Solex Energy Q4 FY25 earnings call

What moved the numbers, as management explained it

• 81% YoFY revenue growth driven by module capacity rising from ~1 GW to 1.5 GW and near-full utilization across the original line.
• Second production line slipped from January 2025 to March 2025 due to technology changes; cost an estimated ~₹135 cr of potential FY25 turnover vs. ₹800 cr target. (one-off)
• EBITDA margin lifted to 11.4% (vs. 9-11% guidance) as OEM volumes gave way to higher-margin Solex-brand modules, plus EPC mix and scale efficiencies.
• PAT margin rose to 6.4% from prior year on operating leverage; finance cost and depreciation profile not split out on the call.
• Inventory and receivables built up because raw material was procured for the second line before commercial production, and March sales (~₹135 cr) were largely uncollected at year-end.

The numbers management led with

• FY25 revenue: INR665 crores, +81% YoY
• Module production capacity by Oct 2025: 4 GW (1.5 GW existing + 2.5 GW new)
• Vision 2030 capacity: 15 GW module + 5 GW cell; ~$1 bn (INR8,500 cr) investment
• Cell + module expansion capex: INR1,500 cr (INR1,200 cr cell + INR200 cr module + INR100 cr WC)
• Overall debt trajectory: ~INR1,400 cr at peak (FY27), ~INR400 cr existing + INR1,000 cr new

Guidance on this call

By business

Balance sheet, capex and funding

• Existing debt ~₹150 cr; total debt projected to reach ~₹1,400 cr after the cell+module expansion (existing ~₹400 cr fund-based + new ~₹1,000 cr).; debt
• Customer advances ~₹55-58 cr on the balance sheet as of 31 March 2025, supporting working capital.; working_capital
• Current liabilities jumped to ₹62.25 cr (from ₹9.27 cr) on sundry creditors and customer advances of ~₹55 cr.; working_capital
• 2.5 GW module expansion capex ~₹190 cr, funded via ₹150 cr term loan and ₹150 cr working capital limit (₹100 cr fund + ₹50 cr non-fund).; capex
• Forward ₹1,500 cr capex for 2 GW cell + 2 GW module: ~₹1,000 cr debt + ~₹500 cr equity (equity raise planned in 2-3 months, possibly via subsidiary).; capex
• Standalone debtors split: EPC ₹69 cr, module ₹42 cr, total ~₹111 cr on 31 March 2025.; working_capital

The industry, as management sees it

Management views India module capacity (now 100+ GW vs 6 GW three years ago) as adequately matched to demand (28-30 GW/year installations), with a meaningful gap between nameplate and actual throughput. US is the next big export opportunity despite higher US-factory cost bases; ALCM on cells is expected to be deferred by government until domestic cell capacity ramps, mirroring the ALLM pattern of 2019-announce / 2024-impose.

Risks management named

• Single-client order book concentration (CRISIL flagged ~INR1,300 cr of INR1,450 cr from one client)
• Negative operating cash flow with rising receivables and inventory from March ramp
• 3-month delay in 800 MW line due to equipment/technology changes
• ESM/SME status and cooling period delaying mainboard migration
• Module commoditisation and Chinese capacity overhang (mitigated via cell-line + ALCM hedge)

Not answered directly

• Cell-line margin contribution (deferred to equity-raise event)
• FY30 revenue and profit numbers (deferred as too early)
• Receivables split between EPC and modules (data not available on call, later provided)
• Module-specific gross margin (data not readily available)

Asked for a number, answered without one

• EPC vs module receivables split: That data is not readily available. I'll tell my team to check and come back.
• Gross margin for 100% Solex-brand modules: We are not readily available with it; we will get back to you on gross margins.
• Cell-line revenue and margin contribution: I have not considered the cell numbers... at present the cell margins are very high. By the time the production comes, the margin will come down. We'll give exact numbers when we approach the market for raising equity.

Every question, with its answer

1. 1. FY26/FY27 revenue guidance

   Pranjal, Unknown

   Question. Earlier you had guided FY26 revenue at INR2,400 cr and FY27 at INR3,200 cr. Given the FY25 shortfall, are you revising or reaffirming this guidance?

   Answer, Vipul Shah, Director. We are not seeing any major issues for the current year. We are targeting turnover between INR2,200 cr to INR2,400 cr including EPC. With 1.5 GW for the full year and balance for six months, we feel we can achieve the projections. We don't think we need to do major changes — it can vary between INR2,200 cr to INR2,400 cr depending on market and price. Similar stance for FY27.

2. 2. Margins vs peers; order book; working capital

   Vikram, Unknown

   Question. Three questions: (1) Our EBITDA margin is ~10% but listed peers are at 15-16% — why the gap? (2) Do we have firm order book backing the INR2,200-2,400 cr FY26 guidance? (3) Why is operating cash flow negative with rising receivables and inventory?

