Issue #023 explores HPL Electric & Power - a leading player in smart meters. We delve into business model, orderbook, capacity, revenue, margin & strategy to benefit from India’s electrification boom
While analyzing HPL Electric, one aspect that had both Priyam & me a bit puzzled was the lack of client-specific disclosures in their exchange filings
Nowhere did the company mention who was awarding them those smart meter contracts — be it DISCOMs, electricity boards, AMISPs or private players
To get clarity, Priyam reached out to the company's Investor Relations team. After a gentle follow-up, here’s the response we received:
Dear Priyam,
Thank you for your patience and your keen interest in HPL Electric & Power and for your detailed research on the industry and our company’s performance.
As a policy, we maintain confidentiality regarding specific contract details, including the sources of our order inflows. However, we can share that we work with leading AMISPs and continue to secure contracts across key market segments. Any marquee contracts will be duly communicated to stakeholders through appropriate disclosures.
In the meantime, we encourage you to review publicly available information, including our exchange filings and investor communications, for updates on our business progress
----
Lesson: when in doubt, write to the company's Investor Relations
Great article Shankar & Priyam. Given your analysis this seems like a potential multibagger esp if they bag more orders for the remaing 22cr units.
Few questions:
1. Target 700 at 30 PE would indicate 27% CAGR right as per your table, not 38%. Typo?
2. FII & DII holding is <1% in HPL at this time. Any reason why? As a high potential small cap wouldn't this be on every AMCs smallcap fund radar? Perhaps that might change if they are subbed to you :)
3. Any indication if HPL is going to increase meter production capacity to bag higher share of the 22cr pending units? If not then wouldn't Tata or Adani grab the lion share?
1. Yes, its a typo. The image presents the right numbers though
2. FIIs and DIIs might not be interested in investing in a small company (HPL mcap < ₹3000 crs) plus free-float is very low
3. There aren't any concrete indications of HPL increasing production of smart meters. They have a capacity of 1.1 crore meters and are currently at a 70-80% utilization rate. The management has said that as more orders flow in, they're equipped to take utilization up to the 100% mark by adding extra shifts
Thank you. The guidance is for a blended EBITDA margin of 14% -- depreciation needs to be added too. This is available in the Q3 transcript, pls have a look.
I made a mistake in the image. Instead of EBITDA, wrote EBIT in some places although I meant EBITDA. Pls make that typo change when evaluating
hi, very nice article. wanted to understand, if the current installation is just 2.3 crore, what is it that will make the target achievable. with the government involved, would the target be achievable in 10 years rather than 2-3 years as the hope is. ?
Hi Shankar, Nice article as always. Just want to understand your thought process as to why you chose HPL electric vs Genus Power in this sector? Genus has the same tailwind, works with a reputed SG AMISP with exclusivity and has a much larger orderbook.
Thank you Mr. Vijayan. In December 2024, Genus Power was named in an ED chargesheet of having routed ₹60 crore to an IAS officer (Sanjeev Hans). I've taken this as a red-flag limiting the company's work until the matter is resolved
Yes, hope you noticed -- they didn't say anything to the tune of "We're innocent". The core messaging was that "it's almost 2.5 months, nothing is going on now .. so nothing to worry"
In a related note, Genus Power purchased electoral bonds worth ₹38.5 crores between Oct 2020 and Jan 2024, donating ₹25.5 crores of it to the BJP and the balance ₹13 crore to Congress. Ofcourse, these were legal then
I guess, it's not just their meters that are smart .. their way of conducting business is super smart :)
There is another company with similar profile trading at 28 pe.... Market cap 1800 cores.. and owns 70% of another company which is valued at 700 cr..... SALZER electronics
We looked at Salzer Electronics too but it's not a like-to-like comparison with HPL Electric. Reasons:
1. Currently, 93% of Salzer's revenue comes from switchgears and wires & cables and 0% from smart meters. On the other hand, HPL derives ~23% of its revenues from switchgears and wires & cables and 66% from smart meters
2. Salzer's margins are around 10% which is indicative of what switchgears and wires/cables offer. Even HPL makes 10-11% on these products. But HPL's blended EBITDA is 14% i.e. 16% from smart meters and 10-11% from their C&I division
3. Salzer is very new to smart meters. It has received just two orders so far -- a ₹5 crore order in Q3 and a ₹50 crore order from the same AMISP in Q4. On the other hand, HPL sits on a orderbook of ₹3,000+ crores
These points will have to be weighed in when judging the PE multiple you'd like to offer to both these companies
Further, the value of Salzer's 71% stake in a subsidiary, Kaycee Industries Limited has come down. Kaycee's mcap is ₹340 crores now. That too needs to be accounted for.
