HPL Electric & Power Ltd

NSE:HPL

Q2-2026 Earnings Call

[Shankhini Saha]

Ladies and gentlemen, good afternoon. Welcome to HPL Electric & Power Limited's Q2 and H1 FY '26 Earnings Webinar produced by ElevEase. I'm Shankhini Saha, Director of Investor Relations from Dickenson, and I'll be moderating our call today. So joining us from the HPL's management team are Mr. Gautam Seth, Joint Managing Director and CFO of the company. Please note that this conference is being recorded and that some statements in this call may be forward-looking based on current expectations and subject to risks that could cause results to differ materially.

So we'll get started with some opening remarks from Gautam. Over to you to start with opening remarks.

[Gautam Seth, executive]

Yes. Thank you, Shankhini. Good afternoon, everyone, and thank you for joining us today. At the outset, I'm pleased to inform you that our balanced business model continues to strengthen with the Consumer & Industrial now contributing 47% of the total revenue and growing 30% in Q2 and 23% in H1. This segment, supported by Wires & Cables, Switchgear and a revised Lighting portfolio has delivered consistent multi-quarter momentum and improved margins, provided stability and offset temporary timing-related moderation in metering.

Let me start with the Metering & Systems business, a key pillar of our dual growth engine that affords us long-term visibility. At the end of the quarter, we carried an order book of over INR 3,300 crores, of which roughly 99% is smart meters. This is largely AMISP driven and sits directly on the nationwide Smart Metering and RDSS opportunity, giving us multiyear execution visibility. We are seeing a pickup in Q2 compared to Q1 Metering revenues. Execution is already normalizing. Smart meter offtake improved by over 12% sequentially in Q2. Going forward, we expect a further step-up in deliveries from November to March FY '26 as on-ground inspections accelerate and AMISP rollouts gather pace.

On the supply side, over the last few quarters, we have expanded both our smart meter assembly and key component capabilities, so that we are fully prepared for the next leg of scaling up in this opportunity. Our inquiry pipeline from AMISPs remains healthy and our long-term-standing relationships, prequalification credentials and R&D capabilities place us well to continue winning and executing orders.

Another interesting point to note is that even in a quarter of softer Metering revenues, segment EBIT margins improved to around 17.5%, thanks to the pricing discipline, procurement efficiency and a richer mix of smart meters. This gives us confidence that as execution picks up in H2, Metering will contribute not just to growth, but also to sustaining a healthier margin profile for the company.

While the Consumer & Industrial, the C&I business, Wires & Cables continues to scale strongly, delivering around 24% growth in Q2, Lighting & Electronics has also clearly seen a turnaround after a series of several softer quarters, recording growth in low 20s this quarter, an encouraging sign of healthier channel and better acceptance of our premium and value-added ranges.

Switchgear, together with the Wires & Cables continues to anchor the C&I growth story, supported by network expansion, deeper market penetration and a broader, more contemporary product portfolio. Over time, this segment also supports a shorter working capital cycle and enhances our overall return on capital employed and cash generation for the company.

A crucial part of making this growth sustainable is our ongoing investment in the HPL brand. In the first half of FY '26, we invested about 2% in advertising and promotion for the C&I business. We intend to step this up further in the second half for FY '26, as we clearly see evidence that brand salience and distribution depth is translating into a better quality growth and pricing power over time.

Looking ahead, we expect the growth to progressively pick up. We believe these foundations, both Metering and C&I segments, combined with the structural tailwinds of electrification, urbanization and digitization position HPL well to deliver sustainable and profitable growth over the medium to long term.

With that, I will pause here and hand it back to Shankhini to start our Q&A session.

[Shankhini Saha]

Thanks, Gautam, for those insights and for giving us -- shedding some light on how the quarter has placed us. We'll now start with the Q&A session. [Operator Instructions] So our first question will be from the line of Viraj Mahadevia.

[Viraj Mahadevia]

Gautam, congratulations on the improvement in margins despite the absence of the meaningful revenue uptake. I think that really solidifies the improving mix in the business towards Smart Metering. A couple of questions from my end, Gautam. One is the recently announced settlement with Havells. What was the consideration received in this settlement, or paid? And was this entirely accrued or paid by the company, HPL Electric? Or was there an element of promoters or other businesses as well? If you can clarify that, please.

[Gautam Seth, executive]

Yes. Viraj, so I'll be very short on this part because there is certain confidentiality surrounding this one until we have the decree of the court and the whole agreement goes through in execution. But very briefly that we've been having long-standing disputes going over 40 years and mainly with the promoter companies. So the consideration is received by the HPL Group in whole concerning the -- consisting of the promoters and the few of others. And these promoter companies are owned wholly by us. So I think once the settlement goes through, so there is certain information is already given in the public domain by both the groups. So overall, I think it's been very positive by both the groups to set aside the dispute and move forward. I think that's been a positive for, I would say, both the groups. And it's been...

[Viraj Mahadevia]

Yes, yes. No, it's very encouraging, Gautam. My question is, it's obviously many years in the making, as you mentioned. How much of this, whatever this consideration is, and I'm assuming HPL is not paying, but receiving. Is it true? How much of that, as a percentage, if you will, will accrue to the listed company to be used as cash balances, right?

[Gautam Seth, executive]

No. So Viraj, right now I cannot give out those specific details. But definitely, it will be known.

[Viraj Mahadevia]

Understood. But the listed company will receive...

[Gautam Seth, executive]

But largely, the dispute was with the promoter entities, yes, where the change of name would come in.

[Viraj Mahadevia]

Understood. My second question is, Gautam, given the tepid first half, are you expecting a meaningful uptick based on the scheduled deliveries for the second half that you have in Smart Metering, because you will know when these deliveries are expected. Do you think you can finish the year at a INR 2,000-plus crore top line?

