Fujiyama Power Systems Ltd (UTLSOLAR) Q2 FY27 Earnings Call: Revenue Up 130% YoY, Holds 70% Growth Guidance

Revenue Doubles YoY; Margins Moderate on Ratlam Ramp

• Q2 FY 2026-2027 revenue of Rs.1,307 crore, up 130% YoY — EBITDA up 116% to Rs.223 crore; management characterized this as "double the business in a year," aided by volumes, the on-roll service network and deliberate competitive pricing.
• Q2 EBITDA margin moderated to 17.1% from 18.1% in Q2 FY 2025-2026, absorbing Ratlam facility overheads staffed ahead of full production ramp; PAT of Rs.133 crore, up 111%, at a 10.2% margin vs 11.1%.
• H1 FY 2026-2027 revenue of Rs.2,652 crore (+127%) — practically equal to the Rs.2,655 crore recorded in the whole of FY 2025-2026; EBITDA Rs.478 crore (+128%) at an 18% margin vs 17.9% in H1 FY 2025-2026.
• Reported H1 PAT of Rs.191 crore includes the Bawal fire loss — Rs.143 crore pre-tax (Rs.107 crore post-tax) exceptional recognized in Q1 FY 2026-2027; normalized PAT was Rs.298 crore, up 128%, at an 11.2% margin.
• Q2 other expenses of Rs.112 crore, more than double YoY — CFO attributed the increase to Ratlam fixed overheads (inverter plant commissioned August, Q2 FY 2026-2027), one-off tier-2/tier-3 ad campaigns, and higher freight on fuel-price increases.
• Return ratios in slide 23 are half-year non-annualized figures — management states annualized return ratios will look better when presented annually.

Retail-Led Consumer Energy Model With Channel Depth

• More than 85% of revenue from retail households and small businesses buying via local dealers; the company positions itself as a consumer household-energy company making cells, panels, inverters and batteries across on-grid, off-grid and hybrid systems, with SKUs from 40W panels to 120 kVA online UPS.
• 10,200+ channel partners across 25+ states/UTs — in H1 FY 2026-2027 added 100+ distributors and 1,000+ dealers; Odisha and Uttarakhand moved to fully covered; 13 states covered, 5 growing, 4 on special-focus programs, with 14 states/UTs still largely untapped.
• 1,000+ on-roll (non-outsourced) service engineers, up from ~650 in March 2026, feeding complaint data to 80+ R&D engineers (patented RMPPT hybrid inverter, combo UPS, online PCUs).
• In-house UTL AI platform — built under the guidance of board member Mr. Sunil Kumar (IIT Delhi alumnus, 24+ years in software including Google) — runs 24x7 WhatsApp/voice chatbots in local languages, predicts spare-part needs and routes engineer visits.
• Dual-brand strategy — Suryakumar Yadav for Fujiyama Solar, Anil Kapoor for UTL Solar; a 25-year panel performance warranty and up to 10-year on-grid inverter product warranty underpin pricing power.
• Over 1.4 million inverters sold in the last 5 years, including ~4.5 lakh in FY 2025-2026.

Ratlam and Battery Build-Out Targets Margin Accretion

• Current capacity of 1 GW solar cells, 3.5 GW panels, 4 GW power electronics and 545 MWh lithium-ion batteries — with in-house PCB/EMS assembly, BMS cards, bus bars and transformers; stake in Jio Energy and Jio Cable raised to 50% in Q1 FY 2026-2027, with these entities planning to make frames, ribbons, junction boxes, cables and EVA sheets in FY 2027-2028.
• 2 GW power electronics commissioned at Ratlam in August 2026; the Ratlam lithium-ion plant upsized from 2 GWh to 3 GWh, expected online in coming quarters (H2 FY 2026-2027), taking lithium-ion capacity to 3.5 GWh.
• 1 GW tubular battery plant at Hathras, UP (replacing Bawal capacity lost in the May fire) expected in Q3 FY 2026-2027; a 1.2 GW TOPCon cell line at Ratlam is on track for Q1 FY 2027-2028, taking cell capacity to 2.2 GW (management pushing for an earlier launch).
• New plants replace external purchases — outsourced tubular batteries since the Bawal fire, cells beyond the 1 GW in-house capacity, and lithium-ion shortfall — so management says they add margin from the first unit.
• Optionality under evaluation — ingot/wafer entry ahead of ALMM List 3 (starts June 2028) and sodium-ion/advanced battery chemistries; a 5 MW BESS pilot at Dadri and a planned 10 MW installation at Ratlam.
• No company-level overcapacity, per management — maximum achievable utilization is 85-90% for cells and ~70% for panels, so relative to captive consumption the company may even need to procure externally in FY 2027-2028.

