Zodiac EnergyQ2 FY24Construction

Zodiac Energy

Q2 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 1

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

4 of 5 growth signals are positive — a strong management growth story.

Revenue guidance

Category 1

→Zodiac Energy anticipates continued growth driven by the expanding solar energy sector and increasing deployment of solar power across India.
→The company expects most of its current 50 MW order book to be executed within FY25, supporting revenue growth.
→New investments in the Independent Power Producer (IPP) segment, notably a 26.56 MW PM KUSUM project valued at approximately INR150 crores, will contribute to future sales.
→Expansion beyond India, particularly in Africa, is planned with strong prospects for converting leads into confirmed orders.
→Government schemes like PM Surya Ghar Yojana and PM KUSUM are significant growth drivers.
→Increasing investments from customers in captive solar projects totaling around INR300 crores indicate rising demand.
→Opening new offices in Lucknow (already operational) and Pune (soon operational) aims to enhance national presence and boost sales.
→Overall, the sector's buoyancy and stable solar panel prices set a positive outlook for revenue and volume growth in coming years.

Category 3

→Zodiac Energy showed strong Q1 FY25 growth with total income up 144.56% YoY and net profit up 184.36% YoY; EPS rose by 183.93% to INR 1.59.
→EBITDA margin contracted due to investments in growth and higher interest and employee costs but is expected to improve in coming quarters as market prices stabilize.
→Growth drivers include expanding solar energy sector demand, successful execution of projects including government contracts (e.g., PM KUSUM scheme), and entry into the Independent Power Producer (IPP) segment.
→New projects like the 26.56 MW PM KUSUM project with INR150 crore investment support growth.
→The company expects most of its current 50 MW order book to be executed in FY25, contributing to revenue growth.
→Operating margins expected to improve from Q2 onward and surpass FY24 levels on a full-year basis.
→Investments in talent and technology are aimed to sustain long-term profitability and growth.

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Yes

→Zodiac Energy Limited is currently raising funds through a Qualified Institutional Placement (QIP).
→The purpose of the QIP is to raise equity to invest in PM KUSUM projects, including a 26.56 MW project with a Power Purchase Agreement (PPA) with UGVCL.
→The overall project cost is approximately INR 150 crores, with INR 30 crores already raised as equity; the balance funding is expected from internal accounts and bankers.
→The company is also open to future investment opportunities and capex, especially in the Independent Power Producer (IPP) segment, evaluating promising opportunities such as PM KUSUM.
→No specific mention of future debt raising; current debt stands at around INR 50 crores with interest of approximately 9.35%.
→The company will approach the market for funding when suitable investment opportunities arise.

Yes

→Zodiac Energy Limited currently has an order book of about 50 megawatts, including rooftop and ground-mounted open-access captive projects.
→Majority of these orders are expected to be executed within the current financial year (FY 2025).
→Execution timelines depend on factors such as land availability, so exact timelines are not provided.
→The company is actively bidding for government contracts through tenders and securing orders from private clients via marketing and techno-commercial negotiations.
→Zodiac is also expanding its project portfolio with investments like the PM KUSUM scheme project of 26.56 megawatts with UGVCL.
→The company expects order execution to be robust in FY 2025, aligned with their growth initiatives.

Yes

→Zodiac Energy Limited is actively evaluating investment opportunities in the Independent Power Producer (IPP) segment.
→A significant ongoing investment is the PM KUSUM scheme project, worth approximately INR150 crores, involving a 26.56 MW solar power plant with a PPA secured with UGVCL.
→The company is looking for further investment opportunities in the commercial and industrial (C&I) segment, particularly in group captive and third-party solar power plants.
→Future capex requirements will be met as opportunities arise, with the company indicating it will approach the market as needed for funding.
→The company raised INR30 crores through QIP equity infusion for the PM KUSUM projects, with the balance funding expected from internal accruals and bankers.

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