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Healthy Q1; all eyes on order momentum

GE Vernova T&D (GET&D) delivered a healthy operational performance with revenue increasing 38% YoY, driven by robust domestic execution. However, EBITDA margin declined 404bps YoY, primarily due to lower gross margins (-709bps) impacted by higher input costs, lower export contribution and ramp-up of lower gross margin HV business. Although order inflow moderated (-30% YoY) due to a weak domestic TBCB ordering environment from Jan-Mar affecting order conversion, the company maintained a healthy order backlog of ~Rs209bn, providing strong multi-year execution visibility. The domestic ordering environment has started improving with the TBCB pipeline witnessing better traction since June. The HVDC pipeline remains intact with the Barmer-South Kalamb’s bidding expected to complete by Aug-Sep; despite some delays and incremental project opportunities are expected over the coming quarters. Export orders accounted for ~46% of Q1 order inflows, reflecting continued success of its 'India for the World' strategy, while order momentum remained diversified across grid automation, GIS, transformers, semiconductors and data centres. Further, pending RPT opportunities, including the US data centre order (~Rs13bn) expected to finalize by Q2/Q3 while Rs30bn RPT project is on hold and can be expected to progress as customer discussions conclude, providing incremental upside to order inflows. The company thus continues to maintain base order inflows of Rs70-80bn and a mid-20s EBITDA margin guidance, supported by disciplined project selection, a debt-free balance sheet with ~Rs29.3bn cash, ongoing ~Rs10bn capacity expansion and a healthy mix of domestic and export opportunities. With rising investments in grid modernisation, renewable integration, exports, data centres and HVDC, GE Vernova remains well positioned to deliver sustainable profitable growth over the medium term.

We believe

1) a healthy order pipeline

2) a robust order book (Rs209bn)

3) the management’s focus on margin resilience augur well for strong revenue & profit growth of GVTD. The stock is trading at a P/E of 71.5x/59.4x on FY27/28E. We maintain our ‘Accumulate’ rating with a revised TP of Rs4,701 (Rs4,650 earlier) valuing the stock at a PE of 65x Mar’28E (same as earlier).

Healthy Execution drives profitability despite high base:

Revenue rose 38.0% YoY to Rs18.4bn (PLe: Rs16.8bn) driven by robust execution. Gross margin decreased by 709bps YoY to 41.3% (vs PLe: 44.2%) due to higher mix of export orders in base quarter. EBITDA grew by 18.9% to Rs4.6bn (PLe: Rs4.4bn). EBITDA margin declined by 404bps YoY to25.1% (Ple:26.4%) against high base (29.1% in 1QFY26) primarily led by gross margin contraction partially offset by operating leverage. PBT (exc. Extra-ordinaries) increased by 24.9% to Rs4.9bn (PLe: Rs4.5bn) aided by sharp increase in other income (+156.7% YoY to Rs418mn). Adj. PAT grew by 24.7% to Rs3.6bn (PLe: Rs3.4bn) as effective tax rate increased marginally (+15bps YoY to 25.5%).

Robust order book at Rs209bn (3.1x TTM revenue):

Q1FY27 order inflow came in at Rs11.4bn down by 30% YoY due to -55.7% YoY decline in Domestic Order Inflow to Rs6.2bn despite export order Inflow growing by a sharp +128.7% YoY to Rs5.2bn. Order book stands healthy at Rs209bn (3.1x TTM revenue) with a mix of Private/State Utilities/Central Utilities at ~77%/2%/21%.

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