ALMM List 2, DCR Shortage and PM Surya Ghar Dynamics

• MNRE has required (since August 2026) PM Surya Ghar inverter suppliers to keep app servers and data in India, alongside mandatory M2M SIM data loggers; the Central Electricity Authority's cybersecurity regulations (July 2026) push the sector the same way. The company has confirmed full compliance to MNRE and sees its India-hosted platform as a competitive moat.
• DCR cell supply is tight — per management, industry DCR solar cell production run rate is only ~2 GW (2.2 GW in the prior month, as of the Q2 FY 2026-2027 call) against much higher demand; management believes DCR cell prices might rise further if ALMM 2 comes into effect from 1st January 2027 (Q4 FY 2026-2027), while a deferral would change the picture.
• PM Surya Ghar progress — per the national portal, 60 lakh+ households covered, 19+ GW installed and over Rs.36,000 crore subsidy released as of 31 October 2026; ~5 lakh households remain in the current phase running until March 2027.
• PM Surya Ghar 2.0 is under the government's consideration — reported proposals include battery-storage support, incentives linked to actual generation, and shared rooftop solar; clarity on timing is still awaited from the government (CFO). Chairman Pawan Kumar Garg said the battery-based systems business, run for 30 years, directly suits the company if the Surya Ghar 2.0 policy comes, and it expects to gain better market share.
• Demand beyond subsidy — several states including Madhya Pradesh, Jharkhand and Chhattisgarh have raised tariffs for FY 2026-2027; government data shows 20 lakh+ PM Surya Ghar households now report zero electricity bills; India rooftop solar capacity grew from ~12 GW (March 2024) to ~26 GW (March 2026) against an estimated 67 GW potential — under 5% penetration.
• Cell vs module context — as of June 2026, India had ~35+ GW of cell capacity against 200 GW of module capacity; Fujiyama owns its cells and is positioned for DCR panels and complete systems.
• On reports that the Chinese government is looking to ban technology transfer with respect to solar, management said machines for the new cells plant are already received and it sees no execution challenge.

Margin Bridge Explained; Inventory Build Ahead of DCR Switch

• Q2 FY 2026-2027 EBITDA margin of 17.1% vs 18.9% in Q1 FY 2026-2027 on similar gross margin — driven by seasonal softness with continued fixed-cost absorption, Ratlam overheads staffed ahead of volume, and higher selling/distribution spend; two temporary drags: outsourced tubular batteries until Hathras starts, and front-loaded sales/marketing/service expansion in new states.
• Margin guidance maintained — CFO said margins will remain sustainable as per last guidance: 18-19% for FY 2026-2027; management said it will try to maintain current margin levels, citing the steadiness of a B2C, multi-product portfolio (18% EBITDA margin in H1 FY 2026-2027).
• Peer margin gap challenged — analyst Himanshu Bisani noted peer solar cell makers report EBITDA margins north of 30% vs Fujiyama's 17-19%; CFO Prashant Gupta countered that 30% margins are not uniform across solar panel manufacturers, the DCR-cell-driven margin spike at some players "might be temporary," and other B2B players saw a slight margin dip in Q2 FY 2026-2027.
• Inventory of Rs.1,230 crore at September 2026 vs Rs.910 crore at March 2026 — but inventory days fell from 123 to 99, net working capital days from 83 to 59, and receivables are just 10 days; management says stock held in own warehouses with fast dispatch is not channel stuffing. Build-up is partly ahead of the domestic-cell switch from 1 January 2027, when every net-metered rooftop system in India (subsidy or not) must use panels made with ALMM List 2 domestic cells.
• Balance sheet as of September 30, 2026 — total assets Rs.2,907 crore (vs Rs.2,344 crore March 2026), equity Rs.1,466 crore, total debt Rs.851 crore, cash Rs.52 crore, net debt Rs.800 crore, net debt/equity 0.55x; H1 operating cash flow before working capital changes was ~Rs.490 crore, with ~Rs.661 crore invested in working capital and ~Rs.184 crore in investing activities.
• Debt increase drivers — ~Rs.100 crore for Ratlam expansion capex and ~Rs.300 crore for higher inventory, with ~Rs.80 crore of damaged Bawal inventory also contributing; cash flow was negative over H1 FY 2026-2027. A QIP resolution is being taken and, once board-approved, debt repayment may be planned from the proceeds (timeline unspecified).
• Insurance claim filed for the full carrying value of damaged Bawal assets — salvage disposal completed; management expects claim resolution and realization in FY 2026-2027, providing additional working capital cash inflow.

Guidance Held but Deferred; H2 Trajectory Left Open

• FY 2026-2027 full-year revenue growth guidance of ~70% stands — management explicitly will not revise guidance this quarter and will review it, along with Q4 FY 2026-2027 guidance, when Q3 FY 2026-2027 results are declared.
• Management declined to guide on the H2 FY 2026-2027 trajectory when asked whether H2 could match H1's ~125% YoY growth; CFO cited ALMM 2 being imminent ("on the door") and possibly shifting the market toward DCR cells where shortage continues, the ALMM 2 implementation deferment remaining on MNRE's list, and PM Surya 2.0 timing clarity still awaited.
• Analyst context on subsidy scheme — only 66 lakh households have benefited to date versus the 1 crore target (period unspecified); the analyst also cited industry capacity of 210 GW vs demand of ~40-45 GW for FY 2027-2028 and asked how much module price correction to expect; management did not quantify any correction figure.
• Competitive intensity in retail — CEO Yogesh Dua said retail requires channel build-out, service engineers and sales staff, so new entrants' sustainability can be judged only after 1-2 quarters (from the Q2 FY 2026-2027 call), especially if they run separate P&Ls he cited Videocon and Philips as past entrants that could not sustain long in retail.
• South India ramp — Kerala is performing well in solar and Tamil Nadu has improved significantly; Andhra Pradesh and Telangana efforts are ongoing with improvement expected in Q3 FY 2026-2027; a South revenue split of Q2's Rs.1,307 crore was not readily available (to be shared offline/next call).
• Disclosure improvement agreed — a slide bifurcating revenue (panels vs power electronics) will be added from the Q3 FY 2026-2027 investor presentation; management noted earlier disclosures of this split had created complications.
• Outlook — management remains fully confident of achieving its robust growth targets while maintaining margin discipline, supported by expanding distribution and newly commissioned/upcoming Ratlam and battery capacities; no specific numeric FY-level guidance beyond the ~70% revenue growth was given on the call.