Q2 2021 Azure Power Global Ltd Earnings Call
Ladies and gentlemen.
Yes.
<unk>.
[music].
Bottom line.
[noise] last question.
<unk>.
[laughter].
Six.
Thanks.
Please note that this conference is being recorded.
I know it's gone from school.
You can judge.
Thank you.
So.
Thank you and good morning, everyone and thank you for joining us.
Last night the company issued a press release announcing results for the second fiscal quarter of 2021 ended September 30 2020.
A copy of the press release and the presentation are available on the investors section as your powers website.
Your power Dot com.
With me today are Randy <unk> CEO.
CEO Worley supermini M C O.
And Paul on Kumar <unk> CFO.
Reggie we'll start the call by going through recent key highlights and to review overall long term positive outlook for solar in India.
We believe will then follow with an update on our projects under construction and an industry update.
Hi, Linda will provide an update on the quarter with additional discussion on the performance of our operating assets a deeper dive into our calling cash Gina expenses recent improvement in Dsos and.
And then we will wrap up the call with Frenchie appealing, that's why 21 guidance and reiteration of our longer term guidance.
After this we will open up the call for questions.
Please note our safe Harbor statements are contained within our press release presentation materials and available on our website.
These statements are important and integral to all our remarks, there are risks and uncertainties that could cause our results to differ materially from.
Those expressed or implied by such forward looking statements. So we encourage you to review the press releases, we we furnished in our form 6K and presentation on our website for a more complete description.
[noise] also contained in our press release presentation materials, an annual record of certain non-GAAP measures.
Sales for the most comparable GAAP measures.
These reconciliations are also available on our website and the press release presentation materials.
<unk>.
It is now my pleasure to hand, it over to Randy.
Thank you Nathan.
Already good morning, everyone.
Last time, you spoke I hope that you would get somebody from the pandemic vaccine would be found.
Looks like there has been some positive news on the vaccine.
And get all see light at the end of the tunnel.
Here's wishing that the next call. It has been going up even more positive than it would be our fight against current 90.
Given the better part of operations as you would've had embarked on an aggressive badness campaign internally and should be the main sales <unk> 90.
So continuous monitoring and management support we insured reduced incidence and report no Cvs health impact on revenue of five team members.
Be formulated then implemented strong quoting dean and isolation protocols across our operations and delighted that dedicated doctoral and gone to support all our team members and their families who was impacted by the pandemic.
Hi, good under one brand that's flat ceding.
Disseminate meaningful information and knowledge.
Hi, its capacity enterprise mystified stops doing dependent.
We have also continued to book that communities to help them to us he gets on outreach.
Job training is an important focus for us across all patients.
We are also moving forward getting ourselves I have so far to start talking about I'm sorry.
I will continue to operate.
Despite the challenges faced with gold would be.
During the quarter.
Well I think the cash to equity or see if he goes 50% yet on the EPS $2 40.7 million.
Starting this quarter do you could also begin highlighting EBITDA and leverage statistics, what operating assets.
This will enable investors to better see how auto based and that's it for me and have a greater ability to value the company.
EBITDA from competing assets for the quarter.
20% year over year to $40.7 million and a net debt to last 12 month EBITDA was 5.9 next.
We also made great progress this quarter in getting beat up payments. So my boss to do customized and our days sales outstanding fell 214 days compared it could be nine days in the previous quarter, which is the lowest level you'd be have defaulted since two calls than anything.
Did you got to the P values for the four Gigawatts biplane garbage we have Louise.
Given the size of capacity combined with other factors. We now expect it to be abused will be signed in trying to the 500000 megawatts at a time, but other than four gigawatts at once.
We are making progress and do expect that you're going to see the views for the first time spent on January February 2021.
As many of his construction costs have fallen sought an exchange to eat more favorable in recent months and you continue to expect that you're going to be a nice like what do you have an expectation of 30% equity write offs or more on this four gigawatts.
As we have discussed before.
It is an added advantage for the T. gigawatts coming on line after the Interstate transmission system, or I guess D.S. costs to be when it expires in mid twentys drinking tea for renewable energy.
Despite this veeva distribution companies.
Begin to incur about one to two cents spoken about Cogs for transmission costs, that's a P.C.R. bard.
However, Florida in diet food got walks bike nine you'd be deemed as vivo and distribution companies that buy fall from this full do you got lots been knocked in Cogs expenses to writing a significant pricing advantage.
After mid twenties, what do you see the Bob agenda. They took some deep megawatts could likely be some of the Lewis Delaware you bought in the Indian market.
In addition, we would note that they need this comps have been shot up meeting different people purchase obligations for the next several years.
He just spoken to note that the draft of Invincibility Act increases penalty than does columns that do not meet the doctor you obligations.
Since this guidance when you need to buy new policy and I looked at it they've been ice deals gevo because people on the bid list cost options.
We also released our second sustainability report in less than nine months. The most recent one it looks good yield and 2020.
You have to continue to expand our disclosure, including school <unk> mission and participation in the carbon disclosure project.
