Strong growth masks Q3 margin headwinds; execution risk on capacity ramp

Gross margin 47.2% (up from 44.6%), reported EBITDA 25.2%, NPM 18.2% — strong for commodity-volatile quarter

Order book ₹1,945 Cr (1.9x revenue); Endoks inquiry levels ahead of expectations; but factories at 2+ years order book at capacity

Two large HVDCs (Adani, Power Grid, Barmer tender close) slated Q3-Q4; but first priority is 60 customer audits over 6 months

Q1 delivered 25.2% reported EBITDA but management warned of Q3 moderation; all orders booked above guidance levels

Machinery installation ongoing; building completion certificate pending from authorities; trial production Aug 2026; ISO audits needed

From ₹15% (prior call) to ₹18% going forward; despite Q1 copper/oil spike, management sees 18% as sustainable

Targeting ₹18% going forward (prior calls were vague); but BESS product margin unknown until shipments

Trial Aug 2026 (vs original guidance); full commercial production Q3-Q4 with 6-month audit cycle (⚠️ bottleneck, not structural per management)

Expanding from Winwin + US entry to include ₹50 Cr at Winwin facility and European facility scouting (no firm capex yet)

Q3 start once facility stabilized; two HVDCs (Adani, Power Grid, Barmer) coming Q3-Q4; will take in more orders after commissioning

Quality Power coil products have 4-5 month lag; aluminum spike Q1 hits Q3. Mehru (8-week cycle) already reflected. Guidance 20% stable; cautionary note, not baseline

Sangli: trial Aug, 6-month audit cycle, peak ₹1,500–1,800 Cr. Magnet wire: 3-5 months trial, full production Q4 FY27

15 months give-or-take. Won't commit on ratio but order demand is strong; focus on delivery first

Current ~USD60M pipeline, expecting +USD40M in 12 months (USD80M guidance on track). PCS execution cycle 6-9 months (faster than core business); working capital also faster

Internal demand ₹40–45 Cr/year; targeting ₹200 Cr orders in 9 months. Not backward integration; will sell at market prices. Peak capacity ₹300–400 Cr initially, ₹450–500 Cr with capex. Margins to stabilize in 4 quarters post-acquisition

Sticking with 20% guidance (₹1,024 Cr base = ₹1,229 Cr at +20%). Won't revise early; many factories still commissioning; factories being established takes time

Model at 20% or high teens; will try to deliver better

Not aware of new HVDC allowance; TVA (already full, supplying Reliance/Adani) + GIS makers (Taikai, Pinggao) de-rated for 6-7 years. Local sourcing norms unchanged (60–70% domestic required). Quality Power supplies components to these OEMs; no significant threat

Westinghouse (American) founded 1960s Chennai, shifted to Vizag SEZ, cyclone Hudhud caused ₹240 Cr loss (2015), sat idle 6-7 years, new investors spent ₹150 Cr reno, got stuck on gas crisis (₹2 Cr/day losses). Now swapping shares + debt payoff with Quality Power. Legacy: approved 55+ countries, 765 kV US exports; will rebrand from Winwin back to Quality Power soon

Want to be 'alternative to Hitachi from India'; invest in high-tech (BESS, HVDC, FACTS, automation); generate free cash; acquire complementary businesses; parallel Japan (Mitsubishi, Fuji, Toshiba), France (Alstom, GE), India (L&T); be alternative in electrical transmission

Power electronics (BESS) fastest growth next 2-4 quarters; power products slower (supply-chain constraints, large transformers); ancillary helps scale but mostly internal (not counted as sales due to accounting). BESS customers faster on takedown vs high-voltage substations

Maintained from prior 15–20% range; won't revise early given factory ramp uncertainties

Maintained from prior call; contingent on Sangli/Endoks full ramp-up and order execution over 15-month horizon

Q1 delivered 25.2% but management warns Q3 moderation; expects margin recovery in H2 as new facility utilization rises

Revised UP from 15%; despite Q1 copper/oil spike, 18% seen as sustainable

Current product lines (STATCOM, SVCs) at 25%; BESS blended margin to be disclosed once products shipped

Expected despite Sangli fixed-cost drag in near term; margins normalize as utilization increases over 15 months

For Winwin acq (₹315 Cr) + ₹50 Cr capex there + US sales team + European facility scoping; timeline to start road shows Aug 20

Sangli coil facility trial production Aug 2026, but 6-month customer audit cycle required before full commercial orders. Delays or audit rejections could defer FY27 volume contribution.

Aluminum prices spiked Q1; Quality Power's 4–5 month manufacturing cycle means impact hits Q3 financials. Management explicitly warned of margin moderation Q3.

Winwin (closed plant turnover, SEZ regulatory hurdles), Endoks (new PCS product line), Sangli (new manufacturing process) all ramping in parallel. Overstretch risk.

BESS production bottlenecked by IGBT scarcity; CTC cables, aluminum castings, springs also in tight supply. Cycles by business and quarter.

Chinese companies (TVA, Taikai, Pinggao) allowed to bid on HVDC/GIS contracts. But local sourcing norms (60–70%) unchanged, and Chinese factories de-rated for 6-7 years.