Diamond Power Infrastructure Ltd (DIACABS) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Diamond Cable Q2 FY27 and H1 FY27 earnings conference call hosted by Monarch Networth Capital Limited. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Alok Shah from Monarch Networth Capital. Thank you, and over to you, sir.
Alok Shah (Monarch Networth Capital Limited): Yeah, thank you, Alick. Good morning to everyone. We welcome you for Diamond Power Q2 FY27 and H1 FY27 earnings con call. Today we are joined by Mr. Amit Bhatnagar, Head Corporate Strategy, and Mr. Kuldeep Thakkar, the Chief Financial Officer, to take us through the numbers and the performance year-on. Without taking much of your time, I would hand over the call to Bhatnagar, sir. Over to you, sir.
Amit Bhatnagar (Diamond Power Infrastructure Ltd): Good morning, everyone, and thank you for joining the Diamond Power earnings call for the second quarter and the first half of financial year 26-27.
Amit Bhatnagar (Diamond Power Infrastructure Ltd): I'm Amit Bhatnagar and with me on the call are, Mr. Umesh Chhaya, Whole Time Director, Mr. Kuldeep Aker, CFO, Mr. Ashwani Saraf, the Chief Operating Officer, and the members of the senior management team. We will keep the opening remarks a little short so that we have ample time for your questions. Let me start with the headline. This was Diamond Power's first 1,000 crore quarter. Revenue from operations for Q2 was Rs. 1032 crores, up 135% over the same quarter last year and up 50% sequentially. EBITDA including other income was 133 crores up 189% at a margin of 12.9%. Profit after tax was 108 crores, against 28 crores a year ago. That is 3.9 times. Earnings per share for the quarter was 1.87 rupees. For the half year, revenue was 17 1722 crores, EBITDA at 218 crores, and PAT at 166 crores. I would ask you to hold two numbers in mind. First is, in 6 months we have delivered 90% of last year's full year revenue. Second, our H1 profit of 166 crores is already higher than the rupees 158 crores we earned in the whole year in the financial year '26. You will see eight consecutive quarters of growth. Two years ago in the Q2 FY '25, we reported a revenue of 307 crore and a PAT of 6 crore. This quarter revenue is 3.4 times that and PAT is 18 times. The scale of the company has changed every single year and it's still changing. Three things drove the quarter and I want to be specific about each. First, the product mix. Growth came from medium-voltage cables at 11 and 33, and to the 66kV EHV, and from AL 59 conductors, the segment is where qualification matters and fewer manufactures compete. Cables were 40% of the revenue, conductors was 31% and the remaining was data center cables. Secondly, a new product line that did not exist in quarter 1, data center cables from our newly commissioned copper cable line contributed 242 crores or 23% of the quarter's revenue, supplied to EPC contractors building hyperscale campuses including L&T, Orient Growth, Sterling Wilson and Bluestar. Three months ago, this line was zero. Copper capacity of 1,500 tonnes a month is live and is being scaled to 2,500. I want to dwell on September for a moment because it shows what this platform can do once it is funded. The QIP funds came into the company in August. In September, the very next month, we achieved record production of 575 crores plus GST. Of that, our team made and delivered 240 crores of data center cables in a single month. That is a historic month of production and sale for the company and it was done with these lines, the same people, and the systems we already have in place. Third, operating leverage. Employee and other expenses came down to 5.7% of revenue from 8.2% a year ago. That is why EBITDA margin expanded from 240 basis points even though the contribution margin as a percentage move from 18.7 to 16.9. The reason for that percentage move is simple. Higher LME, aluminium prices inflate the revenue base. Our contracts carry price variation clauses so the absolute contribution per tonne is protected. We manage the business on rupee per ton and per kilometer and not on a percentage of metal. I want to be careful about one thing here because this is a quarter in which every cable company in India is reported a big top line number and a good part of that is metal. On LME aluminium is roughly a fifth of a quarter on a year ago and the copper is up around 40%. And because our contracts pass through metal through, the revenue lines carry that inflation. So the honest question for any cable company this quarter is how much of the growth is metal and how much is real. Please remember, Diamond Power's major input is aluminium. If you read the analyst updates on the listed peers, you will see the answer for the industry. Our revenue grew by 135%. Metal and price variation pass through account for perhaps a third of that. The rest is real. On actual production, kilometers of cables and tons of conductors made and dispatched, our growth is well about 60 to 70% year-on-year basis. Conductor dispatches were 6,850 kilometers in the quarter. The data center line alone, which did not exist a year ago, delivered 240 crores of product in a single month. That is the difference between
