EKI Energy

Q1 FY22 Earnings Call Analysis

Commercial Services & Supplies

Full Stock Analysis
capex: Yesrevenue: Category 2margin: Category 3orderbook: Yesfundraise: No
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fundraise

Any current/future new fundraising through debt or equity?

- The company currently aims to utilize internal funds to maximize returns and develop more projects, advisory services, and nature-based solutions. - There is no main agenda or plan as of now to raise new funds through external equity or debt. - If good opportunities arise in the future, the company may consider collaborations or external funding. - No specific investment amount or fundraising target has been disclosed. - The focus currently remains on mobilizing existing internal financial resources for growth and project implementation.
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capex

Any current/future capex/capital investment/strategic investment?

- EKI plans to mobilize and deploy internal funds significantly over the next year to maximize return on investments focused on: - Developing more projects - Expanding advisory services with a revolutionary model - Developing Cookstove and community-based projects - Implementing nature-based solution projects (forestry, wetlands, mangroves, sustainable agriculture) - No specific investment amount is targeted currently; focus is on fully utilizing internal financial resources. - The cooking stove subsidiary plans to increase manufacturing capacity from 1.2 million to 3 million units annually, requiring additional CAPEX and OPEX of Rs. 5 to 10 crores. - Amrut Nature Solutions Private Limited (JV with Shell) expects to sign its first project (~Rs. 150 crores) shortly focusing on nature-based solutions. - GHG Reduction Technologies has an equity investment of around Rs. 70 lakh and operates a Cookstove manufacturing plant in Nasik. - Future collaborations may be explored if good opportunities arise.
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revenue

Future growth expectations in sales/revenue/volumes?

- The company expects around 20% growth in carbon credit volumes in the next financial year compared to the 87 million credits achieved in FY 21-22. - Projected sales volume for FY 23 is approximately 110-120 million carbon credits. - The pipeline of projects is very strong, with anticipation to potentially exceed the 20% volume growth target. - Revenue growth is expected to correlate with volume growth and international carbon market prices. - Expansion plans include increasing cooking stove manufacturing capacity from 1.2 million to 3 million units per year with Rs. 5-10 crores additional investment. - Geographic revenue mix is expanding, with major contribution currently from Turkey and Bangladesh, and expected growth from Latin America and Africa over the next 12-18 months. - Internal funds will be prioritized for project development and advisory services, with possible collaborations to capitalize on future opportunities.
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margin

Future growth expectations in earnings/operating earnings/profits/EPS?

- The company achieved a remarkable 844% revenue growth and 1951% PAT growth in FY 2022 compared to FY 2021. - EBITDA margins more than doubled from 13.3% in FY 2021 to 28.7% in FY 2022. - For FY 2023, the company expects a 20% growth in carbon credit volume from 87 million in FY 2022 to around 110-120 million credits. - This volume growth, combined with favorable international carbon market prices, is likely to drive topline growth in the upcoming year. - The company foresees sustaining or surpassing margins and volume growth, supported by strong project pipelines and ongoing geographical expansion. - Investments continue focusing on internal funds aimed at developing more projects, advisory services, and nature-based solution projects. - Long-term sustainability is backed by technology-based projects (6-12 months implementation) and nature-based projects (2-3 years to credit generation, with long recognition periods).
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orderbook

Current/ Expected Orderbook/ Pending Orders?

- The company has a cooking stove order book worth Rs. 200 crores. - This order is expected to generate revenue of approximately 14 million carbon credits over the next 5 years. - The company is targeting a production increase from 1.2 million to 3 million cooking stove units annually, requiring additional CAPEX and OPEX in the range of Rs. 5 to Rs. 10 crores. - They have plans to expand their presence to more than 30 countries within the next 12 to 18 months, indicating ongoing efforts to increase orders and business volume. - Future project opportunities include technology-based projects (6-12 months implementation) and nature-based solution projects (2-3 years investment period, yielding credits after 3 years). - The company anticipates a 20% growth in carbon credit volume next financial year, extrapolating a significant growth in orderbook and pending projects.