[Gautam Seth, executive]

Yes. So I'll just come to the -- like if you look at both the segments, the Smart Metering, we are sitting on orders. Even for the first half, we did have confirmed delivery schedules, which due to rains or due to whatever reasons the AMISPs had, so they got pushed back first to certain part of the Q2 and now some to Q3 and going forward. So we did see a certain drop in the sales. But overall, if you look at the -- right now, the second half definitely seems to be -- is going to be much better than the first half for the simple reason that we are expecting most of our or practically all our AMISPs to be buying a lot of meters. And we are talking about specific confirmed schedules what we have received from all of them. But Q3 is definitely going to be better than Q2. But Q4, definitely, we would see that as a much more stronger growth coming in, in the Q4. So from our point of view, our teams are working to make sure that we are able to cover up the shortfall and then probably have a growth as expected in the Metering part.

What is also good is that the last 2 quarters, we have seen a good growth in the C&I segment, the consumer part. And there, again, looking shortly even in Q3 and going forward, we again see the growth to continue. So I think, overall for the company, that with both the engines firing, both the things going -- of course, meter has a very strong medium- to long-term story and the growth potential is very high. There's no doubt in that. But like I said in my last call as well, that there could be some quarters where the schedules could get postponed or some slowness is picking up. But I think right now, the thing seems to be good. I think the last figures, what the government or what is in public domain is about 4.5 crores of smart meters already installed. So I think now at least some meaningful numbers are coming in, because we are already talking about double digit of implementation.

And I think the earlier part of discussions where whether there was a go, no-go on smart meters, I think that is already -- we are well past that stage now.

[Viraj Mahadevia]

Absolutely.

[Gautam Seth, executive]

So almost practically every state is now going into that and maybe due to elections or somewhere, there could be some slowness in 1 or 2 months. But otherwise, overall, I think almost every state is now moving into that. So if you take from our point of view, the Q3, Q4 is going to be very strong for sure and the second half with this. So we will be looking at all efforts to make sure that we reach the required number. So whether it is INR 1,900 crores or INR 2,000 crores, definitely we should be looking at something [indiscernible] from where they are.

[Viraj Mahadevia]

It's in that ZIP code. Understood. And in terms of incremental order wins, Gautam, are you seeing lots of orders in the pipeline that you're bidding for, for the future? Obviously, you have this INR 3,300 crore order book. Currently, you've done INR 800 crores in first half. You'll do retail sales of INR 300 crores, INR 1,100 crores. So even if you do INR 800 crores out of the INR 3,300 crores in Smart Metering, you'll still have another INR 2,500 crores spilling over to the following year. And are you seeing incremental orders over and above to take you to FY '27 and '28? What is that bidding pipeline looking like?

[Gautam Seth, executive]

Yes. So I think that's also very strong. The orders are coming in, even if you see in the last quarter. Only thing, now as per the compliance, any order reported has to be with the customer name. So sometimes from a business perspective, because these are still orders in the normal course of business. So we are not disclosing them because just giving out every time the customer name may not make so much business sense for us. So that's why we have fewer announcements, if you see in the last couple of times. But nevertheless, the orders are coming in. That is for sure. We've just...

[Viraj Mahadevia]

Wouldn't it be wise, Gautam, to announce them irrespective on a no name basis, at least...

[Gautam Seth, executive]

No, that's not possible now. No, it used to be done earlier. We've ourselves done it, and I think everybody was doing that. Now across all -- for every company, I think -- I don't know when the regulations have been updated, but now it has to be announced, yes. So either one has to announce in total or skip the announcement if it's in an ordinary course of business. This is what I understand. So not every order is getting announced.

But if you look at it, we have just added 2 new AMISPs. So the order book is good. And even right now, as we speak, maybe in the next couple of months also, we are expecting some good breakthroughs from existing AMISP players and in also certain newer ones. And if you see my opening remark also, I did say that we are covering almost everybody now in the AMISP as a customer. So anybody who is there, big or small, we are somehow connected with them and we are supplying to them. So I think that's a good thing. So overall, I think business should pick up, maybe 1, 2 months here and there could be a little slow. And traditionally, if you see the second half is always strong in the implementations. So I think -- we are also hoping that the sales should pick up in the second half.

[Viraj Mahadevia]

Right. Would you like to guide us towards the CapEx for this year? And is this the peak CapEx for the company? So you won't have any major CapEx in the following few years or...

[Gautam Seth, executive]

No. I think the first half, we have seen certain CapEx happening, and we did raise even certain long-term funds for that. And that is mainly on the smart switchgear, what we have been working on that, plus also the enhancement of the metering production, so which is again happening on a selective basis. But right now, if you look at it, let's say, on a medium term, whatever the capacities what we are expecting, that would -- I think most of the CapEx, at least on the Metering front, is more or less done, I would say. Yes.

[Viraj Mahadevia]

Excellent. So from the next year onwards, FY '27, it will just be mainly maintenance CapEx for the next 3 years?

[Gautam Seth, executive]

Yes.

[Shankhini Saha]

[Operator Instructions]. Our next line of questions will be from Samarth Khandelwal.

[Samarth Khandelwal]

Could you help me -- like right now, we have reached 47% of the total -- the Consumer & Industrial has reached that much of the revenue mix in H1, right? So going ahead in H2, with the Metering picking up, how do we see the revenue mix in H2 and FY '27, if you could guide us?

[Gautam Seth, executive]

Yes. So let's say, in the H2 for FY '26, we do expect the Metering revenues to pick up. The orders are there, and as I just explained in the earlier answer. But we do hope certain growth -- good growth coming in into the Wires & Cables also. We are also looking at even Switchgear and Lighting to also perform. So overall, probably the Metering could grow at a much more faster pace, because the uptick could be much higher. But I think anywhere between 45% to 50% is where the C&I should be, yes.

But on a short term, if the schedules are adhered to by the AMISPs, then we should see a jump in the Metering part, especially in the Q4, we should see that. But we are hoping that even since the momentum has now picked up in the C&I, so the entire teams are also working to make sure that we are able to perform better as we go ahead. And second half is generally a better time in the trade business. So definitely, but I think roughly between 45% should be overall where we would expect the C&I to settle down.

