Supreme Power Equipment Ltd

- Supreme Power Equipment Limited raised around INR40 crores through its IPO in December 2023. - The company plans a total capex of INR60-65 crores funded by: - Approximately INR40 crores from IPO proceeds. - Around INR20 crores from internal accruals. - If required, the company may raise a small amount of debt. - Currently, there is very little cash on the books (~INR0.05 crores), but they have bill discounting and other banking facilities available for working capital. - No specific plans for a new large equity raise have been mentioned. - Debt will be considered only if there is a small additional funding requirement beyond IPO and internal accruals.

- Supreme Power Equipment Limited is undertaking a capacity expansion capex of INR 60-65 crores. - The capex will increase transformer manufacturing capacity from 2,500 MVA to 9,500 MVA. - The new facility will enable production of larger transformers, from 25 MVA up to 160 MVA at 230 KV class (currently production capped at 25 MVA, 110 KV class). - Expansion completion and commercial production are scheduled for December 2025. - The company expects to generate around INR 600 crores in revenue at full utilization of the expanded 9,500 MVA capacity. - Funding for the capex includes approximately INR 40 crores from IPO proceeds, around INR 20 crores from internal accruals, with a possibility of small debt if needed. - Strategic focus includes targeting private customers like large wind and solar farms with the higher-capacity transformers post-expansion.

- Supreme Power Equipment Limited expects a year-on-year revenue growth of 10% to 30% over the next 2-2.5 years. - The company projects steady demand in power infrastructure for at least 3 to 5 years, driven by government investments. - New capacity expansion targeting production of larger transformers (25 MVA to 160 MVA, 230 KV class) will support higher revenue potential. - Full capacity utilization could lead to revenues exceeding INR 600 crores once the new capacity becomes operational. - Order book, including INR 60 crores from Tamil Nadu Electricity (TANGEDCO), supports near-term revenue with 60% expected to be executed within 3-4 months. - Growth is focused mainly in Tamil Nadu, with expansion into Karnataka and Kerala underway. - Balanced revenue model aims for 50-50 split between government and private sectors, ensuring stable revenue streams. - The company is cautious in growth guidance due to market uncertainties but aims to maintain margins of 20%-25%.

- The company expects year-on-year revenue growth of 10% to 30% over the next two to two and a half years. - Margin improvement is anticipated to be sustained, with current EBITDA margins around 20%-21%. - Management targets maintaining profit margins around 20%-25%, emphasizing margin-based order selection. - Expansion plans include increasing transformer manufacturing capacity from 25 MVA to up to 160 MVA (230 KV class) by December 2025. - Revenue at full capacity is projected to exceed INR 600 crores, with growth driven by infrastructure development and increased power sector demand. - The company is optimistic about profitable growth in both government and private segments, targeting a balanced 50-50 revenue mix. - EPS growth is supported by operational efficiency, strengthened design and purchase teams, and focus on higher-margin orders. - Current EPS stands at INR 3.02 for H2 FY24, with a full-year FY24 EPS of INR 5.6, reflecting strong financials on increased capacity and demand.

- Current order book is around INR 60 crores, primarily from domestic orders. - Approximately 10% of the current order book is from the solar sector. - Out of the INR 60 crores, about 60% is expected to be completed within the next 3-4 months. - The remaining 40% comprises government orders, which will be extended over the next 9 months. - The order book is continuous, with new orders of INR 50 crores in December, INR 50 crores in Jan-Feb-March, and INR 60 crores currently. - Orders for higher MVA capacity transformers are being developed; moving from 50 MVA to 160 MVA capacity is expected to take at least 12 months. - Company focuses on margin-based orders and selectively converts orders amid strong demand.