HPL Electric & Power Limited , a leading player in the electrical equipment sector, has reported mixed results for the first quarter, with challenges in its smart meter business offset by strong performance in its consumer segment.

Revenue Decline Amid Smart Meter Delays

The company experienced a 2.50% year-on-year decline in consolidated revenues for Q1. This decrease was primarily attributed to delays in smart meter dispatches, which were affected by monsoon disruptions and slower execution by Advanced Metering Infrastructure Service Providers (AMISPs). Despite these setbacks, the company maintains a robust smart meter order book of over ₹3,000.00 crore, indicating strong future potential in this segment.

Consumer & Industrial Segment Shines

In contrast to the challenges faced in the metering business, HPL Electric's Consumer & Industrial segment demonstrated impressive growth:

• Overall segment revenue increased by 16.00% year-on-year
• EBIT (Earnings Before Interest and Taxes) grew by 23.00%
• Segment margins crossed the 11.00% mark
• Wires and cables sub-segment saw a remarkable 35.00% growth

This strong performance in the Consumer & Industrial segment helped to partially offset the revenue decline in the metering business.

Profitability Improvements

Despite the revenue challenges, HPL Electric reported improvements in profitability metrics:

• Gross margins expanded by 230 basis points
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin improved by 85 basis points
• PAT (Profit After Tax) increased by 8.50% to ₹18.50 crore

These improvements reflect the company's focus on higher-margin products and realization of scale benefits.

Future Outlook

HPL Electric remains optimistic about its future prospects:

1. The company expects sequential improvement in Q2, with stronger momentum anticipated in the second half of the fiscal year.
2. Management reported good performance in July, indicating a potential turnaround in the smart meter business.
3. For the Consumer & Industrial segment, HPL Electric has set an ambitious target of crossing ₹1,000.00 crore in revenue by FY28.
4. The company aims to expand its retail network to 100,000 retailers by FY26, up from the current 85,000.

Working Capital Improvements

HPL Electric has made significant strides in improving its working capital position:

• Debtor days reduced by 28 days over the past 12 months
• Net working capital decreased by ₹60.00 crore despite sales growth

These improvements are expected to enhance cash flows and overall financial efficiency.

Conclusion

While HPL Electric faced headwinds in its smart meter business during Q1, the strong performance of its Consumer & Industrial segment and overall profitability improvements demonstrate the company's resilience. With a substantial order book in smart meters and ambitious growth plans for its consumer business, HPL Electric appears well-positioned for future growth, provided it can navigate the near-term challenges in smart meter execution.

Investors and stakeholders will be keenly watching the company's performance in the coming quarters, particularly for signs of recovery in the smart meter segment and continued momentum in the Consumer & Industrial business.

HPL Electric & Power Ltd (NSE: HPLE), a leading Indian manufacturer of low-voltage electrical equipment, has reported robust financial results for the first quarter, while outlining an ambitious multi-year growth strategy focused on smart metering, government electrification projects, and increased export activities.

Financial Highlights

For Q1, HPL Electric & Power reported:

• Consolidated revenue of ₹383.03 crore, a slight decrease of 2.51% year-over-year (YoY)
• EBITDA growth of 3.32% YoY to ₹57.99 crore, with EBITDA margin expanding by 85 basis points to 15.14%
• Profit After Tax (PAT) increase of 8.51% YoY to ₹18.48 crore
• Earnings Per Share (EPS) growth of 8.3% to ₹2.87

Segment Performance

The company's performance was marked by strong growth in its Consumer and Industrial segment, which offset a decline in the Metering and Systems segment:

• Consumer and Industrial segment: Revenue grew by 16.12% YoY to ₹179.09 crore, with EBIT rising 22.95% to ₹20.16 crore
• Metering and Systems segment: Revenue declined by 7.62% YoY to ₹217.87 crore on a standalone basis, primarily due to lower execution and delayed dispatch clearances in certain large projects

Strategic Growth Initiatives

HPL Electric & Power is positioning itself for multi-year growth through several key initiatives:

1. Smart Metering Focus: The company is capitalizing on India's smart metering transformation, with 99% of its metering order book dedicated to smart meters. This aligns with the government's push for advanced metering infrastructure.

2. Government Electrification Projects: HPL is actively participating in various government-led electrification initiatives, leveraging its strong position in the metering and power systems market.

3. Export Expansion: The company is increasing its focus on export activities to diversify its revenue streams and tap into global markets.

4. Product Innovation: HPL continues to invest in R&D across all product lines, with a particular emphasis on switchgear and lighting segments to maintain its competitive edge.

5. Order Book Strength: The company maintains a robust order book exceeding ₹3,000 crore, providing strong revenue visibility for the coming quarters.

Management Commentary

Mr. Gautam Seth, Joint MD & CFO of HPL Electric & Power, commented on the results and strategy: "Our Q1 performance reflects disciplined execution and our focus on growth. While revenue moderated slightly year on year, profitability improved across the board. The Consumer and Industrial franchise provided the primary uplift, with net revenue up 16.12% and EBIT up 22.95%, helped by offtake in domestic switchgear and wires and cables, and tighter operating discipline that widened margins."

He added, "Unlike other meter-centric peers, whose performance hinges on rollout milestones, our Consumer and Industrial vertical aligns with India's real economy across B2B capex and B2C replacement cycles, anchoring a diversified model that participates at the shop-floor and household level, and thereby delivers broader, more granular growth with a stronger, more durable earnings mix."

Future Outlook

HPL Electric & Power is well-positioned to benefit from India's ongoing electrification drive and the push towards smart grid technologies. The company's diversified product portfolio, strong order book, and focus on innovation are expected to drive sustainable growth in the coming years.

As the company continues to execute its multi-year growth strategy, investors and industry observers will be watching closely to see how HPL Electric & Power capitalizes on the opportunities in the evolving Indian electrical equipment market.