[Samarth Khandelwal]

Right. So sir, that would also mean -- how much of a growth rate on an annual basis in C&I would we be expecting?

[Gautam Seth, executive]

So I would say strong double-digit growth for sure. Like Wires & Cables has been growing at a much higher -- like we've done 2 years almost 25% growth; we did 30% and 24% in the first and the second quarter. So overall, I think that the business is picking up. The momentum is there. So accordingly, we are also looking at channel expansion. We are looking at the brand investments to do that. And it's not only for these next 2, 3 quarters, but let's say, in the next 2 to 3 years, I think in a 3 years' time, I think the ideal would be that we double our C&I business. So that is how we are looking at it. It's a strong vertical for us. It's a strong focus. And as a company, we've always been focused on B2B and B2C. And this is right from last 10 years, we've been talking about that.

But right now, the C&I was a little dormant, more because of certain -- like if Wires was doing well, the Lighting had gone down because of the price erosion. So the turnover had gone down by almost INR 70 crores to INR 80 crores. So right now, the timing is good in most of the things. And we have more than 2 or 3 product categories performing today. So I think overall, HPL as a good consumer electrical brand also, that is what we look at. And I think that is the aim to really double up from here in the next 3 years, expand our portfolio.

And within each of these categories, a lot of new products are coming in. We have put in a strong R&D even on Switchgears and Wires. Lighting, again, is a very dynamic line, which requires a lot of R&D work, a lot of work happening to make sure that the costs of the products are kept at a minimum level, because the pricings are changing. It's a fairly competitive line. So I think right now, the things seem to be moving in a good direction, and we hope to catch on this to make the growth a long-term story for us.

[Samarth Khandelwal]

Yes. Very well, sir. So lastly, on the margins, we are investing in the distribution and channels. So how will our margins fare in the C&I segment?

[Gautam Seth, executive]

So I think right now, as I just said, like we are seeing a good movement. We are probably around 11% right now on an EBIT basis. But as the volumes go up, so maybe something for FY '27 or '28, if the same momentum continues and we are able to really make that happen, then we can probably work on much more better margins. But traditionally, if you look at HPL as a brand for last couple of years, we never undersell ourselves or something like that. We've always -- we are known for a good quality. We are known for technology. So we've not been the -- we never cut on the pricing. That's been our strategy right throughout. If you look at the last 10, 15, 20 years, that's been our strategy. Our quality, we believe, is always a little ahead in the market.

So I think premiumization and coming out with newer products has always been our strategy. So we will catch on that. But the only thing is when the volumes pick up and supported by good volumes and then when we look into this premiumization, that is where the margins would improve. But right now, at least for the immediate basis, I would say probably the similar margins would continue until we really hit much bigger volumes going forward.

[Shankhini Saha]

Our next line of questions has come in written form. So this is a question from Nitesh [ Chuba ]. So Gautam, the question is, we've seen good growth in C&I segment and Metering also picking up now. Over the next 3 to 5 years, do we want both segments to remain equal? Or will one clearly lead?

[Gautam Seth, executive]

Yes. So I cannot predict it how it would happen in the next 3 to 5 years. But basically, I think the focuses are very strong from the company not only on the sales part, but also on the manufacturing, on R&D, on any types of development, and including since both have separate channels, so our focus on growing these businesses have been very strong in each of the way. Of course, Metering, it also moves with the industry, like Metering has a very strong opportunity, what we have seen that. And next 5 years are going to be very strong for Metering. So for sure, there, we are seeing a very strong growth, and we already have the orders. We also have the pipeline for that.

Now when you look at the C&I business, these are, of course, made up with different types of products, because we have the consumer lighting, we have the professional luminaires, we have wire/cable, then there is switches, domestic switchgear, industrial switchgear and fans. So I think each of these have, of course, a different strategy for that. But overall, as a segment, if you look at it, we would look at a big growth. So for me, if you say, probably wherever we are in the next 5 years, if you are doubling up or even growing further more than that, I think they would be equal. So I cannot just put one over the other. But yes, I think both have clear strategies and a big addressable market for us.

[Shankhini Saha]

We'll take the next line of questions from [ Sahil Patani ].

[Unknown Attendee]

A few questions, Gautam. I wanted to understand that most recently, we've seen these news coming from like different states like Rajasthan, MP and Tripura where the consumers are complaining about extraordinarily high bills coming because of smart meters, and then there were some cases that the smart meters kind of caught fire and things like that. Have you kind of seen any impact of this on the DISCOMs and the AMISPs ordering or anything around these news that we see? Have you seen any impact of this on the Smart Metering?

[Gautam Seth, executive]

No. So we've not seen any impact. And since anyway we are supplying to the AMISPs, so at the ground level if these issues are coming up, they are seeing it -- they are facing it. But I think right now, the consumer awareness programs by most of these utilities done along with these AMISPs, so I think they are addressing all these issues. So I think running fast is something which even when electronic meters came in 1996, I think even that time that was the biggest problem. Every time there's a technology change, there is some resistance by RWA groups or certain individual things. But I think now the mechanism is such that they are very well addressed to.

And as more and more awareness is coming in and people are seeing the benefits of smart meter, especially with a lot of data available for the end consumer as well and obviously, for the AMISP and the utility, I think those type of concerns will eventually get washed away. So there were a slowdown -- I would say the execution slowdown, especially on the installation had been there. That's mainly -- it's my reading that it was more because of having proper skill set on the ground to actually install the smart meters, because the volumes have been incrementally going up.

So I think those issues are now getting addressed by them. I think even the ministries have been calling and really pushing for -- the government has been pushing to the AMISPs to really speed up the implementation. So I think those are broader issues which are there. But yes, on the news, what small issues are there, I think they are getting addressed locally only. And they do not affect our kind of business where we are in supplying the meters.

