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Our view

GE T&D India Ltd (GETD) reported an excellent of numbers surpassing our estimates with revenue growth of 21% YoY. The company managed to clock in its highest EBITDA margin since FY19. Order inflows at Rs10bn grew by 68% YoY. As on 1QFY24 order book stands at ~Rs39.4bn (1.4x TTM revenue), Robust ordering activity and a healthy tender pipeline led investment in power transmission infrastructure would support revenue growth going ahead.

Looking forward

We believe challenges in the form of rising commodity prices have largely eased and margin recovery would be contingent upon cost rationalization measures which has been witnessed in 1QFY24 to an extent. We expect 1) strong order pipeline, 2) pickup in order inflows and 3) execution ramp up, to benefit GETD in the long run. Given the sharp run-up in the stock price, we believe GETD is trading at demanding valuations of 81.9x/44.2x FY24E/25E EPS. Accordingly, we maintain our SELL rating with a revised TP of Rs160.

Result Highlights

? Sales came in at ~Rs7.2bn (up 21% YoY) (YSLe: Rs6.1bn)

? Gross margins came in at 31.7%, ~280bps YoY contraction

? EBITDA grew by 127% YoY at Rs508mn (YSLe: Rs244mn) led by operating leverage benefits. Margins saw a ~330bps YoY expansion at 7.1%

? PAT came in at Rs282mn (YSLe: Rs64mn) which was a 344% YoY growth on account of strong operational performance

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