Gujarat Industries Power Co LtdQ3 FY22Power

Gujarat Industries Power Co Ltd

Q3 FY22 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Revenue guidance

Category 3

→Current revenue is around Rs. 1,200 to Rs. 1,300 crores and is expected to remain flat in the next year due to ongoing capacity addition timelines.
→Capacity additions of 200 to 300 MW are planned within the next year, which will contribute to revenue growth one year down the line.
→From FY25 onwards, with approximately 50% capacity addition at the Khavda project, incremental revenue is expected based on tariffs around Rs. 2.75 to Rs. 2.80 per unit and capacity utilization factors of 27-29%.
→The Khavda solar park is planned with a total capacity of about 2,375 MW, developed in 4 phases over 5-6 years, with the company targeting to develop over 50% of this capacity on its own.
→The company expects phased capacity additions primarily in renewables (solar), aiming for substantial top-line growth by mid-decade linked to these projects and improved utilization of existing assets.

Category 3

→Revenue outlook for next year is expected to be flat around Rs. 1,200 - 1,300 crores due to current capacity.
→Capacity additions of 200 to 300 MW planned in the next 1-2 years will positively contribute to revenue beyond next year.
→EBITDA is approximately Rs. 220 crores currently; renewable segment contributes roughly Rs. 115 crores.
→Profitability could improve with commissioning of new Khavda park phases from FY25 onwards, expected to add significant revenue.
→Dividend policy may see revision in future as profitability improves; currently cautious due to ongoing expansions.
→Gas-based plants remain non-operational due to high gas costs; viability expected if gas price falls to $8-8.5 per MMBtu, enabling cost-plus tariff supply.
→Focus is shifting more toward renewable energy with phased capacity additions and development of green hydrogen initiatives in 3-4 years.
→Operational lignite-based plants have good life visibility with captive mines supporting capacity for PPA life plus 10 years.

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Yes

→For the Khavda project, Gujarat Industries Power Company Limited plans to fund capacity addition in a phased manner using a 70:30 debt-to-equity ratio.
→The company intends to raise debt from the market while infusing the equity portion over 4 to 5 years, utilizing internal cash flows and depreciation.
→So far, the CAPEX incurred on park development is around Rs. 100-120 crores, with an additional Rs. 400-500 crores expected to be spent next year.
→Discussions/dialogues with various financial institutions and banks have been initiated for debt, with the likely interest rate (coupon rate) ranging between 7% to 7.5%.
→The company has enough cash generation to fund the equity portion without the need to restructure earlier projects or seek more equity urgently.

→The company has initiated dialogues with financial institutions and banks for funding, with expected interest rates between 7% to 7.5%.
→CAPEX for the Khavda park development incurred till date is Rs. 100-120 crores; additional Rs. 400-500 crores expected next year.
→Total CAPEX for 300 MW capacity addition at Khavda is estimated at Rs. 1,600-1,700 crores, with a 70:30 debt-equity funding mix.
→They plan to add capacity in four phases: 600 MW, 600 MW, 600 MW, and 575 MW, primarily solar.
→No specific pending orders mentioned for renewable projects, but a 75 MW solar project on mining reclaimed land is in tendering process pending approvals.
→Park development is underway, with phased capacity addition over 4-5 years, expecting more than 50% of capacity additions to be in-house.

Yes

→Khavda Park development CAPEX incurred till date: Rs. 100-120 crores; expected Rs. 400-500 crores next year.
→Total park development CAPEX: Rs. 1,100 crores with 30% MNRE subsidy.
→Capacity addition planned at Khavda: Four phases of 600 MW, 600 MW, 600 MW, and 575 MW solar capacity, over 5-6 years.
→Target to add at least 50% capacity in Phase I (600 MW), finalized by last quarter of the current financial year.
→Per MW cost at Khavda: Rs. 5.6 to 5.8 crores including everything.
→Funding strategy: 70:30 debt-equity ratio; equity infusion phased over 4-5 years with internal accruals.
→No immediate plan to add new thermal capacity; focus is on renewables and green hydrogen exploration for future phases.
→CAPEX for new solar projects estimated at Rs. 1,600-1,700 crores for 300 MW solar capacity with 15-18 months execution timeline.

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