<unk> you meant to say, the new policy, including diversity and inclusion equally be an enhanced health and safety policy years D.
It's going to continue to not emit non GHG emissions and to reduce lost time incidents by 5% and media among others.
Yeah also increasingly engaging with our suppliers to encourage better carbon defaulting in exports reduce debt environment you backed.
He continues to remain the net carbon new company and are making good progress introducing I bought the consumption with an aim to be water neutral by 2023.
But many other bad tremendous organic growth opportunities for solar in India on page five we would like to provide a brief recap for the many new investors that have decent feed vested indeed.
Your next could you put capital usage and indeed, some of the Lewis into one as many only recently to see access to the grid and but they do get is on Tonight and most readily be available.
As soon as capacity is the lowest cost source for new electricity. So that makes the most sense to satisfy substantial future demand.
These are a couple of nice supportive government targets that seem to have sold 150 gigawatts of the noble energy capacity in place by 20, Coty or nearly could be gigawatts of new capacity additions. If we go going forward.
In fact, you see about 25 gigawatts of new capacity being auctioned by the end of next year.
Today in India.
It is only construction capacity to build about code of what the government defense walks in.
This provides a tremendously attractive done before significant to this new growth that you're doing that will be.
Well above our current cost of Gucky.
As he completes two quarter the votes from home I take this opportunity to tank all as your stake holders, so that patience and support.
[laughter] any organization, it's dean is its biggest source of strength.
And I can proudly say that the team at that yield has done an incredible job well what these last two quarters.
Got it and he had what he told me stuff in LIBOR at Navidea sites looking to the dangers of the spending.
A box in the BDC initiatives.
Human resource team has undertaken to ensure cohesiveness cohesiveness and engagement in these change times. The company has embarked on an ambitious online training program, which is specifically develops what I've been meant but as you seek to upscale ourselves with the guys joke agreed to heights.
With that I'd be possible what commodity.
Thank you Wendy good.
Morning, everyone.
Okay [laughter].
We provide an update on the project under construction.
Overall, we continue to expect that apology.
Let's be punished by the expected device commercial operation date, and that they've been domain within our initial budget.
We finished when he doesn't like Watson ascent, which is part of the notch up 19 megawatts project.
We want to attack the many basketball tirelessly to finish this funding despite the tremendous challenges they face, including dotted green of the monsoon season.
Additions to the family and friends.
Destruction.
We expect to have another lucky megawatts by the end of this fiscal year.
And the remaining 25 megawatts and the thought of next year.
Oh, no not not just logic to me, but I just thought I'd say, we're making focus despite the many challenges.
As of now we expect to have about 300 megawatts completion by this guidance <unk> and there are many 300 megawatts completed by March.
As it relates to what I'm, just trying to eat and nine projects each of which 300 megawatts 25, yeah. That's the ticket.
We expect they will come on line and to talk to what the next kinda Ya.
Additionally, on the energy generation side from operating projects.
We have achieved our targets, but revenue despite what would you need to just fiction and greater than expected and they need it.
Looking at the industry and regulatory developments on page eight we still see significant demand new and renewed energy in India.
It is important that the country.
[laughter] power supply deficit from Cedar 0.3% for.
For the first half of this fiscal year.
During the quarter. There was nearly 2.9 gigawatts of new tenders that are leased and about two gigawatts sort of capacity auction.
Unfortunately distribution companies are taking time to sign follow supply agreements and give me to be procured as such as <unk> and at the moment about nine gigawatts of capacity or.
Without contracts.
However, we do see increasing pick up on discounts to try and see if he can we get a feel and babies proposed amendments to the electricity <unk>. That's what he did the enforcement of hot.
If I look at markets also finally picked up Upto five months of contraction with September demand. This year registering a younger girl up about 4.5%.
You also see the introduction of a new renewable energy trading platform called the Green gum ad market.
But after transactions into new but Pablo.
Next electricity trading in India and getting away from this.
[laughter] pumping provide an avenue for he tells me staged to send out he Pablo aftermarket driven pricing.
And even if you look at for certain states and bias to me.
As an update on the proposed basic customs duty BCD, we kind of expect that it's going to be in the range of integration.
Which would be in addition to the team Doug.
We have been expecting to find her decision for sometime now but that has been.
Some hesitation given that and get married reliant on China for mortgage.
And to be thinking that as I can higher electricity does a customer.
We do not expect any material impact.
On our projects as they are protected by change in lung function.
Yeah first of all just comps continue and the ministry of quality since he should they'll come in Oh man. This idea public pension because interested in buying a majority stake in.
Distribution companies.
We also wanted to highlight the proposed changes to the electricity [laughter] electricity, who that would benefit us and they knew but energy sector in India.
One set of proposals would give us greater certainty on revenue, including formalizing and you've been energy into electricity as much strength of African making.
Making curtailment less likely.
Enhancing security payment and establishing a new they can pick up the focus on contract disputes with an aim of shortening the time, because it's all fixtures.