   Answer, Vipul Shah, Director. Margin: we are at 11.5% EBITDA and 6.4% PAT, above our internal 9-11% / 5% estimates; sustainable for now depending on market dynamics. Order book: existing lines fully booked; firm orders for new lines too; many MSAs signed but PO signings tied to machine delivery schedules. CFO negative: inventory built for second line procurement before commercial production; March receivables spike of INR135 cr turnover + EPC mix caused debtor build, common Feb-Mar pattern industry-wide.

   Partly answered.

3. 3. Client concentration; capex & debt; commoditisation

   Hardik Gandhi, Unknown

   Question. Multiple questions: (1) CRISIL flagged single client concentration of INR1,020-1,300 cr of INR1,450 cr — who is this client? (2) INR150 cr debt on books — what's the capex plan and debt trajectory? (3) Will the cell expansion cause equity dilution and what is the timeline? (4) Forward revenue mix EPC vs manufacturing? (5) Sustainable PAT margin post-expansion? (6) Industry view: will modules commoditise in 1-1.5 years given huge capacity expansion and US Chinese competition?

   Answer, Chetan Shah, Chairman & Managing Director. Client concentration: this is the old CRISIL data; new orders have been published; small 3-5-10 MW orders are not announced; the large order is mapped to lines 3 and 4; dependency will come down to 40-50%. Capex: cell line INR1,200 cr + module INR200 cr + WC INR100 cr = INR1,500 cr; mix INR1,000 cr debt + INR500 cr equity. Timeline: 18 months from zero date. EPC: ~10-12% of revenue (INR200-300 cr). PAT margin: 6-7% range; should improve with scale. Commoditisation: industry has been commoditised for a while; nameplate vs actual gap; Solex differentiates on technology and reliability; cell line + upcoming ALCM will be a major edge.

   Partly answered.

4. 4. Capacity utilisation; ALCM cell sourcing risk

   Dhawal Bari, Unknown

   Question. Two questions: (1) What is current capacity utilisation and realisation per MW? (2) Post ALCM List-2, how will the company source cells if suppliers raise prices — won't this hurt margins? You are also not a DCR manufacturer and import cells.

   Answer, Chetan Shah, Chairman & Managing Director. Utilisation: 70-75% on existing lines; Solex runs two production lines 24/7 across three shifts. Cell sourcing: market is dynamic — any cell price rise gets passed through via change-in-law and dollar-linked clauses in all orders; this is standard industry practice. ALCM will be deferred because cell manufacturing capacity in India is insufficient; government has real-time data, so ALCM will only be implemented when domestic capacity exists, similar to ALLM 2019/2024 pattern. By the time ALCM kicks in, Solex will have its own cell lines.

5. 5. Advance payments; order book unit error; capex mix

   Karan, Unknown

   Question. Three clarifications: (1) Do you receive advance payments on orders? If yes, what %? (2) CRISIL shows order book INR1,450 cr but presentation shows INR1,756 million on page 28 — units error? (3) Confirm: capex INR1,500 cr with INR1,000 cr debt and INR500 cr equity?

   Answer, Chetan Shah, Chairman & Managing Director. Yes, all orders are backed by advances from customers, normally around 10%. The INR1,756 million in the PPT is likely a unit error — the rating agency number is the latest. Confirmed: capex INR1,500 cr with INR1,000 cr debt and INR500 cr equity. (Chetan adds the order book has since increased beyond CRISIL number.)

6. 6. Expansion delay; capex funding for 2.5 GW; factory visit

   Swamy, Unknown

   Question. Three questions: (1) Earlier the 2.5 GW expansion was expected in June but is now October — has the plan changed? (2) INR210 cr is needed for 2.5 GW expansion — how is it being funded and is the INR150 cr a loan or total capex? (3) Can I visit the factory?

   Answer, Chetan Shah, Chairman & Managing Director. No change in plan — only change in technology. New equipment is robotised/automated, requires extensive testing in China; shipment from July; commercial production from October. Capex for 2.5 GW is ~INR190 cr total; funded via INR150 cr term loan + INR150 cr working capital (INR100 cr fund + INR50 cr non-fund based). Factory visit welcome — share contact details; we'll allocate a slot between ongoing audits.

7. 7. Receivables split; 2.5 GW capex stage

   Kiran, Unknown

   Question. Two questions: (1) Can you split receivables between EPC vs module/cell? (2) What stage is the 2.5 GW capex at right now?

   Answer, Vipul Shah, Director. (1) Data not readily available; will revert. (2) Factory building complete; equipment orders placed; team currently in China inspecting equipment which is ready; shipment from July; lines 3 and 4 (2.5 GW) operational by October. (Vipul later in the call provided: standalone EPC debtors INR69 cr, module debtors INR42 cr, total INR111 cr; customer advances INR58 cr.)

   Not answered directly.