Amit Bhatnagar (Diamond Power Infrastructure Ltd): company riding a metal cycle and a company adding capacity, qualification and customers, we are the latter. I would like you to judge us on volumes not on the rupee top lines. One more point on cost, since you will see it in it in the peer comparisons, Diamond Power does not spend 2 or 3% of sales on advertising and branding as consumer facing cable companies do. We sell business to business and business to electrical consultants, utilities, EPCs, data center builders, and industry. And in that market, for the long term period, only quality speaks. The industry is presently going through a cycle where quality is considerably compromised under the pressure of maintaining margins and volumes in B2C due to entry of newer players. For us quality is our brand and that is why our employee and other expenses are 5.7% of revenue and that is why our saving goes completely to the bottom line. Our other income is 18 crores is treasury income on QIP funds largely in fixed deposits and the tax remains negligible because of carry forward losses. The profit and loss tells half the story, the balance sheet tells the other half and in some ways it is more important one in this quarter. At 31st March this year our net worth was negative by 604 crores. At 30th September, it is positive by 764. Net debt of 527 crores has become net cash of 572 crores. Three events that made it happen. The QIP in July we completed and raised 614, 1614 crores entirely due to the fact that we need to we had to bring down our minimum shareholding. The promoters loans, as we mentioned in the last call, have been completely repaid, and most importantly, the profit which we are generating. The 12 crore of finance cost you see in this quarter is almost entirely LC discounting and bank charges on a much larger volume of business, a cost of trade not a, not an actual debt. The resolution plan in September was prepaid for full, 501 crores cash consideration, a year ahead of September 2027 deadline, availing a prepayment discount of almost 9.5 crores. The company has exited the NCLT mechanism completely, all plan payments are complete, lender NOC and release of charges are in process, and we are now eligible for a credit rating for fresh bank lines which are being tied up. Let me take you to our orders, customers, and the demand. Our firm order book at 30th September stands at 3,735 crores at quoted value and around 4,300 crores at current market prices under the price escalation clause. More importantly, it keeps growing while we execute it. Order inflow in H1 was 2,217 crores against a revenue of 1,722 crores, a book to bill of 1.29 times after 1.60 times in financial 2026. The book is 46% conductors including a 974 crore order of AL-59 for 800 kV HVDC line. That is a landmark project which the company is doing. With this quantum of almost close to 1,000 crore of HVDC, this will ensure that Diamond Power has all possible PQs which are required to reach out the TBCB players in the global market. 36% of medium voltage cables and the balance is LT and data center cables. The conductor strategy is unchanged from what I set out in the last quarter. The book is essentially of AL-59, HTLS, through RTS conductor partnership building behind it, and we are deliberately not chasing ACSR tonnage. Key wins in, in and around the quarter include additional MV and LT cable orders from Adani Electricity Mumbai, our third consecutive year of supplying, 66 kV EHV cable for a GETCO, GETCO project in Jamnagar, 1370 crores of 11 kV cables for PGVCL's coastal underground schemes and AL-59 conductors for TBCB supplies. We served around 670 customers in the first half of 2027 across utilities, EPC players, data centers, and industry. Adani Group entities
Amit Bhatnagar (Diamond Power Infrastructure Ltd): reverse auction basis. We have built a national marketing organization. We have put our city teams in place. We have put a key accounts group. We have now put a separate conductor desk. And more importantly, a separate export team which is drawn from most of the successful competitors who compete in the export market. I can assure you financial year 27-28 will contribute, a large contribution shall come from export. We have already put a very large distributor in place in UAE and Middle East. And also I can hap- happily report to you that this quarter Adani sales are less than 30% of our top line. So we are on track to build our customer profile as we had promised to you. We continue to be very bullish on the medium voltage cable segment. Last quarter I said that Diamond Power is becoming a medium voltage and increasingly an extra high voltage cable company with a premium conductor franchise besides it. Q2 bears that. 11 and 33 kV cables were 79% of our cable revenue outside data center. And 33 kV alone was our lar- our largest product line. I want to spend a few minutes on why we remain bullish on this industry, and we were as we were in August. I will take you through the important demand driver which we have discussed in the past and are now building out. First, the grid buildout. India is in its largest ever transmission investment cycle, and for us, that is the conductor business. 