It's the proposed amendments adopted we will be able to get expedited the company cash outlay. So I got to consider to talk through your the change in law such it seems that your.
With that I will turn into something that's got the quarterly results.
Thank you Melissa.
Turning to.
I don't think they'll get 2020.
You bet, all PD 1835 megawatts.
Yes.
Oh Boy, you all 7150 megawatts.
Let me just given some of the biggest got it.
[laughter] consumption cost, what mostly flat you hit on it.
On page 11.
Well why don't you.
Ladies we took what did and they don't scare me I read a lot into minute expectations.
Funding for that reporting well last few quarters to focus on improving utilization and reducing operating cost.
You bet news wasn't second fiscal quarter was when you were talking about 14.5 to 7.6 million.
You're talking about 6% above the high end of our guidance.
I Love this country was operated very bad.
And be enough was 18.8% audit.
Well at the high end of <unk>, you didn't do anything but since you left guidance range.
And about 200 basis points higher.
Then second fiscal quarter cut off the bat it.
Yes, Hi, Npls.
Hi, I was wondering if you can do see capacity.
I just got to go for about $2 million related to see it got duty and DST.
Bill when do people tend to increasing the venue.
The theme court of Lafayette.
Well, that's what it seems to me like maybe that had been an expectations. So you bought stock appreciation rights or they see us.
<unk> I did about 7 million into do you Andy.
Maybe it's been but couldn't give you didn't see a place during the quarter.
On this I don't that most of that is what.
Yes.
Well gosh due date.
We also had the benefit related to EPS yet about.
$2.4 million.
We expect that tax expense will be at home goods <unk> million for the fiscal year.
Hi, techs expenses, but on the other 6 million for the third fiscal quarter.
Excluding stock I think she's invites him back.
Second fiscal quarter as they would have resulted in a net loss of about 700 collagen done it.
It wasn't meaningful improvement.
I'm definitely see me off about $10 million in the same quarter last year.
Turning to page 23.
I mean, maybe focused on reducing our cost as we had outlined earlier this year.
We do continue to expect to see Edison you know they got put into what he told you Andy.
Yes, yes.
Well if at least 10 Bucks Indeed, if I can do my.
Well it sounds like when do you think you do.
Despite about a 35% increase.
Makerbot salt business by end of this fiscal.
As you can see we are driving continued operational limited and you expect that there will be even more important and will implement margins going public.
If you look at your India, excluding stock compensation expenses.
I got it but did you update that I mean, I look at what done at 1 million, but again, so far this fiscal year.
We are doing more reduced costs and.
I don't really think you moved on who else was what do you want me to location saving about two times, though not all season serious expenses.
One of the new media. So sometimes it is quite good reason for why didn't you do disclose those I don't know, but I think I said.
We believe this is ready, but didn't funny because to properly value the company.
Linda did you see it topped off and got to condition. Once it's whatever project is operational.
On page 30.
You can see that I'd be definitely <unk> increased about when people say you don't yet and.
Hi, guys look we could eat it was about 50%.
They didn't Philadelphia, because it's one of the boat you enjoy the 964 million.
I'd be done for the last 12 months was about 163 million.
Is there anything you're not needed to EBITDA is short fall, but did you guys get off it looks like when I next.
These days so it's much more just like people thought I didn't see it doesn't need to be done to mitigate the liquidity issue. So what else company. We didn't do that football I guess it becomes section well density simply going to be done but have yet to produce not.
Normalized EBITDA.
<unk>.
Do you feel thought well one of the balance sheet on page 13.
You had the boat.
Usually 6 million of cash and cash equivalents and.
They're not needed to correct, one blended away billion.
I'm pretty minded so doors.
I've got to calculating I didn't really see what the hedging I think if you did that okay.
She'd been commuted ads. This is Derek you linked to the fun and exciting hedging you put in place it really did a lot of green bonds.
I want to take a moment and just because I did see outstanding because it was on page 15.
Yeah, I'm pleased to see a notable improvement you need to get through this quarter.
Yeah. So when you want it into what do you need someone <unk> hundred and 79 days in the last quarter.
Boston do get comps.
Just gone and I never these.
Made about 6 million of pickup you mean on the positive.
We continue to work on getting payments from the other just comes in Connecticut.
Thanks.
And hope to have some good news in the coming quarters.
Before I pass it to learn what I'd like to discuss guidance I would like to mention that isn't it out. He wasn't what do you think you included into Leidy soon and stock indexes.
We do we expect student hub city liquidity I.
I didn't really missed it I mean, it's a <unk> company.
No what do I need to provide some comment beyond it's like when do you mind and long term guidance.
Thank you bye bye.
On page 16, as mostly noted.
The completion of about 600 megawatts could slip into the early part of the next fiscal year and expecting de designated to Cogan.
However, as the commercial operation dates.
Also being adjusted to reflect the pandemic, we don't expect to incur any penalties related to these days.
We now expect to have about 2300 2500 megawatts Oh placement by March 31st 2021.
In addition, we are changing our revenue guidance to a range of I am not 16.3 to 15.8 billion given the delays in completing projects.