Great analysis! HPL Electric stands out as a strong proxy for India’s smart meter revolution — 1.1 cr capacity, ₹3,400 cr order book, and 20% market share position it well for multi-year tailwinds. The AMISP model gives it scalability despite some execution volatility. Forward PE of 18.8 (FY27E) with 40% EPS CAGR potential offers a rare combo of growth and valuation comfort. Looks like a textbook case of “riding policy-backed tailwinds early.”
Hi. The company invested quite a bit over the past few years in building capacity from internal accruals and borrowings. The revenues did not grow much during this period
But now, as these capacities are getting utilized and EBIT numbers improving, the ROCE has started to rise. ROCE in numbers:
Mar 2022: 6.4%
Mar 2023: 8.5%
Mar 2024: 10.8%
Sep 2024: 12.7%
Further, the C&I division has a shorter working capital cycle as compared to meters. This also helps with re: expanding ROCE
Hey Shankar, nice article. I have a few questions:
1. Shouldn’t we view in terms of a broader customer base? (instead of only about the AMISPs)
2. Aren’t we betting much on a single sales point (smart meters)?
3. If we are in the wires and cable segment, how is it that HPL is going to play against the already established manufacturers like Polycab and Zaggle(relatively). Now that Adani group seems to enter this market, isn’t that a risk?
I wanna to join alpha community but i have queries regarding alpha community I already drop mail but not yet responded to that mail I hope you will respond and resolve my queries to join alpha community and grow to gather
1. Any particular concern you have identified when working with AMISPs?
2. Companies that grow rapidly or are deemed to see a spike in revenue tend to show a spurt in inventory & receivable/payable numbers. For companies like HPL, this is more visible as they deal with government players and utilities
I have no views on it currently, will circle back if a picture emerges
While analyzing HPL Electric, one aspect that had both Priyam & me a bit puzzled was the lack of client-specific disclosures in their exchange filings
Nowhere did the company mention who was awarding them those smart meter contracts — be it DISCOMs, electricity boards, AMISPs or private players
To get clarity, Priyam reached out to the company's Investor Relations team. After a gentle follow-up, here’s the response we received:
Dear Priyam,
Thank you for your patience and your keen interest in HPL Electric & Power and for your detailed research on the industry and our company’s performance.
As a policy, we maintain confidentiality regarding specific contract details, including the sources of our order inflows. However, we can share that we work with leading AMISPs and continue to secure contracts across key market segments. Any marquee contracts will be duly communicated to stakeholders through appropriate disclosures.
In the meantime, we encourage you to review publicly available information, including our exchange filings and investor communications, for updates on our business progress
----
Lesson: when in doubt, write to the company's Investor Relations
Great article Shankar & Priyam. Given your analysis this seems like a potential multibagger esp if they bag more orders for the remaing 22cr units.
Few questions:
1. Target 700 at 30 PE would indicate 27% CAGR right as per your table, not 38%. Typo?
2. FII & DII holding is <1% in HPL at this time. Any reason why? As a high potential small cap wouldn't this be on every AMCs smallcap fund radar? Perhaps that might change if they are subbed to you :)
3. Any indication if HPL is going to increase meter production capacity to bag higher share of the 22cr pending units? If not then wouldn't Tata or Adani grab the lion share?
Thanks and you guys rock!
Glad you liked it, Amit ji
1. Yes, its a typo. The image presents the right numbers though
2. FIIs and DIIs might not be interested in investing in a small company (HPL mcap < ₹3000 crs) plus free-float is very low
3. There aren't any concrete indications of HPL increasing production of smart meters. They have a capacity of 1.1 crore meters and are currently at a 70-80% utilization rate. The management has said that as more orders flow in, they're equipped to take utilization up to the 100% mark by adding extra shifts
Shankar & team, very nice investigated article and thanks for the effort !.
From screener below is what I can find.
March 2024, Sales 1461. PBIT is 158, means PBIT is 10.8% ?. (interest 90 + PBT 68).
Can you please confirm the PBIT 14%+ commitment by management?
Thank you. The guidance is for a blended EBITDA margin of 14% -- depreciation needs to be added too. This is available in the Q3 transcript, pls have a look.
I made a mistake in the image. Instead of EBITDA, wrote EBIT in some places although I meant EBITDA. Pls make that typo change when evaluating
hi, very nice article. wanted to understand, if the current installation is just 2.3 crore, what is it that will make the target achievable. with the government involved, would the target be achievable in 10 years rather than 2-3 years as the hope is. ?
Thanks. It should be done sooner that 10 years. The math is as follows:
- Current installations per day = 80,000 (let's assume this goes up to 1,10,000 over the next year)
- Installations per year = 4 crores (1,10,000*365)
- Time to complete 20 crore additional installations = 5 years
Superb quality sir
Thank you so much 🙌
Hi Shankar, Nice article as always. Just want to understand your thought process as to why you chose HPL electric vs Genus Power in this sector? Genus has the same tailwind, works with a reputed SG AMISP with exclusivity and has a much larger orderbook.