[Unknown Attendee]

Understood. Thanks for the clarification, Gautam. And now I want to understand, obviously, the government is pushing towards the adoption of solar rooftops as well, right? So a lot of individual homes are adopting solar rooftops, which require the net meters or the solar meters. So how is HPL contributing there? Is it still through smart meters? Or what is our strategy in capturing that piece of the market?

[Gautam Seth, executive]

So we are into net metering. From a long time, we've been supplying net meters throughout. But even the smart meters also stand in for that. So I'll need to individually check up what kind of -- because the smart meters are mainly going as a system to the AMISPs and through the utilities. But as a technology, the smart meter also can work on as a feature to look at the bidirectional measurements on that. But the net meters otherwise are -- we have been into that, and we've been supplying it, yes.

[Unknown Attendee]

Okay. Got it. And just one last thing. I want to understand, obviously, our Fans division that we started about like 18, 24 months ago, and then we did like a test production rollout, and I think that was mostly for export. So how is that coming? If you could just give a business update on the Fans segment?

[Gautam Seth, executive]

Yes. So we launched them in export because there were a lot of changes happening in the domestic market, mainly the market moving to -- the star rated came in, then the BIS mark became mandatory for a lot of things. So there were a lot of changes which, in a way, disrupts the market. Each time for 6, 8 months, we see the market getting disrupted.

So right now, in export, we've done, I would say, at least in 14 countries, we have supplied our fans. We've got international approvals for the Middle East with G-Mark. We've got the Sri Lankan approval for the SLS, because these are mandatory approvals to get into those markets. Then we also got a couple of the international approvals, which are more acceptable and universal going forward. Even in India, we have all the mandatory approvals for star rating.

Now when we look at the Indian market, we are looking at -- starting December and then moving up to June, July of '26, that will be the first full season where we will be participating. So we are already preparing for it. Our product range is complete, duly tested. And initially, wherever we have supplied, we've got a very good feedback on the quality. So I think let's wait and watch, but I'm sure by June end, by the time we complete, we should be at least present in about 70% to 80% of the market across the country and certain decent figures would start coming out here. So I think overall, we would be upbeat on that segment as well. And especially with the overall consumer and industrial growing, the fans definitely can provide another pillar in the whole thing to strengthen our connect with the channels as well as the end consumer.

[Unknown Attendee]

Okay. Got it. And on the margin front, are you expecting the margins to be stable in the current range? Or is there any improvement that you're expecting in the second half of the year?

[Gautam Seth, executive]

So right now, I would say, because what we see is the growth should be coming in. But still, on a margin basis, I would say, maybe in the longer term, maybe in the next year or something, we could aim for much better one, once the volume picks up to a larger extent. But right now, I would say, maybe same, maybe 11%, 12% is something where the margins would be on the consumer side, yes.

Because still Wires & Cables plays an important -- it still contributes a good chunk of the whole business. And that is still commoditized, that is still -- there is a lot of play on the on the copper prices going up. Only in the last 2 to 3 weeks, we have seen some stabilization of copper prices. But otherwise, they've been pretty volatile. We've had almost, in September, October, 3 increases, which have gone to the market. So let's hope -- because as more geopolitical and things become much more stable, then we should see the metals at a stable level. So I think right now, the C&I margins would be around those percentages only.

[Unknown Attendee]

No. Just on a consolidated basis, including the Metering?

[Gautam Seth, executive]

So Metering, like Metering last quarter has been pretty good. Right now, if you see the supply chain part is -- I don't see any major issue in that. I think it's getting to be a biased market where anybody with volumes can actually demand a better pricing. So I think those type of procurement efficiencies are something which we are right now experiencing. But sometimes, maybe on the exchange rate or electronics, or sometimes anything can happen on a geopolitical basis. But the last 2, 3 months have been pretty stable from that point of view. But we are doing pretty much global sourcing now for a lot of our -- especially on the ICs or if you look at the active/passive electronic components. Our polycarbonate is also sourced from outside. So like we are seeing wherever we get the best pricing, the best quality. So we have those resources to reach out and get those procurements done.

[Shankhini Saha]

[Operator Instructions] The next participant asking a question will be Mr. Ashit Kothi. Ashit, you can unmute yourself and ask your question.

We'll move on to the next participant in the meantime. Our next participant asking a question will be Mr. Pranjal Mukhija.

[Pranjal Mukhija, analyst]

I have a couple of questions, sir. Sir, firstly, in our order book, like what percentage of our order book is coming from Maharashtra right now?

[Gautam Seth, executive]

No. I think we've not been disclosing that. So we are talking about like our -- we go based on the AMISPs. So let's say, if one AMISP is doing it in 8 or 10 circles, so then -- so we are not doing it -- because we are not an AMISP, so we are not going geographically. Our business is more aligned on a customer basis. So probably I won't be able to answer you on that right now.

[Pranjal Mukhija, analyst]

Sir, is it like a material contribution though?

[Gautam Seth, executive]

No. Our order book that way, because we were studying it just last week, it's pretty well spread out. So just any particular state does not have so much of a relevance or effect on our overall order book, because ours is mainly on supply basis. So yes, an individual AMISP would make a difference, but yes individual circles, that do not impact us. No single state would impact us so much like that.

[Pranjal Mukhija, analyst]

Right. Sir, secondly, I just wanted to understand like what is the pace of execution in terms of smart meters in India cumulatively? Do you have any idea on that right now?

[Gautam Seth, executive]

Yes. So if you see the figures on public domain, so they're talking about 4.5 crores already installed. One month, the government announced that they did 1 crore meters, but then I think it is anywhere between 60 lakhs, 70 lakhs. Of course, I'm going by -- my information is as good as yours when you search the data on public domains and see that. But one thing is sure that if you look at our own, let's say, experience, almost every AMISP has a demand which is much stronger in the second half of this year than the first half. Then we have a lot of confirmed schedules, starting from November, December; especially Jan, Feb, March is much stronger. So overall, I think the execution is gaining pace. But the numbers you will have to check up on various sites to just try to get a sense of the numbers, because the accurate numbers probably may be a little difficult to get.

