Atlanta Electricals Ltd (ATLANTAELE) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Atlanta Electricals Q2 and H1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Upadhyay from Adfactors PR. Thank you, and over to you, sir.
Mohit Upadhyay (Adfactors PR): Thank you. Good morning and a very warm welcome to Atlanta Electricals Limited Q2 and H1 FY27 Earning Conference Conference Call. Joining us today are Mr. Niral Rupeshbhai Patel, Chairman and Managing Director, Mr. Anand Sharma, the Chief Operating Officer, Mr. Akshay Kumar Mathur, CEO, and Mr. Mehul Mehta, CFO. Before we begin, I would like to remind participants that certain statements made during this call may be forward-looking in nature and are subject to risks, uncertainties, and assumptions. These should not be relied upon as guarantees of future performance. I now invite Mr. Mehul Mehta, our Chief Financial Officer, to take you through financial highlights of Q2 and H1 FY27. Thank you, and over to you, Mehul sir.
Mehul Mehta (Atlanta Electricals Ltd): Thank you, Mohit. Good morning, everyone. I will now take you through our financial performance for the second quarter and first half of FY27. We have delivered healthy year-on-year growth in revenue and profitability during the
Mehul Mehta (Atlanta Electricals Ltd): start of the financial year. Despite facing certain external challenges during the second quarter, our performance reflects the underlying strength of our of demand across our key business segments and the investments we have made in expanding our manufacturing capabilities. While elevated raw material prices and weather-related disruptions impacted our quarterly performance, these challenges are largely temporary in nature. Our focus remains on timely execution of our order book, improving operational efficiencies and maintaining financial discipline. Let me begin with the quarterly performance financial performance. During Q2 FY27, our consolidated revenue from operations stood at INR390.1 crores, registering a growth of 23.1% year-on-year compared with INR317 crores in Q2 FY26. This growth was achieved despite unusual heavy rainfall in Gujarat, which temporarily affected manufacturing operations, transportation and customer delivery schedules. Heavy rainfall and waterlogging resulted in precautionary shutdowns at our manufacturing facilities on two occasions. More importantly, disruptions at customer project sites prevented the timely acceptance of certain completed transformers. Consequently, finished orders worth approximately INR180 crores could not be delivered during the quarter. Importantly, these represent deferred deliveries and not cancellations, and these orders continue to remain part of our order book. I'm pleased to share that approximately 70% of these deferred orders have already been dispatched and we expect to complete the remaining deliveries during Q3 FY27 subject to customer site readiness. Coming to profitability, our gross profit for Q2 FY27 stood at INR103.6 crores, registering a growth of 6.1% year-on-year compared with INR97.8 crores in the corresponding quarter last year. However, gross profit margin moderated to 26.6% compared with 30.9% in Q2 FY26. The moderation was primarily attributable to elevated commodity and raw material prices, particularly transformer oil, copper and steel, which increased manufacturing costs during the quarter. As highlighted in our earlier calls, the majority of our orders carry price variation clauses, allowing us to pass on increase in raw material costs to customers. However, during Q2, we executed certain firm price orders booked in the previous year, which accounted for approximately 15% of quarterly revenue. Since these contracts did not offer the same flexibility to pass on higher input costs, they adversely impacted our gross margins. The remaining firm price orders are relatively smaller in value and are expected to be substantially completed during Q3 FY27. Accordingly, we expect the associated pressure on profitability to moderate in the coming quarters, although commodity prices price volatility remains an important factor to monitor. Moving to EBITDA, for Q2 FY27, EBITDA stood at INR59.6 crores, representing a growth of 8.8% year-on-year compared with INR54.8 crores in Q2 FY26. EBITDA margin stood at 15.3% compared with 17.3% in the corresponding quarter last year, reflecting a contraction of approx- approximately 201 basis points. The margin moderation was primarily driven by higher raw material costs on firm price contracts and the impact of temporary disruptions on execution and operating leverage. Despite these challenges, we continue to maintain operating profitability and remain focused on disciplined procurement, cost management and improving capacity utilization. Coming to the bottom line, profit after tax stood at INR32.1 crores, registering a growth of 28% year-on-year compared with INR25.1 crores in Q2 FY26. Our PAT margin improved to 8.2% compared with 7.9% in the corresponding quarter last year. This was supported in part by lower finance costs, which declined to INR8.5 crores from INR13.2 crores a year ago. Basic and diluted earnings per share for the quarter stood at INR4.18 compared with INR3.50 in Q2 FY26. Now coming to our consolidated performance for H1 FY27, revenue from operations for