Thank you Mr. Vijayan. In December 2024, Genus Power was named in an ED chargesheet of having routed ₹60 crore to an IAS officer (Sanjeev Hans). I've taken this as a red-flag limiting the company's work until the matter is resolved
Ok understood, management says there is no issue in the recent concall but yes, definitely a red flag.
Yes, hope you noticed -- they didn't say anything to the tune of "We're innocent". The core messaging was that "it's almost 2.5 months, nothing is going on now .. so nothing to worry"
In a related note, Genus Power purchased electoral bonds worth ₹38.5 crores between Oct 2020 and Jan 2024, donating ₹25.5 crores of it to the BJP and the balance ₹13 crore to Congress. Ofcourse, these were legal then
I guess, it's not just their meters that are smart .. their way of conducting business is super smart :)
Will Genus show all the figures in their pnl ?
Nice presentation shankar sir as usual. Anything about the background of the management and team?
Thank you. I did some Google search, didn't find anything untoward
The promoter group has over 70% shareholding and it's owner-operated (run by Rishi Seth and Gautam Seth, both in their 50s)
Haha, true!
By the way, I look forward to joining Alpha.
Thank you Mr. Vijayan. I've sent you the invite now 🤗
There is another company with similar profile trading at 28 pe.... Market cap 1800 cores.. and owns 70% of another company which is valued at 700 cr..... SALZER electronics
We looked at Salzer Electronics too but it's not a like-to-like comparison with HPL Electric. Reasons:
1. Currently, 93% of Salzer's revenue comes from switchgears and wires & cables and 0% from smart meters. On the other hand, HPL derives ~23% of its revenues from switchgears and wires & cables and 66% from smart meters
2. Salzer's margins are around 10% which is indicative of what switchgears and wires/cables offer. Even HPL makes 10-11% on these products. But HPL's blended EBITDA is 14% i.e. 16% from smart meters and 10-11% from their C&I division
3. Salzer is very new to smart meters. It has received just two orders so far -- a ₹5 crore order in Q3 and a ₹50 crore order from the same AMISP in Q4. On the other hand, HPL sits on a orderbook of ₹3,000+ crores
These points will have to be weighed in when judging the PE multiple you'd like to offer to both these companies
Further, the value of Salzer's 71% stake in a subsidiary, Kaycee Industries Limited has come down. Kaycee's mcap is ₹340 crores now. That too needs to be accounted for.
Great analysis! HPL Electric stands out as a strong proxy for India’s smart meter revolution — 1.1 cr capacity, ₹3,400 cr order book, and 20% market share position it well for multi-year tailwinds. The AMISP model gives it scalability despite some execution volatility. Forward PE of 18.8 (FY27E) with 40% EPS CAGR potential offers a rare combo of growth and valuation comfort. Looks like a textbook case of “riding policy-backed tailwinds early.”
Thank you sir ji
Most welcome
Hi Shankar,
What about the consistenly low ROCE of the company over the years ?
Thanks
Hi. The company invested quite a bit over the past few years in building capacity from internal accruals and borrowings. The revenues did not grow much during this period
But now, as these capacities are getting utilized and EBIT numbers improving, the ROCE has started to rise. ROCE in numbers:
Mar 2022: 6.4%
Mar 2023: 8.5%
Mar 2024: 10.8%
Sep 2024: 12.7%
Further, the C&I division has a shorter working capital cycle as compared to meters. This also helps with re: expanding ROCE
beautiful , thanks
How can we join Alpha Community, @Shankar Nath ji
Hello Swaroop ji, kindly have a read: http://youtube.com/post/Ugkxbjpyl9MA-eM_qy5gWpAMoNHfHivaW_JK?si=1LyZUJzI87rm4PIr
Since the price has now shot up to ~550, would you still recommend buying it?
Hey Shankar, nice article. I have a few questions:
1. Shouldn’t we view in terms of a broader customer base? (instead of only about the AMISPs)
2. Aren’t we betting much on a single sales point (smart meters)?
3. If we are in the wires and cable segment, how is it that HPL is going to play against the already established manufacturers like Polycab and Zaggle(relatively). Now that Adani group seems to enter this market, isn’t that a risk?
Thank you Shankar
I wanna to join alpha community but i have queries regarding alpha community I already drop mail but not yet responded to that mail I hope you will respond and resolve my queries to join alpha community and grow to gather
Hi Shanker nice article great work
Two concerns one is AMISP business model le revenue short fall and second trade receivables,trade payables increasing
whats your view on these
Thank you
1. Any particular concern you have identified when working with AMISPs?
2. Companies that grow rapidly or are deemed to see a spike in revenue tend to show a spurt in inventory & receivable/payable numbers. For companies like HPL, this is more visible as they deal with government players and utilities
I have no views on it currently, will circle back if a picture emerges