[Pranjal Mukhija, analyst]

Right. So sir, the reason I was asking this question, I mean, I think in one of the previous calls, you had mentioned like daily execution has gone to 1.2 lakh meters. But if you look at the National Smart Grid Mission data, I think in October month [indiscernible] just like...

[Gautam Seth, executive]

Pranjal, your voice is not clear.

[Pranjal Mukhija, analyst]

Okay. Sir, basically, the reason I was asking this question was -- so the government has recently extended the time lines for the entire 25 crore meter target, right? And if you just like try to break down the kind of execution we need to sort of execute this target in the next 2 years, I mean, the pace of execution needs to further increase from here. So I'm just trying to understand like do you see that the industry -- I mean, the ramp-up in the industry in terms of execution will even strengthen from here going forward?

[Gautam Seth, executive]

Yes, for sure. The pace of execution will pick up. But you have to realize one thing that a lot of these orders, when they come in, they have a delivery schedule of 2.5 to 3 years, plus there is normally 3 to 6 months of ramp-up required. So many of these projects are reaching those stages where now they really need to push the numbers. And a lot of the preliminary work, the groundwork has been done at that level. So I think my take would be that the overall execution will pick up. So not by 1 or 2 AMISPs, but by everybody, yes. So when you look at the overall industry, in the next 2, 3 years, the pickup should be there. Now whether they complete it or maybe they require some more time, that is something which we cannot comment today. But overall, I think the execution should pick up.

[Pranjal Mukhija, analyst]

And finally, I just wanted to understand, any new development on the software side that we're working on? Any new solutions or like products that we've come out for the consumer or the utility that we're serving?

[Gautam Seth, executive]

Yes. So I think on the software end, yes, we are out with our solutions -- or we've been working on that. And I guess on certain of the projects or customers, we have been already quoting those. So as we get them -- apart from just the smart meter, we are also exploring the overall ecosystem. So I think a lot of work has been going on, and we are due to get some orders with those supplies more beyond the smart meter, including the softwares.

[Pranjal Mukhija, analyst]

Sir, could you provide some color on the kind of products you're working on?

[Gautam Seth, executive]

No, not specifically, but I can ask Shankhini, she can probably share with you. So probably I'll need my technical people more on that. But I can share with you some light on that offline.

[Shankhini Saha]

Thanks for your questions, Pranjal. We'll be sure to share those details with you. Our next line of questions will be from the line of [ Riddhesh Gandhi ].

[Unknown Attendee]

I just want to understand, on your first quarter con call, you had indicated that a few of the orders have been deferred and rolled into Q2. And now it isn't exactly like reflecting into Q2 and then you've indicated that it's an issue of ramp-up being slower because of skilled labor to install them, et cetera. When do we actually -- when in your estimate are we going to see the kind of hockey stick growth happening in the smart meter business? Or do you see it being actually a lot more linear growth, if you will?

[Gautam Seth, executive]

So I'd say if you -- on an immediate, if you look at on a short-term basis, I would say like the Q3 is expected to be better than the Q2 for sure. But again, just being a little conservative, because in the last couple of months, the confirmed orders and confirmed schedules could not be honored by the AMISP. So there were slightly delays happening. So Q3 definitely is going to be much better, but Q4 looks to be very strong, because for most of the AMISPs, the delivery schedules are much, much higher in that. So even if there is a slowdown here and there, overall the business would still be substantially growing from there. For an individual case -- when I look at the overall industry, I think similar trends are there, like when we see -- like after all some information we do have, but I think the H2 should be better for the industry as a whole for sure.

[Unknown Attendee]

But any reason specifically it's been slightly slower than expectations? Is it only the labor issues or...

[Gautam Seth, executive]

No, no, this is just my understanding that it can be -- because we have seen that many times the meters are available, the data is available, but the requisite manpower to install or the skilled manpowers are sometimes missing. So this is just my understanding of that. But there could be other issues as well, because after all -- like that. But even today, companies like us also, we are also helping out some of our AMISPs in specific installations just to make sure that the requisite skill set is available at site. But when I look at the overall thing, there could be -- ultimately, they are dealing with the utilities. I'm sure a lot of initial challenges they have overcome, some fresh challenges could be there. But overall, I would say the things would move ahead for sure.

[Unknown Attendee]

So except for the labor issues, what are the other specific issues which they are experiencing and sharing with you for the slowdown? Is it that the clients are sort of signing off? Is it the budgetary issues? Is it red tape? Just wanted to understand that.

[Gautam Seth, executive]

No, no. I think from the policy perspective and from a budget, this thing, I think it seems to be very clear. This is what our understanding would be. So the only thing is more on the, challenges are on the execution front, which I think even the AMISPs are taking up. Even the ministry in one of the meetings had highlighted and really pushed forward that these execution issues need to be sorted out. So I think it's more of that end. From the policy perspective or the funds perspective, I think there's a lot of clarity from the government side on that, yes. In fact, on the contrary, they have been really pushing for the smart meters to be implemented.

[Unknown Attendee]

Got it. I mean, just to understand, if we receive a large order, that order typically will not have the time frame attached to it. As and when they are doing the installations, they will then use that specific order to kind of continue to place orders along with us. Is that how it works?

[Gautam Seth, executive]

No, no. Whenever an order is coming, they have a specific time schedule, because many of the AMISPs, let's say, if 4.5 crores is implemented and there are a couple of orders already given out to manufacturers like us, the overall orders received by AMISPs are much larger. So let's say, if they are receiving an order of 100, they are probably giving initially the 20, 30 order. There's a gap between the orders they are receiving and the orders they are giving out to manufacturers. So they are giving out on specific schedules, circles. So that is the way the industry has been working right now.

So only thing, let's say, what we also experienced in second quarter was that certain fixed schedules got postponed. So they say, okay, we'll take it up after 30 days, 45 days. So that's the kind of delays. But when we talk on a very strict quarter-on-quarter basis, anything moves from one quarter to another, definitely, the figures get affected. It's just that. On the long-term or medium-term basis, there is no change in it. The meters are going to go and the volumes are going to pick up for sure.