We would note that the shifting of revenue for the following quarter isn't limited only to the delays in projects coming on line on account of over 19, we.
We have seen not operating from a portfolio performed as expected.
He makes fun and it is expected to continue to deliver the expected revenue in its too.
<unk> third quarter 21 fiscal 21, we expect revenue to be between <unk> 2.6 in 2.8 billion and to feel that's to be between 19.5 to print different type event.
Turning to page 17.
I've long term outlook remains unchanged, except for some movement of Capex from fiscal year 2021 into fiscal year 2022.
We would note that our fiscal year graduate to Capex as a place holder for potential additional megawatt excuse me again, given the decent signs bps for the full people watch.
As stated earlier.
We would only be doing good projects that make sense and display took place holder is not a commitment.
This will be happy to take questions. Thank you.
Thank you very much.
We'll now begin the question and answer session.
Anyone who wishes to ask questions, let's start with one.
On the Touchtone telephone.
She was sent from the question queue Stein.
Participants on a question do you was handsets when asking questions.
Ladies and gentlemen that even for a moment the question Truisms.
The first question just from the line.
From Jefferies. Please go ahead.
Oh, hi, Thank you so much for the opportunity.
So just wanted to check on that well you got what you thinking back or do you believe you any given where we are you asking me what Ah if I'm not wrong, maybe well see a and b quality. She said before this needs to be coming into force I think you name any when you can.
[noise], Yeah, I'm confident that these politically we can we can do that.
HM.
Thanks for the question you are right that I used to use the diva niches in place guidance people renewable energy projects expires.
In the June up Twentytwenty Ti so on projects that I mentioned before June and starting to Eattwenty T. I wouldn't call. It the vivo and those folks to June 20 drinks you see I've not eligible for it to be positive, though the manufacturing bendel that but then though it's a you know a bit to be have a and b to b has been the auction.
If you have been in this Ah tenda the condition because you know this these projects would actually expect it to be delivered over the period of time, because they are linked to manufacturing capacity. So as the manufacturing capacity comes up a thousand megawatts. So yeah. We are supposed to move these projects over 40 years right. So.
On the bank sign up for the project. The first set of projects were supposed to go off and do you know since he has been fully opened five years right because though by the time of manufacturing capacity comes up you know like supplies logic. So.
You know that should be a bump in the on the ground that society up the Goldman. So therefore these projects because they would you be willing to go then into couldn't do 20 Fivek range. When you fix had this vivo for base. This capacity battery Bod Miss what happens and I see a stable. These projects will enjoy the I guess do you have to be looked in the assumption.
Okay got it thanks a lot.
Secondly on this I mean do you think you can see a nice chemo. So let it be manufacturing just wanted to see if he had I mean fighting back.
I mean, Oh, what do you think.
I didn't even unavailable.
Any insight or anything like that.
Oh, what could be the benefit for us given that you can also do they can you give me that I came up.
[laughter] you know that's a that's a the cabinet this isn't that you're referring to right. There. It's been posted a t. 51 per day in the afternoon, [laughter] and it's actually a very small amount of money that means that's 4500 their growth.
So I don't know what what exactly are they really did was babbage bid a 4500 goes but.
Thank you I can tell you, though there though.
The stuff that has come out.
ER is not very detailed and even have to be for more details on this as to how they want to do it and perhaps the ministry of new entity, but energy in a you know a book on the how would this be a nice team is going to up are going to help with the sector, but the amount of money that they seem to have a put down is.
It's small unfortunately.
Like any any idea how long.
Let me pick up on the Miscue anyone's guess.
Yeah, I I think I said, no because yesterday afternoon. So it's a it's a you know it's really really a.
It's a new they say Oh, you know really to rephrase hot off the fifth so [laughter] at the moment. The I must say that I have I have no more the information that you have on is.
[noise] lighten God Bless me you did oh, so when they when you factor in anything that would be on the acquired do you think he say they see has I <unk>.
You got lots of TV, what do you can you can follow I mean, it's always he actually if anything if he is talking about it but I think it's I think I mean, I think he's talking fighting <unk>.
Okay.
I think Dan I know what it sounds like.
So.
For for the manufacturing thing, though scientists so far the Papa Johns agreements have not been fine because the policy like Lehman has to be fine for us and be like we had mentioned in the previous earnings calls that sticky is bundling. This problem with the you know there's a.
Does your auctions or so so they are in the process. It's a lot of this capacity because obviously you know between us and I was a a few less the other couple up and does that ISO and ticket any stocking. This process will be in the month of Paul Goodson pandemic is going on so you know sometimes the distribution company off is it opens up.
They're not open so it's been because if something has to be lischinksi month, and I think that he has made tremendous still good and if you have a quite hopeful that the you know by January February they will start signing these Ah, yes isn't BP is lucky.
Well, I mean, but I guess I'm looking on live any day.
Thank you.
Thank you.
The next question is from the line of Philip Shen from Roth Capital Partners. Please go ahead.
Hi, everyone. Thank you for taking my questions.