8. 8. EBITDA outlook; quarterly reporting; EPC strategy

   Chandrashekar, Unknown

   Question. Three questions: (1) Any scope to improve EBITDA from current 11.6%? (2) Will we get quarterly updates from this quarter? Are we on track for mainboard migration? (3) Is the slow pace on EPC intentional or can you go aggressive?

   Answer, Chetan Shah, Chairman & Managing Director. (1) Better EBITDA expected in days to come; efficiency and large-scale orders drive margin; Solex already at or above China factory levels; few listed peers, unlisted peers show similar or lower numbers. (2) Yes, quarterly numbers from Q1 FY26 (Apr-May-Jun); currently under ESM (SME platform) so mainboard migration delayed; once out of ESM there is a cooling period. (3) Focus is manufacturing, not EPC; will stay selective; EPC is a different domain and most of our customers are EPC companies themselves.

9. 9. 2.2 vs 2.5 GW; current liabilities spike

   Shubham Agarwal, Unknown

   Question. Two questions: (1) The expansion was reduced from 2.5 GW to 2.2 GW — why? (2) Current liabilities rose from INR9.27 cr to INR62.25 cr — what is the reason?

   Answer, Vipul Shah, Director. (1) 2.2 GW and 2.5 GW are the same — depends on whether you make 585 Wp TOPcon modules (2.2 GW) or 625-650 Wp G12R modules (2.5 GW); lines can produce both. (2) Increase in current liabilities is due to sundry creditors and customer advances; ~INR55 cr is customer advances which we classify under this head.

10. 10. Capex D/E mix; 2.2 GW delivery risk

    Mohsin Alam, Unknown

    Question. Two questions: (1) On the INR1,500 cr solar cell capex, is there a target debt-to-equity ratio? (2) The previous 800 MW line was delayed by 3 months — should we expect delays in the 2.2 GW line too?

    Answer, Vipul Shah, Director. (1) Mix is 2/3 debt, 1/3 equity. (2) No, things are taken care of this time; machines are ready, only inspection, shipment and installation remain; 4 months (June-Sept) are sufficient; we will stick to October commercial availability.

11. 11. Gross margin commentary

    Sarang Joglekar, Unknown

    Question. Gross margin expanded significantly YoY — what drove it and what are normal gross margins? Can you give module gross margins assuming 100% Solex brand?

    Answer, Vipul Shah, Director. Main reason for margin expansion: mix shift from OEM to Solex-branded modules plus scale and increased EPC contribution. EBITDA range has been 9-11% — we crossed that this year. On pure module gross margin, we are not readily available with the split; will revert separately.

    Not answered directly.

12. 12. Vision 2030 numbers

    Kunal Shah, Unknown

    Question. What revenue and profit are you assuming till 2030?

    Answer, Chetan Shah, Chairman & Managing Director. Too early to comment on 2030 margins and revenue; capacity and investment commitment already in public domain: 15 GW module + 5 GW cell by 2030, ~$1 bn (INR8,500 cr) manufacturing investment; we are going according to that commitment; being tech-driven, we mould ourselves to market situation in the best interest of company and shareholders.

    Not answered directly.

13. 13. Debt trajectory FY26/FY27; equity raise timing

    Aman Makhija, Unknown

    Question. Two questions: (1) What is the expected overall debt level over the next 2 years for capex? (2) INR500 cr equity — when are you planning to raise it? Will FY26 see INR300 cr and FY27 see peak debt?

    Answer, Vipul Shah, Director. (1) Total debt ~INR1,000 cr for cell + 2 GW module capex + ~INR400 cr existing (ex non-fund based) = ~INR1,400 cr overall. FY26 utilisation low because cell line not yet under execution; debt will be sanctioned. FY27 will see peak debt. (2) Talking to bankers on structure (subsidiary vs holding level); within 2-3 months, we will approach investors to raise INR500 cr.

14. 14. Mainboard migration; 2.2 GW funding; FY27 revenue/margin

    Madhur Rathi, Unknown

    Question. Three questions: (1) Are we expecting mainboard migration this month since the last update was in January? (2) Are we raising equity for the 2.2 GW expansion? (3) What is the full-year revenue and margin picture at 4 GW module + 2 GW cell? Will the 2 GW cell line commission by FY27 end?

    Answer, Vipul Shah, Director. (1) Currently under ESM; once out of ESM, cooling period applies; we will still give quarterly results proactively. (2) No equity raise for 2.2 GW; supported by internal accruals + proceeds from last preferential allotment + INR300 cr debt (INR150 cr TL + INR150 cr WC). (3) With 4 GW module (cell captive, no separate revenue), revenue will be INR3,000-3,400 cr for FY27 including INR200 cr EPC. EBITDA 9-11%, PAT 5-7%. Cell margin numbers will be given when approaching market for equity raise in 1-2 months; cell margins are high now but expected to normalise by the time Solex produces.

    Partly answered.

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