[Unknown Attendee]

And just a last question was you had indicated that you expect a quick ramp-up to happen from the fourth quarter. Is that an expectation? Or is that based on specific orders we already have and we know that the ramp-up is going to be there, or we expect from what we're hearing from our clients that we expect a ramp-up in Q4?

[Gautam Seth, executive]

No, I'm talking about specific information, what we have right now. Yes.

[Unknown Attendee]

Got it. So it's not specific orders which we already have, it includes expectations that we are expecting actually Q4 to ramp up.

[Gautam Seth, executive]

Yes, exactly.

[Shankhini Saha]

Our next line of questions will be from the line of Manish Gupta.

[Manish Gupta]

Yes. So I have 2 questions. One is on the Consumer & Industrial side. We have done about INR 384 crores of revenue in first half. I just wanted to understand in terms of the go-to-market strategies, what avenues are we present at, at this point of time? Especially, say, online versus offline, what is the business strategy? If you could highlight whatever you would be comfortable highlighting.

[Gautam Seth, executive]

So right now, our strategy is mainly the traditional and the offline strategies. Here, we are addressing the market through the traditional retail channel. And I think there, we have seen a growth in terms of the outlets or the point of sales what we've been addressing. And across all the product lines, more or less, the growth has been seen here. Also on the project side, especially when you look at -- because the portfolio what we have on the consumer side, which is the switches, MCBs, wires, lighting, all these go to the builder segment in a big way. And I think that is also where we have seen a growth coming in like this.

Now when you look at the online strategy, we have done it in the past, mainly in the lighting, but our experience was not so good when you look at from that point of view. Wires, MCBs, they don't have such a big market right now looking at it. But when we look at the fans, what we are right now -- we would be focusing as we enter the season, that through fans, we would again rebuild our online strategy in a bigger way, because there the per unit pricing is good. It's not breakable like in lighting or something like that. So overall, I think we will be putting in a stronger online strategy going forward. Probably by Q4, as the fans pick up, we would be doing that and then including the lighting and wherever other products could, because a lot of accessories can go along with that.

But I don't see a big business happening on wires or MCBs and even switches happening so much on the online. You see a lot of -- we have seen a lot of -- most of our competitors do have it online displayed. But when you look at the actual numbers what people are doing, at least in these type of segments is not so encouraging right now. But we'll definitely be finding a strategy within that.

[Manish Gupta]

So you think this kind of growth that we've done, like 23% in first half or 30% in Q2, 20% to 30% growth is achievable for next 2, 3 years in this segment overall?

[Gautam Seth, executive]

Yes, I think so. It's just -- okay, one has to -- right now, the market is supporting us. And our market share is also not so much. So we still have a headroom for growth. And our growth percentages, if you see in most of the segments, are well above what the industry figures come out. If you look at the EMA figures or whatever comes out, we are growing well beyond that. But then we have a lot of -- our market share is still lower. So we do have a headroom to really grow up. And I think we'll keep that momentum. Probably -- let's see how the H2 comes in. We are hoping for a good growth. And if that is happening, then probably we'll put in much more longer time strategies into that and make sure that this is sustainable. Yes. But for a company like us with the kind of products what we have, for us to double up from here in the next 3 years in C&I segment is pretty much doable, yes.

[Manish Gupta]

And we are okay in terms of capacities for producing these things?

[Gautam Seth, executive]

Yes, yes. We have been -- as I said earlier, as HPL, our focus has always been on technology and good products. So similarly, if you look at our manufacturing, we have a very strong manufacturing. So capacity-wise is good, but we have also put in a lot of automated machines. Especially in the Switchgear side, a lot of work has happened in the last 1, 2 years also. So in that way, we are investing even in those areas. So there, the quality gets enhanced, a lot of consistency comes in. And the human intervention in a lot of areas, including final testing and all, gets reduced considerably. So I think that's where a lot of our focus has been there.

So capacity would not be an issue for us to do like that. Wires & Cables, of course, we'll be coming out more specifically, because we are looking to expand our range, get into the next level of categories within the Wires & Cables and expanding the capacity, because we are seeing a steady growth. But I think those numbers we will disclose as and when things are ready to roll out, and that is when we will be coming back on that.

[Manish Gupta]

Sure. Sir, second question is on the settlement with Havells. I know you answered that you would not like to discuss the monetary part. But does that in any way open up any new segments for the listed company as part of settlement, anything which you could not do before, now you could do now that the settlement has happened with the brand or whatever the dispute is resolved? Or there is no change there, it's status quo, the way it was historically in the [indiscernible].

[Gautam Seth, executive]

So there's going to be no change in that, because there was no restriction anyway. Yes.

[Shankhini Saha]

Our next line of questions will be from the line of Rishabh Hingar.

[Rishabh Hingar]

So I have a couple of questions. So first thing is I want to ask, is HPL looking to launch next-generation products such as solar panels, something like what Polycab, Havells have done. Also the fact that this type of product range is a natural complement to the markets that we serve. So that's one question. Second, I also want to know that what is the split of Consumer & Industrial segment? Like how much does Switchgear constitute as a percentage of overall C&I segment?

[Gautam Seth, executive]

Yes. So Rishabh, so regarding our -- let's say, we have a complete solar portfolio where we are having right now the net metering; we do solar cables, the entire range; and in solar switchgear, there are a lot of DC breakers, there are a lot of products like this, plus all the distribution boxes which are, again, DC conversions on the string junction boxes and everything. So we have a large portfolio, but which is as a product. Like in any solar plant or rooftop solar, they go as balance of equipment.

But getting into right now, let's say, the solar panel, I think we have no plans on that. And I think -- so there's not. So companies would be getting into that. But we find that -- in the past also, because that's a very fast dynamic changing field with very heavy R&D requirements and a CapEx like that. So I think -- well taken, we'll probably study that part and see how that can complement our products in the future, and commercially how that would go around. But right now, we have no plans for that.