Mehul Mehta (Atlanta Electricals Ltd): First half stood at INR 856.4 crores, registering a growth of 35.5% year-on-year compared with INR 632.1 crores in H1 FY '26. Gross profit increased by 28.6% to INR 230.9 crores, while EBITDA grew by 32% to INR 136.7 crores, compared with INR 103.6 crores in the corresponding period last year. EBITDA margin for H1 FY '26 sorry, EBITDA margin for H1 FY '27 stood at 16% compared with 16.4% in H1 FY '26. Profit after tax for the first half increased by 40.4% year-on-year to INR 79 crores compared with INR 56.2 crores in H1 FY '26, while PAT margin improved to 9.2% from 8.9%. These numbers demonstrate that despite the temporary challenges during Q2, we have maintained healthy growth in revenue and profitability during the first half of the financial year. Turning to our cost structure, employee benefit expenses increased during the first half as we continued to strengthen our workforce to support the expanded scale of operations. Depreciation and amortization expenses also increased during the commissioning of new manufacturing capacities standing at INR 20.1 crores in H1 FY '27, compared with INR 7.9 crores in the corresponding period last year. These investments are part of our long-term capacity expansion strategy and as utilization improves, we expect better absorption of our operating cost base. Turning briefly to working capital, inventory increased to INR 632.9 crores as of 30th September 2026, compared with INR 364.1 crores as of 31st March '26. This increase was partly attributable to finished transformers awaiting dispatch and customer acceptance due to the weather-related disruptions, alongside raw material procurement requirements for our manufacturing operations. With customer deliveries having resumed and approximately 70% of previously deferred orders already dispatched, we expect progressive movement of the related finished goods inventory as the remaining orders are executed. We remain focused on disciplined working capital management while supporting the execution requirements of our growing order book. Overall, despite a challenging second quarter, the first half of FY '27 reflects the strength of our business and the benefits of the manufacturing investments undertaken over the last few years. Our immediate priorities are to accelerate execution of deferred deliveries, improve capacity utilization, manage commodity price volatility, and strengthen operational efficiencies. With a majority of our orders protected through price variation mechanisms and the remaining firm price orders expected to be substantially executed during Q3, we remain focused on improving our operating performance during the second half of the financial year. With that, I would now like to hand over the call to our Chief Operating Officer, Mr. Anand Sharma, who will take you through the operational performance and key business developments during the quarter. Over to you Anand, sir.
Anand Sharma (Atlanta Electricals Ltd): Thank you Rahul, and good morning everyone. I'll now take you through the operational performance and key business developments during quarter 2 of financial year '27. We continue to witness healthy demand across transmission and distribution, renewable energy, and industrial applications. Despite weather-related disruptions and commodity price volatility during the quarter, our underlying business momentum remains healthy. Let me begin with the order book order book and business developments. As on 30th September 2026, our outstanding order book stood at 3,196.97 crores compared with INR 3,116.63 crores as of June '26 and approximately 2,069 crores a year ago, representing 54.5% year-on-year growth. Our inquiry pipeline remained strong at approximately INR 19,464 crores. During quarter 2, we booked new orders worth approximately 421 crores. Commodity volatility delayed certain order finalization, including tenders where we emerged as L1, but purchase orders are awaited. We expect order finalization to improve during H2 of financial year '27. Among the key developments was a letter of intent worth INR 193 192 crores from APTRANSCO for the sub-
Anand Sharma (Atlanta Electricals Ltd): 12 units of 160 MVA 220 kV class auto transformers. We also added 12 new customers during the quarter, including our first US export customer, new state utilities, and renewable energy players. Coming to manufacturing operations, unusually heavy rainfall in Gujarat temporarily impacted plant operations and transportation during quarter two. However, with the withdrawal of the monsoon, our manufacturing facilities are operating normally, and customer side activities have resumed. Our focus remains on accelerating execution, optimizing capacity utilization, and ensuring timely deliveries during the quarter, during the second half of the financial year. Moving to higher voltage transformer initiatives, our Vadodara facility has received approvals from NTPC Solar, NTPC Renewables, Tata Power, KPTCL, Punjab Transmission Company, and a few more customers. Manufacturing of our first 315 MVA transformer, 400 kV class, commenced in October 2026 following delays in receiving certain critical components. To minimize similar delays going forward, we have planned or we have placed advance purchase orders for the long lead components and developed alternate supplier arrangements. We are targeting manufacturing completion and short-circuit testing during quarter three of this particular quarter, financial year '27. Subject to successful testing and necessary approvals, commercial contribution is expected in quarter four of this particular year. On the 765 kV development program, our engineering team has commenced in-house design of the first 765 kV reactor. While the proposed international technology partnership could not be progressed due to international sanction related constraints, we remain open to suitable partnerships as circumstances improve in future. We are targeting commencement of the production during quarter four of this particular financial year, with completion and testing envisaged between quarter four of this year and quarter one of next year. These developments will strengthen our capabilities in higher voltage class transmission projects. Coming to capacity expansion, civil construction of our dedicated IDT plant, Inverter Duty Transformer facility, is complete, and machinery installation is underway. We expect commissioning before the end of quarter three financial year '27, adding approximately 5,000 MVA of capacity with planned capital expenditure of 65 crores. The facility will enable us to shift 33 kV IDT manufacturing from unit two, which is happening presently, releasing capacity for higher kV classes of 66 and 132 kV class to be manufactured