| Q3 FY26 Earnings Conference Call
Summary : Borosil Renewables reported strong Q3 FY26 results with significant sales and EBITDA growth, driven by increased selling prices and robust domestic demand, while planning a 60% capacity expansion amidst supportive government policies and import competition.
Management Perspective positive : I'm happy to report that the company has been able to achieve significantly better sales and EBITDA for the last few quarters on the back of improved domestic operations. We are very satisfied and comfortable that the government is doing every single thing possible to increase solarization and deployment of solar energy in the country. We assure that from our side, we will do our very best to continue to run the company professionally and efficiently.
Concall Report Analysis & Insights
Business Overview
- Achieved all-time high quarterly sales of INR386.5 crores, up 40% year-over-year.
- EBITDA jumped 518% to INR129.04 crores, representing 33.4% of sales.
- Average ex-factory selling price increased to INR149.97 per millimeter from INR104.54.
- Exports accounted for 5.4% of turnover, with EU, Turkey, and USA markets facing challenges.
- German subsidiary Geosphere filed for insolvency; financial impact deconsolidated.
Future Growth Prospects
- India's module manufacturing capacity is expected to rise to 200 gigawatts by 2027.
- Indo-European Union free trade agreement could boost solar module exports from India.
- ALMM-II (June 2026) mandates domestically produced solar cells, ALMM-III (June 2028) mandates local ingot/wafer.
- Company is expanding capacity by 60%, with new furnaces expected by Q4 FY27.
- Domestic solar glass demand is 55 gigawatts, with 70% currently met by imports, offering significant substitution scope.
Management Insights
- Company achieved significantly better sales and EBITDA due to improved domestic operations.
- Domestic demand remains steady despite challenges faced by module manufacturers.
- Management is cautious about rapid capacity expansion to ensure proper management of resources.
- Input costs are currently stable, with efficiency gains offsetting minor price increases.
- Government is actively supporting solar sector growth and increasing solarization in the country.
Signs of Skepticism
- Management's 'personal guess' that module capacity utilization will reverse and increase, contrary to conventional wisdom.
- Optimism that government and industry will find solutions for potential solar cell overcapacity issues.
- Uncertainty regarding the government's future actions on solar glass import duties from Malaysia.
Risk Factors
- Anticipated changes in GST and prolonged monsoon challenged solar module manufacturers.
- Overcapacity concerns in module manufacturing could have future repercussions.
- CVD on imports from Malaysia is set to expire, potentially increasing import competition.
- Poaching of expert personnel due to increased new entrants in the industry.
- Potential delays in commissioning new furnaces due to project complexities and monsoon.
Good To Know
- The German subsidiary, Geosphere, has been deconsolidated, and no further financial impact is expected.
- Power and fuel costs constitute approximately 32% of the total cost of production.
- Renewable energy deployment at the plant is expected to save INR1.25 crores per month.
- The company expects to achieve at least 6% volume growth compared to last year's 9 months.
- Targeted Return on Capital Employed (ROCE) after 4,600 expansion is expected to be upwards of 25%.
Key Drivers
- Strong domestic solar glass demand.
- Government's supportive ALMM policies.
- Indo-EU free trade agreement potential.
- 60% capacity expansion by FY27.
Key Analyst Discussions
Competitive Environment
- 70% of domestic solar glass consumption is currently met by imports.
- Malaysian imports became significant after anti-dumping duties on China and Vietnam.
- Pricing difference between Indian and Malaysian/Vietnamese products is 3-4% below Chinese landed cost.
- Malaysian domestic players have increased capacity for exports to India.
Market Trends & Consumer Behavior
- Domestic demand for solar glass continues to be steady.
- Increasing adoption of battery energy storage systems is observed.
- Government policies like ALMM-II and ALMM-III are driving domestic manufacturing.
- Government is actively working to increase solarization and deployment of solar energy.
Financial Highlights
- Rupee depreciation had only a marginal, not significant, impact on selling prices.
- Raw material and fuel costs are currently stable, with efficiency gains offsetting minor increases.
- Volume growth for the first 9 months was about 6% up year-over-year.
- Revenue is expected to be flat until Q4 FY27, then increase by 60% with new capacity.
- No further equity dilution is planned, as cash accruals will fund expansions.
Strategic Considerations
- Further capacity expansion depends on strong demand and managing talent poaching.
- German subsidiary insolvency process is ongoing; deconsolidation completed.
- New furnace commissioning is targeted for December '26, with 3 months for stabilization.
- Solar glass prices are expected to remain stable due to minimum import price regulations.
- Government is expected to find solutions if domestic solar cell supply lags module demand.