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

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 o

Any current/future new fundraising through debt or equity?

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 additio

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

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

Future growth expectations in sales/revenue/volumes?

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%

Current/ Expected Orderbook/ Pending Orders?

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 leas

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Supreme Power Equipment LtdQ1 FY24Electrical Equipment

Supreme Power Equipment Ltd Q1 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹250P/E: 27.4Market Cap: ₹578 CrSector: Electrical Equipment

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→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%.

Margin guidance

Category 3

→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.

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Fundraise plans

Yes

→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.

Order book

Yes

→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.

Capex plans

Yes

→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.

How does Supreme Power Equipment Ltd rank vs peers in Electrical Equipment?

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