46% of the order book, which is 17 and 18 crore, 1,718 crore. In the last year, we have supplied over 40,000 km of conductor to TBCB developers and to Power Grid. As I mentioned to you, the single largest order this year is HVDC 800 kV. And we have a long-term backup arrangement with TBCB suppliers so that their wins flow to us. In the last quarter, the important thing we have done is because the number of TBCB players in the un- industry is growing substantially, we have now started a back-to-back arrangement which is pre-bid, which assures us that we get orders when the TBCB bid is awarded to a player. Second, I'll talk about the renewable eva- evacuation. The clearest example is Khavda, in Kutch, the world's largest renewable park, where our AL-59 conductor carries the evacuation, and our cables run inside the Adani Solar Park. Beyond Khavda, solar is now a product line of our own. 3.3 kV solar cables were 39 crores in Q2 and are 221 crores on the firm order book position from key dev- developers like Tata Power Solar, which we have now classified as a key account in the October, considering the fact that we're expecting very large order inflows from Tata Power. We are now a dedicated servicing team from for Waaree, ACME, Cleantech, Enrich. Demand from solar parks is strong enough that we are building a 1,000 km a month single-core 3.3 kV cable plant, which will get on stream in the next 18 months. Third demand driver is underground cabling, and this is where our MV cables go. Medium voltage cables are 1,328 crore of our order book position, which is 36%. In Mumbai, Adani Electricity has placed a 152 crore LoA on us. According with accordingly with that, we have PGVCL related contractors who have ordered almost 195 crores of these cables in the last quarter itself. Our 66 kV underground program is also on track. We've received 164.5 crore EHV order from Jamnagar and further 66 kV tenders are in pipeline, and we're expecting a good inflow on 66 kV in the next 90 days. More importantly, we have now started working in newer markets like the south and the east. In Bengal, we have seen more than 5,000 km of 33 kV tenders which are now coming up. I'm sure with being a dominating player, we are, we shall be focusing on that market in a big way. In short, Diamond Power has now moved ahead of Adani and western India and northern India, and now the focus is pan-India. We desire to bring to build in a market which is equally segregated acor- across the geographies in India. Coming to the fourth, which is the data center. As I mentioned to you in the last quarter, we have made a dedicated data center team, and I can proudly tell you
Amit Bhatnagar (Diamond Power Infrastructure Ltd): most of the leading consultant in the data center space, now Diamond Power is approved and we are now the preferred vendor, considering the fact that we delivered 240 crores of data center cable in one single month in September. The fifth is the industrial capex. The Yamuna Expressway, Mundra Port, Delhi International Airport, NTPC Vindhyachal, the bio-CNG plant at Jhajjar for Reliance. These are some examples of the clients which we have worked on. Our recent 132 kV supply to Siemens India, Tuticorin Port and Indian Oil Tanking, is a validation of how we are now panning across the market and dealing with very sensitive industries like port and refineries. Our industrial names this quarter was AM/NS, JSW, SAIL, Bokaro Steel and Serum Corporation of Serum Institute of India. So, we are now across the spectrum, across the industry. Green hydrogen and offshore cables is something which we are now focusing upon and I can assure you that we will be able to share with you some good news on these markets very shortly. We are also focusing on EHV cables in a very big way and we are now focusing on exports and especially exports in medium voltage and extra high voltage. We have already started building our Middle East market and now we are working on pre-qualifications in Europe and US market. It is worth remembering that nine of the world's top 10 cable manufacturers are manufacturers who make MV and EHV cable. Scale in this industry is one on medium and extra high voltage where qualification and trust takes years to build, and that is precisely where we have spent the last 3 years building it. Now coming to our capex and what infrastructure we are building. This is what we called building the next Diamond. I will spend some more time on this section than usual because two things are new since the last call. We have ordered a sixth CCV line and we have frozen the design of a polymer compound backward integration, which will be the real differentiator between us and any other cable company in the country. Let me start with polymers because this is the project investors have asked us most about. The insulation and sheathing compound is between 35% to 40% of the cost of a cable, more than that the conductor material in most of the constructions. We already make our own PVC compound in-house. What we have never made and what no Indian cable manufacturer makes today is the cross-linked polyethylene polymers for cables above 66 kV. Most of the peers make compounds up to 33 kV. We are setting up an integrated polymer complex, which is INR170 crore of investment at in a 1.5 lakh square feet building with no land cost because the lands land already we have. The combined capacity of the project will be 84,500 tonnes. The Phase 1 is six compounding lines, which will cost us INR78 crores, two PVC lines, two silane lines, one