When we look at the -- in the C&I segment, if you look at the Switchgear part, so almost you can say about 40% of the sales of C&I is Switchgear. That includes both industrial as well as the domestic switchgears.

[Shankhini Saha]

On that note, we'll take a written question. So this question is from the line of Vikram Pandey. So Vikram wants to know, can you give us a breakdown of the C&I segment in more detail from Lighting to Switchgear to Wires & Cables?

[Gautam Seth, executive]

Yes. So if you look at the -- yes, so it's almost 40% is -- like I'll just give it in percentage-wise, almost 40% is Switchgears, 40% is Cables, and about 20% is Lighting, yes. Fans are still less. You can put it in within the lighting part, yes. But that is how the mix of the C&I segment is from a revenue perspective.

[Shankhini Saha]

And do you see this continuing? Or do you see any change in the near to medium term?

[Gautam Seth, executive]

No. So internally, there can be, because like lighting is sometimes seasonal, like Diwali period, it goes up, like this. But many of the luminaires what we are giving right now is now becoming -- and all-round year sales are there. So it's not too specific on Diwali what we see like that. But it may go up and down a little bit. What is more important for us is that we need to see this complete C&I portfolio grow at a double-digit figure in the next couple of quarters, and that is more important. So more or less, our teams or the consumer will find something or the other to take from HPL on the consumer side. And we need to enhance this portfolio. And I think that is more important right now for us.

[Shankhini Saha]

Our next question will be from participant, Raman K.V.

[Unknown Attendee]

Can you hear me?

[Shankhini Saha]

Yes, please go ahead.

[Unknown Attendee]

Yes. Sir, I have a question on the smart meter side. So from the presentation, I can understand that we have around INR 330 crores of unexecuted order book with respect to smart meters. So what will be the execution cycle for these? And sir, government has increased the target of INR 25 crores smart meter installation from March 2026 to March 2028. So I just want to understand what's the current industry-wide installation momentum? And by what percent will this pick up if the deadline of March 2028 is unchanged?

[Gautam Seth, executive]

So I think we've discussed it in the previous answers, but I'll try to put it all together again. If you see, the execution is around 4.5 crores right now. 25 crores was the initial estimate. I think 22 crores was sanctioned. Again, I'm going by the public data, by the government data, what they have given like this. But I think by the time we reach the next 2, 3 years, probably that 25 crore requirement may go even up to 30 crores, because this 25 crore figure was also fixed about 4 years back. So there are a lot of new connections, new customers coming in into the market. So the requirements generally would increase from that point of view.

The executions are now picking up state-wise. Most of our AMISPs, because that is where we get our direct data from. And I think all of them are looking to ramp up in the second half of this year. And obviously, the next year will be much better. The government has -- earlier also, they had extended the deadline. This time, I think there is going to be a much more bigger push by the government to adhere to these deadlines. So a bulk of the metering would probably happen in the next 2.5 years here. And that is going to be this. So whether they reach the figure or there's maybe some left out may not be so relevant for us. But as an industry, the pace of execution is going to go up. It's going to go all around. From every state, we are going to see that.

The earlier apprehension, which used to happen 3, 4 years back, and I was asked a couple of times even in news channels and others that whether the industry can supply that kind of volumes and meter, I think that is pretty much sorted out, because I think any type of upswing in demand can easily be met by -- even the top, I think, 2, 3 manufacturers themselves can meet the entire demand. So I think that's a good news even for us that we are sitting on large capacities, strong orders also. But even if the order book was to double from here and the time line probably reduced by half, we can still manage and supply more. So I think that is it.

So overall, what we are seeing, certain slowdowns or certain things, these are part of any installation process or any -- because it's a change in the entire system. And the first time is going to take a lot of time. The next time, probably in the next 5, 6 years, when we are talking about the next generation of smart meters coming in, the overall ecosystem will not require that kind of change, because the customer data would already be mapped. They would already be paying through that. The communication systems would be there. Probably they will need to be enhanced for sure. But the structural changes what we are seeing right now, at the utility level, with the AMISPs also learning a lot, and things falling in place, I think those type of challenges will not be there for the next subsequent part.

And the whole system from an offline system would have migrated to an online system. So I think it's a big change what we are seeing. And the government is, I think, driving it pretty well in that. So slight delays of 6 months, 1 year here and there, I think. That does not spoil the whole thing, because it's a huge change happening. And I think I've said it earlier also that it's the world's biggest smart meter rollout happening and that too on a prepaid basis. So definitely it's pretty challenging even to think of it and even to conceive of the whole thing. And then execution, obviously, will have challenges, which I think are getting sorted out.

[Unknown Attendee]

Sir, and the INR 3,000 crores of order book, what will be the execution cycle?

[Gautam Seth, executive]

Normally, any order we get is to be supplied in about 2.5 to 3 years. So many of the orders which we are sitting on our order book are actually scheduled towards the end of this year or FY '27 or '28. So that is how they have been structured. So they are not all for immediate delivery. It's not like that. It is all scheduled in a way, and that's how it's happening.

[Unknown Attendee]

Sir, just a follow-up on the initial part of the question. So now the industry is doing around 4.5 crores of smart meter installation per year. In order to fulfill that, you said there will be increase in the total targeted capacity from 22 crores to 25 crores to 30 crores. So if there is an increase and you have to execute, let's say, next 3, 4 years, so my understanding is the execution should double from here in the next 2 years. Correct me if I'm wrong on this part.

[Gautam Seth, executive]

No. So I'll just correct you a bit that the 4.5 crores is not an annual installation what they are doing, 4.5 crores is right now the cumulative installation they have done. This is, again, I'm quoting the...

[Unknown Attendee]

Okay. Understood.

