx. 12% to 13% IRR - Projects in Africa for grid-scale BESS with estimated 300 to 500 MWh of orders in FY27, growing 20-25% in FY28 - Execution timelines: - Standalone BESS projects: ~1.5 years - Solar plus BESS projects: 2 to 3 years - Growth target supported by strong order book and execution visibility for FY27 and FY28