in unit two. Alongside this, our tank and radiator backward integration project through AE Components is also progressing. The plant layout, machinery requirement have been finalized, and the ground breaking ceremony has been completed. With planned capital expenditure of approximately 193 crores, commissioning is targeted by October 2027. This initiative is expected to strengthen supply chain reliability and support manufacturing efficiencies. Another important development is our progress in the international market. During quarter two, we secured our first US order for the special duty transformer for a new transformer manufacturing facility to be set up in the United States. We are also witnessing encouraging traction from US customers, with active inquiries of approximately 120 transformers aggregating to 9,300 MVA. Additionally, we have identified two potential long-term partners to support our international expansion. Our medium-term aspiration is for exports to contribute approximately 15% of the overall revenue within the next two years, while we continue exploring opportunities across Europe and Africa as well. We are seeing opportunities from emerging segments in battery energy storage systems. We currently have an active inquiry pipeline of approximately 3,400 MVA, worth 184 crores, alongside renewable energy and industrial electrification. These segments are expected to support future demand for our products. Overall, despite temporary execution challenges during quarter two, our order book and inquiry pipeline remain healthy. Our immediate priorities are to improve execution, commissioning of our new IDT facility, and advance our higher voltage development program. With that, I would now like to hand over the baton to our CMD, Mr. Viral Patel, for
Anand Sharma (Atlanta Electricals Ltd): remarks, over to you, sir.
Niral Rupeshbhai Patel (Atlanta Electricals Ltd): Thank you Anand bhai. Good morning, everyone. First of all, on behalf of entire Atlanta Electricals family, I would like to extend my warm wishes to all our investors, analysts and stakeholders for the upcoming Diwali festival. I wish you and your families a very Happy Diwali and a prosperous New Year. The first half of FY '27 has presented its share of challenges. While Q1 is traditionally a seasonal seasoned softer quarter for our business, Q2 witnessed additional headwinds of elevated commodity prices and adverse weather conditions, which impacted our operating performance and execution schedules. Despite these challenges, we delivered healthy growth in revenue and profitability during H1 FY '27, reflecting our underlying strength of our business, sustained demand across key markets. With operations having normalized, our focus remains on accelerating execution and improving performance during the second half of the financial year. Looking at the broader industry, we continue to believe that at India's power infrastructure sectors represents a significant multi-year growth opportunity. Sustained investments in transmission and distribution networks, renewable energy integration, battery energy storage systems, data structures data center infrastructure, are driving the demand for higher capacity and technological advanced transformers. At Atlanta Electricals, our strategy is centered on strengthening our position in evolving industry through capacity expansion, technological advancement and product diversification. Our key priority remains at remains a transition towards 400 and 765 kV transformer categories, which will expand our addressable market and enable participation in larger and more technically demanding transmission projects. [cough] Alongside this, our investments in our dedicated inverter duty transformer facility, the tank and radiator backward integration project will strengthen our manufacturing capabilities, improve supply chain reliability, and long-term operational efficiencies. Our other development has our other important development has been in our entry into the US market with our first order making a significant milestone in the international expansion strategy. We continue to see opportunities across international markets and remain focused on our aspiration for exports to contribute approximately 15% of our over revenue overall revenue within the next couple of years next two years. Coming to our our outlook. Our strong order book, healthy inquiry pipeline provide encouraging revenue visibility. While commodity prices volatility, temporarily affected the pace of order finalization in Q2, we continue to witness healthy customer interest across our key business segments. We remain committed to our previously outlined three-year revenue growth aspiration of approximately 40% CAGR, while maintaining a disciplined approach towards profitability, capital allocation, and execution. Our immediate focus during H2 FY '27 will be on strengthening execution, improving capacity utilization, advancing our strategic investments, and converting our inquiry pipeline into firm orders. We believe that the combination of strong industry demand, expanding manufacturing capabilities, higher voltage product development, and increasing international opportunities positions Atlanta Electricals well for sustainable long-term growth. I would like to thank our employees, customers, business partners, and shareholders for their continued trust and support. With that, we conclude our opening remarks and we are now open the floor for questions. Thank you, everyone.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use headsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Tina Virmani from Motilal Oswal. Please proceed.
Tina Virmani (Motilal Oswal): Hi, sir. Good morning, and my my first question is related to the 765 kV plant. You mentioned that there are some delays in finalization of the tech partner over there. So what would be the status of ramp up of this 765 kV plant? This could be my first question.
130 more turns of this transcript: log in to Stocksigma to read the full call.