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Disappointing quarter

Our view

GE T&D India Ltd (GETD) reported a poor set of numbers, led by weak executional performance owing to pandemic and supply chain issues. EBITDA slipped into negative owing to elevated commodity prices (impact of Rs350mn), other items (Rs200mn impact) and certain non‐recurring expenses. Order inflows in Q4FY22 and FY22 declined 10% and 5% YoY, respectively. As on 4QFY22 order book stands at ~Rs37.2bn (1.2x TTM revenue), providing revenue visibility for 1‐2 years. Going forward management expects strong traction with healthy ordering pipeline in renewable and TBCB segments however it would selectively bid for orders with prime focus on profitab

We believe medium term challenges would continue due to rise in commodity prices impacting margins. However, we expect 1) strong order pipeline, 2) pickup in order inflows and 3) execution ramp up, to benefit GETD in the long run and expect it to report revenue/PAT CAGR of 4%/29% from FY21‐FY24E. The stock is currently trading at 41.1x/20.9x FY23E/24E. We maintain our REDUCE rating on stock with TP of Rs105 valuing it at 22x FY24 earnings. Owing to weak operational performance and margin headwinds, we cut our FY23/FY24 EPS estimates by 33%/15% respectively.

Result Highlights

* Sales came in at ~Rs6.6bn (down 27% YoY) (YSLe: Rs10.8bn) on account of poor dispatches.

* Owing to high commodity inflation, gross margins came in at 14.0% Vs 25.4% in 4QFY21.

* The company reported negative EBITDA of Rs1.6bn v/s Rs446mn in 4QFY21 (YSLe: Rs94mn) on account of a sharp rise in other expenses (90% up YoY).

* As a result, adj. PBT came in at a loss of Rs1.4bn.

* At the adj PAT level, the company reported a loss of Rs1.3bn in 4QFY22 Vs adj PAT of Rs386mn in 4QFY21

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