Buy GE Vernova T&D Ltd for the Target Rs 4,950 by Emkay Global Financial Services Ltd
We assume coverage on GE Vernova T&D (GVTD) with BUY and TP of Rs4,950, valuing the stock at 60x its Jun-28E EPS. GVTD’s operating performance was in line with our estimates. Revenue booking stood at Rs18.4bn (+38% yoy; our est: Rs16.6bn). EBITDA was Rs4.6bn (+18.9% yoy; our est: Rs4.3bn), with a margin of 25.1% (-400bps yoy; our est: 26%). Higher other income drove PAT to Rs3.6bn (+25% yoy), ahead of our estimate of Rs3.3bn. Order inflow degrew 30% yoy to Rs11.4bn, primarily due to a delay in order finalization in the T&D space, which has seen a pick-up in 2QFY27; the management retains base ordering guidance of Rs80bn for FY27. Order backlog stood at Rs209bn (+61% yoy), with revenue visibility of 3.1x TTM revenue. Despite geopolitical uncertainty, the management remains confident of maintaining mid-20s margins.
In-line operational performance
GVTD’s 1QFY27 performance was in line with our estimates. Revenue stood at Rs18.4bn (+38% yoy; our est: Rs16.6bn) Gross margin contracted sharply by 710bps yoy to 41.3%, owing to lower exports, elevated commodity prices, and the ramp-up of the lower-margin HVDC business. EBITDA came in at Rs4.6bn, with margins contracting 400bps yoy to 25.1%. PAT registered a healthy 24.7% yoy growth to Rs3.6bn, owing to higher other income (Rs418mn; +156% yoy).
Order book up 61% yoy to Rs209.3bn provides strong medium-term visibility
Order inflow in 1QFY27 declined 30% yoy to Rs11.4bn, while order backlog grew 61% yoy to Rs209.3bn, with revenue visibility of 3.1x its TTM revenue. 1QFY27 order inflow was muted, given delayed finalization of orders in the T&D space, which has started witnessing traction in 2QFY27, the management remains confident of achieving Rs80bn base orders for FY27. The US data center order of Rs13bn is expected to be booked in 2Q or 3QFY27.
HVDC one of the key growth levers going ahead
GVTD has identified HVDC projects as one of the key growth levers in future. A few largeticket HVDC orders are expected to be finalized in the medium term, potentially benefiting GVTD. Further, localization requirements in HVDC projects have evolved significantly, with transformer sourcing shifting from an earlier one-third share from India to now being entirely sourced locally.
Investment summary
GVTD is well positioned to ride the multi-year T&D capex cycle. The improvement in localization levels continues to support margin visibility. Despite near-term moderation in order bookings, the order backlog remains strong. We assume coverage on GE Vernova T&D (GVTD) with BUY and TP of Rs4,950, valuing it at 60x its Jun-28E EPS.
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