masterbatch line and one perry of peroxide based lines with a capacity of 66,500 tonnes a year. They will make PVC, FR, FRLS sheathing compound, bedding compounds, silane XLPE for 1.1 to 11 kV and peroxide for 33 kV. All of Phase 1 output is captive. It replaces the compound we buy today. The PVC and Catalyst line commission first and the full phase is on steam to be commissioned between June and December 2027 progressively. Phase 2 is the is the masterpiece in the entire investment of capex which Diamond is making. It is a Swiss engineered reciprocating line, the same low-shear mixing platform that global compound makers use, making super-clean peroxide XLPE insulation for 66, 132, 220 and 400 kV lines. This is going to be 18,000 tonnes capacity. The line is bought with its know-how package, its formulation and its cleanliness acceptance and it commissions in early 2028 after the pilot trials on our own raw materials. And the most important part here is super-clean. When we say super-clean, the compound has zero impurities and there is nothing which is impure 100 less than 100 microns. In EHV cables, the electrical field concentration is very important and
Amit Bhatnagar (Diamond Power Infrastructure Ltd): approved the compound and the compound itself is a brand and a pre-requisite for making that cable from the end customer. And this is where Diamond's investment in EHV compounding plant, the first of its kind, and probably the sixth of its kind in the world will make us the differentiator among everybody else. Presently we have certain data which tells us that in this compound the margin is more than ₹50 a kg and at our current volumes this will re-leave an additional EBITDA of 120 crores when we use it on a captive consumption basis and that is going to be a major impact on us. The project model shows a 30% post-tax IRR on a consolidated basis. This project is being funded by 78 crore funding from the GCP account of the QIP and 100 crores from internal accruals and a small amount of debt if we feel we need to get it. The other projects we are already running is the balancing equipment project, the doubling of the copper cable capacity, the 5th and 6th CCV line which is going to get commissioned, and these are very important projects because all these projects are very long term and we already have the equipments virtually in place. Our LV cable project as promised is going to be commissioned before April 2027 which will get us a very large inroad into LV cables. Additionally, the single-core cable project which targets the solar infrastructure is already on stream. On our last call, we indicated in FY '27 our revenue will be 4,300 crores to 4,500 crores. We are still standing by with that number, with 1,722 crores delivered in H1, we have to get you 2,580 crores in H2. The season itself is half as strong. As my new CFO Mr. Tundir Thakkar told me yesterday that most of the cable companies do 40% of their revenue in quarter 1 and 2 and 60% coming in quarter 3 and 4, I'm sure his analysis and our capacity and understanding will stand good. Diamond Power is constantly now focusing on increasing the manpower bench strength. We have a new Chief Operating Officer and a new CFO, both of whom have a fantastic industry experience. We have now started working on succession planning and the Director's Office has been made, so that in the next five to seven years we get our gen next to come on board and start being part of the decision-making process in the company. To sum up, a first 1,000-year quarter, a half year that is already out earned all of last year, a balance sheet that has gone from negative net worth to a positive cash flow, a 3,735 crore order book position, and a capacity program that moves up step by step, voltage class by voltage class. I can only sum it up by saying Diamond Power is a five-decade-year-old company and it is at the best of the next decade. I want to thank our team and about and about 2,000 people at Vadodara and Diamond Power employees across the country and our sole shareholders for their existing confidence and the future confidence on us. Thank you very much for listening me out. Now we are open to questions.
Moderator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Nishant Bagrecha with InCred Capital. Please go ahead.
Nishant Bagrecha (InCred Capital): Yeah. Good morning, everyone. So, thank you for the opportunity. Firstly, congratulations to the entire team on crossing the 100 crore quarterly revenue milestone.
Amit Bhatnagar (Diamond Power Infrastructure Ltd): So, as we mentioned to you the market value of our existing orders is around 4,300 crores and we are targeting to do almost 2,500 crores till March. So, the remaining is obviously for the next financial year. On a on an average our order intake is between 350 to 400 crores, and always the H2 and H3 and H4 is the period when the order inflows increases considerably because all the budgeted tenders of the government gets finalized in quarter two and in the beginning of quarter three and that inflow comes to us through the EPC contractors. So, we are confident that by the time we end Q3, we will have 50% of next year's target in and by the time we end Q4, we will have the next year's order book with us.
99 more turns of this transcript: log in to Stocksigma to read the full call.