As a follow up there around sheets.
I think you said you're expecting to see.
Some of that could be a sign starting January or February of next year how.
How do you expect the cadence of the people used to come in next year. So maybe the first tranche comes in at 500 megawatts or early in.
21, but do you expect or all the p. piece to be signed before the end of the year and 21.
Can you provide a little more color. Thanks.
<unk>.
Morning Bill.
Yeah. The question the two Austin actually to tell you. The truth, we have not yet started to focus on the on the on the next trying to.
The auction that didnt happen by the mid isn't all Twentytwenty, one got Linda right. The June July August kind of thing change in those auctions malls to all the people most of the company's been stock taking into account. The fact that they are not likely to be able to take that.
Yes, do you have to be able to you know because by the time the auction happens and then the.
And the ways given into pop, which is the agreements are signed it becomes too goes the commissioning Dave's become too close to doing 2020 two.
So we expect that once the data is stocks of Inflecting in the middle of next year by the time the topic that EPS stocks, reflecting this new reality like you have mentioned that one cents two cents to three cents higher then I believe you.
You know say keep in stock, making an attempt to sales of Ababa also and I'm hopeful that you know at least one more times, if not do more times. It didn't get done by end of next year.
Okay, great. So ER just ask the question a different way. So when you think when you talked about the.
The 25.
Gigawatts that could be auctioned by the end of next year, how much of that do you think is reasonable to be addressed.
By you guys.
For us if we are sitting if a you know it's the get hot properties agreement signed like we are expecting to get signed up by January February and have even have this has been a made omega walks to bid.
From the new capacity, we even think Boston or you don't very very few Oh auctions I I won't be able to tell you a number I know you didn't depend upon how is it can get spaced out and because also depends upon the opportunity that didn't pass sales. Yes. We have said in the past that we are comfortable doing a thousand megawatts are ya.
Today to be up in no rush to become the largest company in the in the country. If he wants to be the most profitable company in the country and B are you don't be Ah Ah.
We have no we have no plans to leap X megawatts, but ex gigawatts by such and such time. So leaving you don't be just want to make sure that all this I use all the costs reflect the amount of projects that we are able to do and at the moment. We believe we can do a thousand megawatts are you. So you know I I didn't have.
To see how would the always pans out, but you know I don't think weve been bidding button too many auctions if they're not interesting option for example, the hydro production water storage auctioned between from the technology perspective, you know take US forward, we would certainly be interested if there was any arbitrage we see in the market where we feel.
That too you know if you can get a higher that a lot of big data done you could potentially see that if you see any delays in the signing of the Papa Johns agreements all transmission and activities that you do have budgets equal they flock in Austin, but if everything is running smoothly really big pop in very very few auctions and what I can see.
Okay. That's helpful. Thanks, as it relates to the basic custom duty.
What is the timing as to when that new duty could be passed and I know it sounds like economically it should not impact you guys because you.
You can pass through that tariff cost to.
Yeah in markets or your customer, but there will be some kind of impact or somebody loses out on economic. So just curious on the timing you expect on the basic custom duty.
You know Oh pinned up you should get the basic opportunity I think from what you hear only be doing all the deals reason behind the deal because this is expected to come out in the month of July.
In August so there has been a little bit of would be we look he has given to understand what could be good is that it could be because the last time. Most of you have used up new deal concentrations I think theyre being part of that we feel good about that in a you know folks that you have to jump through to ensure that we had in compliance with the new deal norms of yeah, but then.
So I think the government does is a is crossing the t's and dotting the i's on on this a notification which is why it is taking a little bit longer.
Difficult to see how long it's been a it will be but like we had mentioned in my remarks. This is James is all put up. So you know if you have not but everybody. What does happen is that most of it is the extra cost off the a b C D. All the STB trend.
25% of that.
It wouldn't be become our equity to flat.
Who are you know I'm, hoping they could but we you don't get a boss who bought it so all up it comes back to Patrick and for projects that we have.
Big If you do for example, I've got a lot of stuff out there for example.
I just on five subjects, we have already started getting money back as you make that you might not picking up I mean, the presentation, we've already started getting money back for it.
[noise] right Okay.
We saw that in this past quarter of Q2 of about 2.2 million is that correct.
That's right that's right.
Okay, Great. One last question for me and I'll pass it on with Ah how well your stock price is doing can you share how you're thinking about.
Capital and how you could fund.
The four gigawatt pipeline that you have with checking so what's the.
Potential that you guys tap the equity markets and ER or and what are the other sources of capital that you're thinking about and how.
How do you see it and balance or all the different options.
But when you would want to take this.
[noise], Saudi Saudi Oh, I I didn't get that.
Okay I'm going to go up in New York Reits have been be had up there than we had planned Ah Ah Ah capex right. The idea that share prices at a different level and I am I think you have been able to instill some confidence in the market about above your head it and yes seeing though.
They backed off all the hard work that we have done and the support that we are getting some big domestic I mean have you in our share price and obviously, especially if they are you know.
Good schools, though do a bad deal value if the company is.
