GENSOL - Gensol Engineering Limited Share Price

Outlook and Major Points from Gensol Engineering Management (Q3/FY25):

1. Solar EPC Growth:

• Order Book Strength: Solar EPC order book stands at INR 7,000 crores (80% turnkey projects, 20% balance of system). Recent large-scale project wins (e.g., NTPC, Gujarat projects) highlight strong momentum.
• Execution Focus: Delays in Q3 due to weather and land handover issues are expected to resolve, with accelerated execution in Q4 and FY26.

2. Expansion into Energy Storage & Green Hydrogen:

• Battery Storage (BESS): Secured orders from GUVNL, actively pursuing new tenders in India's growing storage market.
• Green Hydrogen: Positioned to capitalize on opportunities as the sector evolves.

3. EV Leasing & Manufacturing:

• Leasing Growth: Assets under management reached INR 850 crores. Strategic asset transfer to Refex (INR 315 crores debt reduction) to deleverage the balance sheet.
• EV Manufacturing Breakthrough: Over 30,000 pre-orders for electric vehicles (EZIO for ride-hailing, EZIBOT for cargo). Production to commence in FY26 with a slow, quality-focused ramp-up.

4. Financial Performance:

• 9M FY25: Revenue up 42% YoY (INR 1,056 crores), EBITDA surged 89% (INR 246 crores), margins expanded to 23.3%.
• Q3 Challenges: Slower execution impacted margins (lower-margin projects dominated), but Q4 expected to rebound with higher turnkey contribution.

5. Debt Management:

• Refex Transaction: Reduces debt by INR 315 crores; similar deals planned to further deleverage.
• Net Debt-Free Goal: Targeting significant debt reduction over the next 6"“12 months via asset sales and working capital optimization.

6. Outlook:

• Solar EPC: Robust pipeline and government support (INR 27,000 crores MNRE budget) to drive sustained growth.
• EV Vertical: Leasing profitability achieved; manufacturing to scale cautiously in FY26, supported by strong pre-orders.
• Margins: Improvement expected as turnkey projects dominate execution.

Management remains confident in India's renewable energy transition and Gensol's role as a diversified clean energy leader.

Question 1:
"Our guidance for this year was around INR 2,000 crores. But looking at first 9 months, we are very much behind the guidance... Why are we not able to execute the numbers that we are guiding to the investors?"
Answer: Anmol Singh Jaggi attributed slower execution to extended rainfall delays and delayed land handovers from customers. He assured that these projects would spill into subsequent quarters, maintaining a "higher than industry average" growth rate (~42% YoY in 9 months FY25) and emphasized confidence in long-term execution.

Question 2:
"How is Q4 looking, and where do you see FY24 ending in terms of top line?"
Answer: Anmol indicated Q4 would see improved execution with land issues resolving, though he refrained from specific guidance. He reiterated the focus on sustaining the 42% YoY growth rate, with Q4 traditionally being the strongest quarter due to spillover projects.

Question 3:
"Why did margins dip significantly in Q3?"
Answer: Lower margins were due to a higher share of lower-margin "balance of system" projects (vs. turnkey) in Q3. Anmol highlighted that 80% of the INR 7,000 crore order book comprises higher-margin turnkey projects, which will drive margin improvement in future quarters.

Question 4:
"Any solar projects completing this year? Provide completion dates for recent EPC contracts (e.g., INR 968 crore)."
Answer: The 275 MW, 245 MW, and 225 MW projects secured in Q3 have 18-month completion timelines from signing dates (Nov 2024"“Jan 2025). Anmol confirmed completion of smaller projects (e.g., for a textile client and eastern India projects) in Q4 FY25.

Question 5:
"Why are 40 GW renewable projects failing to attract bidders? How does this impact Gensol?"
Answer: Anmol clarified this issue pertains to developers, not EPC contractors like Gensol. He emphasized that 80"“90% of Gensol's order book involves A-rated clients with secured PPAs and financial closures, insulating the company from such risks.

Question 6:
"Explain the process for transferring 2,997 EVs and INR 315 crore debt to Refex."
Answer: Gensol will sell these vehicles to Refex, which will finance the purchase. The transaction will deleverage Gensol's balance sheet by repaying lenders. Refex is finalizing financial closures, with completion expected by Q4 FY25 or Q1 FY26.

Question 7:
"Timeline for Ezio production and capital adequacy?"
Answer: Production will start in FY26 after advanced testing, with a slow ramp-up (e.g., 100 vehicles initially). No advances have been taken yet; finalized orders and advances will follow production readiness. Capital is deemed sufficient for gradual scaling.

Question 8:
"Q3 margins were low. Will Q4 margins improve?"
Answer: Margins will improve in Q4 due to higher contribution from turnkey projects, though not fully offsetting earlier dips. Long-term margin confidence stems from the turnkey-heavy order book.

Question 9:
"When will promoter pledge (81.7%) reduce to 0?"
Answer: The Refex deal will reduce pledged shares by INR 300 crore. Similar future transactions and organic deleveraging (via EV asset sales) will further lower pledges, though no specific timeline was committed.

Question 10:
"When will EV manufacturing (Ezio) generate revenue?"
Answer: Production starts in FY26, with revenue contribution likely in FY27. Initial batches (100"“200 vehicles) will prioritize customer feedback, ensuring slow, steady scaling rather than rapid commercialization.

Question 11:
"Current liquidity (unencumbered cash) and non-fund-based limit utilization?"
Answer: Total liquidity is INR 250 crore (half unencumbered), with INR 350"“400 crore available via working capital limits. Focus remains on converting fund-based debt to non-fund-based instruments (e.g., letters of credit).

Question 12:
"Plan to achieve net debt-free status in 6 months?"
Answer: Refex's INR 300 crore debt transfer and similar future EV asset sales aim to eliminate EV leasing debt. Solar working capital debt (~INR 300 crore) will shift to non-fund-based limits, reducing net debt significantly.

Question 13:
"Breakdown of EV leasing revenue (parent vs. Let'sEV subsidiary)?"
Answer: FY25 EV leasing revenue is INR 280"“300 crore. Post-subsidiary formation, all new leasing occurs via Let'sEV. Legacy Gensol leasing revenue reflects pre-subsidiary assets, with no overlap post-incorporation.