[Gautam Seth, executive]

Yes, the things. But if you see, in a couple of months, the government -- there have been figures of 50 lakhs to 60 lakhs in a month. There have been a news given directly by the government that they have achieved 1 crore meters in 1 month. So assuming even if it is 60 lakhs, 70 lakhs, so they are talking about almost 8.5 crores or 9 crores, let's say, in a year, if that is the run rate they are following. So in 2 years and 2.5 years, probably they would reach anywhere above INR 20 crores, if you look at the figures.

I think that is how probably they must have calculated. But incrementally from here, I think looking at it on a quarterly basis, it would go up, because a lot of these -- as I said earlier, I'm repeating it again, the initial challenges what they were facing maybe 2 years or 1 year back, probably those challenges are not there, but there could be new challenges coming up. But that's normal in any business that would happen. But overall, I think that's how the -- so if they look at the -- by March '28, and if you look at the current pace and with a slight increase of, let's say, 10%, 15%, I think it's a very doable thing. It can happen. It's not something very far-fetched.

[Unknown Attendee]

Understood, sir. And sir, just one small doubt. So you said Q2 will be better for the smart meter, especially the Q4 part will be a little bit of execution heavy. So can we expect the margin to improve, because smart meter has a better EBIT margin than the C&I segment?

[Gautam Seth, executive]

Yes. So there is -- we've already seen the margin improvements happening. But going up from here, I cannot say that. But I think even to sustain these margins at these levels, because margins are dependent upon a lot of -- at the time of sourcing of materials, prices are still -- can be volatile. We have seen, of course, the last 2, 3 months pretty stable, but -- going forward, I cannot comment on it. But I think even though the volumes will go up, probably the margins would be sustainable only. I don't see it just incrementally growing each time until we really see some big product mix changing or something like that. But immediately, I don't see that happening, but we probably will sustain it also, should be a good achievement for the company.

[Shankhini Saha]

We'll take a follow-up question now from Mr. Viraj Mahadevia.

[Viraj Mahadevia]

Gautam, some time ago, I think you mentioned that the working capital terms or the receivable days on the AMISP are superior to the retail channel. Given now that your order book has largely pivoted to smart metering and the AMISP business, are you seeing an improvement in working capital days? And what are your working capital days currently -- receivable days, I'm sorry?

[Gautam Seth, executive]

Yes. So if you look at -- considering the GST, it's about 125 days overall. So I think it's a little about 5, 6 days better from March. But right now...

[Viraj Mahadevia]

Is it 125 working capital or 125 receivable days?

[Gautam Seth, executive]

125 days, I'm talking about the debtor days overall as a company. Yes. But yes, that can be better. This time, of course, the meter was a little subdued. But overall, if you see from the utility days, when we have seen that they were typically around 180 days, 165 to 180 days were what the utility debtors were, so we have seen an improvement in that. But overall, I think going forward, we need to see -- I think this is a segment which should see an improvement in the working capital.

On a short-term basis, we have seen the stocks go up, because certain confirmed orders, which were manufactured, ready to go, got shifted by 1.5 months. They got shifted backwards. So the stocks went up. The sales could not come into the books. So I think that is getting sorted out now. The sales are happening. So...

[Viraj Mahadevia]

Would the inventory days settle at sub 200 days, do you think going forward?

[Gautam Seth, executive]

No, the inventory -- yes, inventories on a short-term basis, like in Q3 and Q4, they will come down by about INR 50 crores, INR 60 crores. The inventory should come down. The sales should be going up.

[Viraj Mahadevia]

Yes. Understood. And assuming this generates more cash flows, right, with the improved performance in second half of the year, with the improvement in receivable days from where we were last year or a year before, you should generate decent operating cash flows by the end of the year. Obviously, you're investing some in CapEx. But would the balance cash flows be used to deleverage the balance sheet and pay down debt?

[Gautam Seth, executive]

Yes. So right now -- so I can probably -- how we use it because there has been a CapEx in the books in the first 6 months. And so I think maybe the borrowings may not -- the long-term borrowings would -- they have increased by, I think, about INR 60 crores. But if you look at the working capital part, whatever additional realizations happen, that brings the debt down. So that is how it would be. But...

[Viraj Mahadevia]

So the spare cash flows post CapEx would be prioritized for debt paydown?

[Gautam Seth, executive]

Yes. On the working capital part, yes. Yes, on the short-term fundings.

[Shankhini Saha]

We'll do one more follow-up from the line of Raman K.V.

[Unknown Attendee]

I just want to understand, sir, in the Switchgear and Cables & Wires segment, if you can provide me with the split about how much of your C&I segment is your Cable & Wires versus Switchgears?

[Gautam Seth, executive]

Yes. So I just said in my earlier answer, about 40% of the revenue is the Switchgear part, almost another similar 40% is the Wires & Cables and 20% is the Lighting.

[Shankhini Saha]

All right. On that note, I think we'll wrap up the Q&A session. If you have any more follow-ups, you can write to us at [e-mail], the e-mail ID on the last slide of the investor deck, and I'll make sure to get back to you with an answer that is up to your satisfaction.

So that concludes our Q&A session. As soon as this call finishes, you'll be directed to a survey for your feedback. Kindly take a few short moments to participate in this quick survey. I'll now hand over to Gautam for closing remarks. Over to you, Gautam.

[Gautam Seth, executive]

Yes. So to close, our priorities remain straightforward, execute on our Smart Metering order book; scale our Consumer & Industrial franchise, in Wires & Cables, Switchgears and Lighting; stay disciplined on margins, cash flow and capital deployment. So we keep investing selectively in our brand, products and capabilities, so that HPL can deliver steady and sustainable value for all stakeholders over the medium and long-term period.

So thank you for joining us today and being part of our growth story, and wishing you a good day ahead. Thank you very much.

[Shankhini Saha]

Thanks for your time today, Gautam, and for your insightful answers, and thank you to everyone who participated in our call today. On behalf of HPL, that concludes our earnings webinar for Q2 and H1 FY '26. Please do write to us if you have any remaining questions, and we'll be happy to get them answered. We can now disconnect our lines. Please have a very pleasant day ahead, everybody. Cheers, and bye-bye.