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HPL Electric & Power Ltd

| Q2 & H1 FY2026 Earnings Webinar Transcript

BULLISH SENTIMENT

Report Source

⬤18th Nov 25

Summary : HPL Electric & Power sees strong H2 FY26 growth driven by accelerating smart meter execution and robust Consumer & Industrial segment performance, supported by a healthy order book and improved margins.

Management Perspective positive : Management expressed pleasure with the strengthening business model, confidence in H2 execution, and optimism for future growth across segments. They highlighted strong order books and strategic investments.

Concall Report Analysis & Insights

Business Overview

  1. HPL's balanced business model is strengthening, with C&I contributing 47% of revenue.
  2. C&I segment grew 30% in Q2 and 23% in H1, driven by wires, cables, switchgear, and lighting.
  3. Metering & Systems has an order book exceeding ₹3,300 crore, 99% of which are smart meters.
  4. Smart meter execution is normalizing, with Q2 uptake improving 12% sequentially.
  5. Segment EBIT margins for metering improved to 17.5% due to pricing discipline and product mix.

Future Growth Prospects

  1. Expect significant step-up in smart meter deliveries from November to March FY26.
  2. C&I business, especially wires and cables, continues strong double-digit growth.
  3. Company aims to double its C&I business within three years through portfolio expansion.
  4. Smart metering offers strong medium- to long-term growth potential with a healthy pipeline.
  5. Fans division will launch in the Indian market by December, targeting 70-80% market presence.

Management Insights

  1. Management is pleased with the strengthening balanced business model.
  2. The smart metering order book provides multi-year execution visibility.
  3. HPL has expanded smart meter assembly and key component capabilities.
  4. Ongoing investment in the HPL brand aims to drive quality growth and pricing power.
  5. The Havells settlement is positive for both parties, resolving a 40-year dispute.

Signs of Skepticism

  1. Specific details on the Havells settlement amount for the listed company are not yet disclosed.
  2. Management cannot predict which segment will clearly lead in 3-5 years.
  3. Specific new product details are not being shared on the call, to be provided offline.
  4. Cannot commit to further margin improvements, sustaining current levels is a good achievement.
  5. Future stability of sourcing prices and component volatility cannot be assumed.

Risk Factors

  1. Temporary moderation in metering revenues due to timing-related issues.
  2. Smart meter execution slowdown attributed to lack of skilled installation manpower.
  3. Geopolitical events could impact exchange rates and electronic component prices.
  4. Wires and cables segment is commoditized, affected by copper price volatility.

Good To Know

  1. The conference call covered Q2 and H1 FY26 earnings.
  2. The smart meter target was extended from March 2026 to March 2028.
  3. Cumulative smart meter installations are approximately 4.5 crore.
  4. HPL's C&I segment revenue split is 40% switchgear, 40% wires/cables, 20% lighting/fans.
  5. HPL has a complete solar portfolio but no plans to manufacture solar panels.

Key Drivers

  1. Smart meter execution accelerating in H2.
  2. C&I segment strong double-digit growth.
  3. New fan product line launching in India.
  4. Improved working capital and cash flow.

Key Analyst Discussions

Competitive Environment

  1. HPL supplies to almost all AMISP players in the smart metering universe.
  2. Company focuses on quality and technology, not price-cutting competition.
  3. HPL's market share in C&I is not high, indicating significant growth headroom.
  4. Metering is becoming a buyers' market, benefiting volume players with better pricing.

Market Trends & Consumer Behavior

  1. Consumer complaints about smart meters are localized and being addressed.
  2. Government is pushing rooftop solar adoption, requiring net meters.
  3. Structural tailwinds include electrification, urbanization, and digitisation.
  4. Smart meter benefits will eventually overcome initial public resistance.

Financial Highlights

  1. Q2 C&I segment grew 30%, H1 grew 23%.
  2. Metering segment EBIT margins improved to 17.5% in Q2.
  3. Expect Q3 to be better than Q2, with Q4 showing stronger growth.
  4. Targeting ₹1,900-₹2,000 crore topline for the current fiscal year.
  5. Debtor days improved to 125 days, 50-60 days better than March.

Product Composition

  1. C&I segment contributed 47% of total revenue in H1.
  2. C&I revenue mix is expected to settle around 45% in H2 FY26.
  3. C&I segment split: 40% switchgear, 40% wires/cables, 20% lighting/fans.
  4. Fans division to launch in India by December, aiming for 70-80% market presence.

Strategic Considerations

  1. Order book of over ₹3,300 crore provides multi-year visibility.
  2. Most capex for metering capacity enhancement is now complete.
  3. Aim to double C&I business in three years via channel expansion.
  4. Developing smart meter software solutions beyond hardware.
  5. Havells settlement does not alter HPL's operating freedoms.
HPL Electric & Power Ltd (HPL) Concall Report Analysis & Insights | Dhanarthi