Reduce GE T&D India Ltd For Target Rs.116 - Yes Securities
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Subdued quarter; all hopes pinned on 2HFY23
Our view
GE T&D India Ltd (GETD) reported a muted set of numbers, significantly missing our estimates. Revenues at Rs5.9bn declined by 18% YoY while EBITDA was just about in the green at Rs54mn. The company managed to report a profit at PAT level on the back of higher other income. Order inflows in Q2FY23 at Rs4.9bn de?grew by 23% YoY. As on Q2FY23 order book stands at ~Rs34.6bn (1.2x TTM revenue), providing revenue visibility for ~18 months. Going forward management expects strong traction with healthy ordering pipeline in renewable and TBCB segments however it would selectively bid for orders which are profitable for it.
We believe medium term challenges would persist 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, will benefit GETD in the long run and expect it to report revenue CAGR of 13% from FY22?FY25E. The stock is currently trading at 67.2x/24.7x/18.8x FY23E/24E/25E EPS. We maintain our REDUCE rating on the stock with an unchanged TP of Rs116 valuing it at 22x FY24 earnings.
Result Highlights
* Sales came in at ~Rs7bn (down 18% YoY) (YSLe: Rs8.4bn) on account of poor dispatches.
* Gross margins came in at 25.2%, ~120 bps/930bps YoY/QoQ contraction
* EBITDA came in at Rs54mn (YSLe: Rs298mn) om account of poor operational performance
* Adj. PBT came in at Rs101bn vs a loss of Rs96mn in 2QFY22.
* Adj PAT came in at Rs86mn vs a loss of Rs77mn in 2QFY22
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