The cost of capital concentration comes into play and be a deciding how we want to be a they just kept up as far as the you know as far as the 4000 megawatts is concerned like we had said not saying you know this monies needed over four to five years and you know this was expecting that the post popping to the unions could.
So we should have already been signed if the school would think has not happened right. So business that they do the dealing in a in anything that into it do you think that equity or from the perspective of flow of Oh, so the opportunity not having been fine.
Oh, you know so yeah. We then do you need that the equity and when we make the it said one of the things that people are exploring with selling abaxis nice. So we have to see no but does it make sense for us to set assets does it make sense to you know these equity in the public markets. So that's the biggest because how could dig.
And then become to that because you know like we have said in the past the gallstone capital needs to make sense right. I mean, if I could make sense for us to come to public markets, even got the public markets. If it doesn't make sense to come to public markets, even though you know a sell lots oh, the corporate debt or are you know the big investment.
At SPV level. So there are many needless put us and they've even the accordingly, or you know take action as a as we come to that decision points that ourselves.
Great. Thank you Reggie it's I'll pass it on.
Thank you.
The next question is from the line.
From Credit Suisse. Please go ahead.
Hey, Hello. Thanks.
Thanks for taking my question so over here.
I just wanted to understand the cadence of the project construction next year.
Once you get for the.
Try to fight on.
Do you have some project that seems to be capital was there.
I understand a couple of deals is because of the construction time answering questions, but just wanted to understand what that gap for the ascent project is driven thing.
Well you know.
Well I think ER, which we have already completed on does it really really tough circumstances like Bose votes, basically been doing them on site. So that is a suboptimal and in case of us and specifically where the ball to David is very high it becomes impossible to walk through the monsoon because as you start doing your filing uses I didn't.
The water almost immediately, especially getting them on sales right. So one project, even able to complete most of it or you know even during the monsoon. The other project. It's been that you don't see or you don't even be able to start it on me both sponsor and so you know we have just started on a couple of the other projects to be should get done in business School.
The the last project it'll be I've.
That'd be with that is the most of the more project. The chip you know we are yeah building and is like you have mentioned in our earnings presentation. There was a little bit of land that the soon to be completed that so we expect to complete that's nine over the next two or three months and that's the reason why they did that.
EBITDA for delayed the completion of the fourth project, So bill both see budgets and into the first project as well as the done practically on time, even without the extension practically and the other two projects that get done, but then did extension thing and you're seeking an extra extension for the fourth project. Those lost luggage is only at 20.
Five megawatt project.
So hopefully not in fact ER.
Much the fact that it's slightly more do you need them to other projects.
Got it got it that's helpful and just started friend dock known for the four gigawatt backlog I know you haven't identified any indications yet publicly but.
Just in terms of the I guess to yes.
[noise] BP is it allow you to build to project any rights or are you looking to build them and Roger son or drop in southern India could you just or any other application in the country.
Well [laughter] studies, so bill the four Gigabaud project I mean, the good thing is that you know as soon as you have been lifted up boy you can lock transmission capacity right and that is one of the critical resources back to you need to block it right away.
Okay. So as soon as the Gaut <unk>. Louis you had already signed you had already school Golden but I wouldn't be has actually taken back in these auctions. Because you know 200 200 megawatts project, which is a typical auction you can get anywhere right. If you don't get it in a you'd get it and b, if you're going to get it and be able to get it in seat, but then you have to make a plan for 4000.
The laws you cannot.
That's funny it anyway. So this was oh he had a plan to serve anybody that well before we took part in the auction and the D.V. Good <unk>. Louis the same big literally be up life of transmission capacity for these hotels in megawatts or you know well, we'll see different sub stations within the state up I just one.
We have already received their connectivity called B C or a part of the over these key substations for the 4000 megawatts. So these 4000 megawatts that guidance do you plan to be built in the state of other times. It has the best information.
Got it that's helpful and.
Just on you know.
What you're seeing in terms of commodity prices or the cost of the system right now is 55 cents per.
The roughly in that range for you at any sea level, but just in terms of your visibility into the mortgage crisis over the next year or two or how do you see that changing or.
For yourselves and the Ford before people are French it does though.
Or perhaps a movie you want to take this.
Yes.
Oh no so.
The last couple of quarters has seen some maternity and ammonia prices because of a lack of availability on the supply country on the opposite side. So we have seen some sites fluctuations. We expect this to continue at least not patients to continue over the next couple of quarters as I'm not understanding when the blast.
However, the.
No that's not going to get them because it could the medium and the long term I think that is a you know, let's take look changed whats declining metal prices on account of a better efficiencies coming in you want to call just coming in.
So overall, we do expect commodity price reduction you're going up a few percent the other piece, but into Chicago ACIM. One this is dan fluctuations in size.
Thank you.
No. That's helpful. And then just last one from me and I'm, just Honda Honda to love to others in the queue.
We are the first be if you just said as she could potentially sign in the next quarter and assuming a 2018 month construction probably comes on line and made up 2022.
