Highlights of the Concall

The consolidated net sale for Q4 degrew by 7% to Rs 300.64 crore. The net profit declined by 36% to Rs 11.05 crore.

Operating performance witnessed significant improvement in H2.

Q4 FY17 revenues grew by 32.1% QoQ driven by healthy growth across all 4 segments

Metering sales declined YoY due to lower take-off of metering orders by utilities. However, the situation has improved in Q4 FY17.

While Switchgear sales marginally declined YoY, margin witnessed improvement from 20.8% to 23.1% in FY17 due to better product mix

Lighting sales grew by 22% YoY in Q4 FY17, however FY17 sales were lower due to phase-out of CFL products and voluntary reduction of low margin business from EESL/projects. Increased focus on LED bulbs & luminaries helped in partially offsetting the impact of lower CFL sales

Wires & Cables sales grew by 5% YoY in Q4 FY17 along with improved margin from 5.1% to 8.1%

Strong order book of Rs 285.4 crore as on 31st March 2017. Metering orders of Rs 199.2 crore. Lighting orders of Rs 59.8 crore. Switchgear orders of Rs 21.4 crore. Wires & Cables orders of Rs 4.9 crore

Metering business set to witness traction in Solar Net Meters backed by Government's push for Solar power

Switchgear & Lighting business continue to benefit from government initiatives like IPDS, DDUGJY in the renewables space

The company's comprehensive product range stands to benefit from ‘Housing for All' – Affordable Housing initiative and implementation of RERA and PMAY which will lead to faster execution of and closure of ongoing projects

Advanced lighting solutions (including Lighting Electronics, Drivers, Ballast etc.) with integrated communication is set to present new business opportunities

With an increased focus on working capital efficiency, HPL has already signed 225 Channel Partners for ‘Dealer Channel Financing' which will reduce debtor days over coming quarters

The new plant in Assam, commenced on 30th March 2017, will have capabilities to manufacture range of Switchgears, Circuit Breakers, Fans, Wiring Accessories, Electronic Energy Meters

Significant deleveraging of Balance Sheet post the debt repayment of Rs 320.5 crore in FY17; with D/E ratio coming down from ~1.6x in FY16 to ~0.5x as of Mar-17. This should result in significant improvement in PAT Margin going forward

GST implementation will lead to smoother inter-state goods transport. This will reduce the number of warehouses (presently 125) and help in inventory rationalisation and lower working capital cycle

Meter business - total of 2.8 crore meter tender under validation by various entities, whose value can be around Rs 2000 crore.

The company has Rs 199 crore pending order from utilities for meter.

In meter, present situation is much better than last year.

Maximum drop in meter margin appears in Q4.

In FY16, 60 lakh meter sold. FY17-, 51 lakh meter sold

Light business - Bhopal smart city revenue will start from Q1 FY18. Margin here are better. Sale is not directly to govt.

Light business - The Company has kept out from low margin business. Good growth from LED seeing. This helps Lighting & Electronics business growth in Q4. Q4 sales number can be assume as base for growth gng fwd.

Light business – CFL contribution to the Light business sales was 22% in FY17 and it is coming down. Growth seen is due to LED and LED luminaries. FY18 - expects majority of business on LED.

Price has been big disruptor in light segment. Whenever price drop, the company has come with new model and tries to retain margin. Consolidation is happening in light industry.

FY18 - 13-14% EBIT margin expects in light business

Working Capital has gone up. There has been some payment from creditor side of Rs 129 crore which increased net working captial.

Q2 and Q3 FY18 will see remarkable changes in receivables.

Utility Debtors –. Now most of the states join UDAY. Expects some reform to happen which will reduce debtor days.

173 days total debtor days.

Gross debt is around Rs 362 crore. By end of Q2, substantial reduction in debt base on channel financing.

For FY18 capex – Rs 25 crore normal maintenance capex.

For FY18 – tax in FY17 region.

The mgmt expects good growth for non metering business with improvement or retain in margin.

Capacity of the company for meter is 90 lakh meter per annum.

Switchgears, Lighting & Electronics and Wires & Cables are all B2C business. In meter, 85% sales comes from utility and rest is B2C

Negative impact of demonetization has passed on.

The company sees growth coming around with various initiatives put by government.