Does that any gap between men, that's come saying and when do I just sun sake say projects gets completed and does that provide you with any.
Window too big for other projects I, just said to get to that one gigawatt for you.
Construction run rate or Ah Ah interesting because the dealers that's kind of not just on the window and you'd rather just us installed the first tranche of the four gigawatts.
So when he built a these projects the ones, which are linked to the manufacturing thing, but because these are larger sized projects, they're fine live megawatt trenches. So these have two years to bid right. So if we find the P.B. for example in December of thing between deal, let's sit down with your friend Btwenty, one cindy's needs to be done it wasn't on December 22.
And we'll be trying to do is actually 22, right. So and odd projects like the has mentioned the Vicki AIDS and ticket I. Just on 809 projects are not expecting of you'd expect him to commission by September the quantity of Ah you know the next calendar. So therefore between.
Between though the third quarter, all Twentytwenty, one calendar and the fourth quarter of the calendar Twentytwenty two right. There is the almost five quarters of each had available to us thing so yes.
No date is a gap there, which began a that's moving back to Phil.
And to be built big box in a in the auction for the you don't fall into a part of that gap, maybe 200 megawatts, maybe 500 megawatts weekend, Matt he can do in that timeframe or so.
Then once the Titan is established that I want to buy some of the stuff. This then that.
That Ah flexibility to do more projects goes away.
Right right no that makes sense, thanks for taking the questions and Oh start you soon bye.
Thank you.
The next question is from the line of Sean.
<unk> from <unk>.
[music].
Hi are showing a.
Nice to hear from you and I have two questions. One is the stock appreciation rights in this quarter I'm going forward do we see the same expense affecting EBITDA margin and then good. The next question is that.
They are the speaker had mentioned with all the volatility in panel cost can you give us a sense of what type of comp volatility was it is it 10%, 20% or 30%. Thank you.
So I I guess.
Let's go said Oh well.
What I see out.
So I've got your seasons lights.
And then can you didn't take place.
We've been really didn't get us funding or funding that you can use in a and b in the charges for that right.
So so.
So.
Technically you could it because he he taught us if I use continues to go up if we continue to heal.
Hey, that's being done.
Got you so are the ones that ultimately wasn't or what have you got to that extent public.
I Wonder what does anybody didn't note died very very large part of these efforts. Yes why did he doesn't mean thing is that they should do it.
It cannot be exercised under.
He was going to be doing before I didn't mastani doing before.
It's like 20, guys article will only happen. After my comments are going to be 40, if we thought you had it been phased out after that though even if you have to when you're going to put or whatever so that's what's it's easier to be stupid thing.
Okay. So maybe it didn't add more going to do this but I just wanted to go to highlight that these that accounting Oh I get it and then that these charges, which you have to look cool.
Oh, that's the basic place most [noise].
But actually because what happened and I feel like my shouldn't be done before.
Oh.
So I I understand the cash versus accrual a difference, but just from an EBITDA calculation basis, do we see 80% EBITDA margin or do we see sales, 70% EBITDA margin or can the next you know.
Coming quarters.
No I haven't seen for this and I like to know so I do think monies that no. It's.
Before I begin my didn't did can you just because of that she had expenses Oh I would be happy because that means that that that does it by just being very good the company's doing very well and that's my part of that is actually the checking five youre backing that we'd be talking about like but that was that it was one way to do that.
Honestly, the baby might Oh, WB discussing done only with the board or we'd be does stay cool does.
In terms of your domestic weakness we keep these are big like I'll take that I could item. So I see I I Didnt mean, suddenlink daunting to link the willing to sacrifice and we don't keeps what kind of like the management team Oh how.
How best we can do Elgindy shown in the boat caught and how we can improve it we don't sense that's yes.
But if he can probably be because of that he said if accounting, but every time audience would be 87% thought he'd be person to 90%, because because oh wait a bit difficult to predict and we don't take it they didn't get anybody on this call.
Okay.
So so oh I'm sorry.
If I may.
Just a little bit more detail on this are you facing the appreciation.
Percentage increase in stock price or are you facing but absolute level off the stock price.
Oh, he's got about you'd be back soon right. So so so for example for the for the sort of hold the FDIC come on it even gets good.
They are definitely have to India, and Poland I see us we talked that we try to give to me as to what next door. So many ideas adoption that you all that become become become part of the chart. So so that is the way these are going to talk.
Okay.
Certainly this is Nate today I'm, just one way to think about modeling on that is at the ended the quarter the stock was around $27.
Every variance from that by the end of the quarter will result in about a half a million dollars swing.
I'm, sorry, $200 million swing for every $1 change in stock price.
After the million dollar for every Buck.
Buck of stock price change alright, great Nathan.
Good to hear from you.
To add onto it snapped back.
Your second question on the extent of volatility so what we've seen in the last three months is up.
The prices move anywhere between five and 10, <unk> and and and the other thing that happened is there's been a little bit of a supply crunch because as we said a shortage of raw material availability and if you choose to definitely supplies, which most of the India market has different suppliers because of Goldman.
You know they end up what it really is not as much.
Uh huh.
Okay got it thank you very much.
Thank you.
Before we take the next question are the mind participants did you May press star and wanting to join the question queue.
The next question is from the line off the then one can off from Raymond James.
It's please go ahead.
Thanks for taking the question I ask 'em kind of a big picture question about.
The solar opportunity in India, I think then raised 220 gigawatt still.
<unk> coal fired generation.
Right.
I'm now on or what percentage of those 220 gigawatt do you think are realistically.
Going could be displaced by.
Solar.
Well up although you know its a question that.
Did that Ignytas and no the ministries that.
They could I suppose that all the time.
I'm feeling in the industry. It really is that you know data.
The fleet Hill.
How about like you like you mentioned about 220000 megawatts. So all in all though from a capacity going capacity exists in India.
About five or 6% of bids capacity is expected to decommission the via because at the moment did I say little time, so clearly if any or right with Cody as a 40 year old times.
Especially in the states sector that has been running which the government is pushing very hard to get the commission. So every year, you expect about 5% to to come down.
The energy required Nichols, who are in India.
As expected to go up.
But I would see to 5% on a year on year basis right.
If you look at these two metrics nine it means that we need in India.
About 15 to 20000 megawatts of new capacity can be built.
Which is about 5% though.
Well move capacity, which is decommission and about 3% to 5% of capacity that needs to increase because I didnt get acquired them into the three things like that like you mentioned, India has another Lewis spoke out like utilization well for all of you and if something makes it I got 100 units. So you will see that average.
Well, let me see about 20000 megawatts, so afraid at Citi.
Some of it but actually still come from you been common nice because the states. Unfortunately, some of the states still continuing to build some new business. So, let's say look cool to five gigawatts I still being better maybe two maybe team in poor maybe five gigawatts of lets say about 15, gigawatts. So booked between 10 to 15.
The awards of capacity needs to come.
Though renewable energy sector.
And then to 15 gigabaud equal billing comas.
Because almost typically converted their bonds onto in fact sort of almost 85% leased as EPS will look like it's been done between 25% to 30%. So at least one of things right. So when you say 15000 megawatts 15000 megawatts automatically become Cody thousand megawatts of solar so if someone to fill the need for 15000 megawatts of today.
I need to go deep thousand megawatts of solar.
To be installed so that is how we typically had I've been told me doesn't make a work number they said, but I missed something that has also said that we want to reach to 450000 megawatts. So you don't bed as the pool for 2000 megawatts calculates income from it comes from these kind of numbers that you know about 45% of cone capacity would be.
Commission Yeah.
So the 5% the need of the nation will continue to increase it just comes to between 2000 megawatts 50 to 1000 megawatts for 5000 megawatts of Pomalyst in being a is this can be put in place, but a meaningful move.
And go will really come from the new boots and that does there, though I've got smoky Tobey told and megawatts comes from.
I'm, sorry, I forgot to add up.
And a very big picture 11, the ACA that doesn't really you know Doug.
Tell me that's provided a huge base load supply and I suppose on one supposes that as and then storage costs declined to a point, where they become competitive with school, that's when you'll be able to completely fall off and then over a period of time they just.
You know go away.
Okay.
Let's go ask about [noise] Green bond odd.
As I understand you you you shoot to green bonds in the last three years.
Obviously interest rate in in India, you watched in Europe continued to be close to zero and lots of appetite for green bonds are you continuing to look at that as an option for you for future capital needs.
Well, then you want to take that.
Yeah. So.
Green bonds. They honestly I do I know the company or maybe just what do you mean fiddly considered having done something maybe.
And then ER, we would prefer to have optimal mix of debt and equity.
So why isn't a green light well located does provide a button if he too because it is a bunch of into Buckley fund they could they need but but oh BBB. We we have no plans to focus on finding it could be a buyback would again and funding debt like that so.
Okay, one like it so you have your plans with that.
What do you do it different and so I'd I'd project.
And then do you feel that that what do you know what happened. So when we when we do the any sense like I said I don't think we'd be afraid to people telling me. Because then we do have debt limits because that is kind of like somebody ask about yourself to a single agent and it got close so when we do then you shouldn't funding, we try and leaving it limited the project I talked I don't really.
If you consider it even level.
What was the thought was that all but he's not encourage their technical enough cash flows.
The fun.
But even on the project you did with 11 of debt.
Hi, guys closed can comfortably sustain.
That's all it is to some extent limited based on that guys lose or even available would you be times when done into Boston and we can be a tricky fining open to do that but it would be coming due before two days up and easy 'cause. Your time would you be the focus to raise equity and that is not something that does that mean that you have today.
Oh, Thank you very much.
Oh, sorry.
Thank you very much.
That was the last question in queue.
On behalf of a short follow that concludes the conference.
Thank you for joining us ladies and gentlemen.
Even now disconnect your lines. Thank you everyone in and out.
A very happy Thanksgiving for every one of the U.S.
Thank you everyone.
Thank you.