Buy GE Vernova T&D India Ltd For Target 5,928 by Prabhudas Liladhar Capital Ltd
Robust backlog supports multi-year growth visibility
We interacted with the management of GE Vernova T&D India (GVTD), during which they discussed the scope of their recently secured Barmer–South Kalamb HVDC-LCC project, pipeline across domestic and export market and outlook on margin and capex. GVTD recently secured the Barmer–South Kalamb HVDC-LCC project. While the company did not disclose the order size, we estimate it has an ~INR125bn of potential order value. The company’s order backlog thus stands at ~INR334.3bn and translates to a book-to-bill ratio of ~5.0x providing strong multi-year revenue visibility while the Lakadia-II–Alephata tendering is expected to begin around Q4 FY27. The management remained constructive on domestic transmission opportunities driven by POWERGRID’s capex, opportunities through TBCB channel and renewable integration driving STATCOM demand. Export conversion remains lumpy, with the INR30bn project currently on hold and the INR13bn US data centre opportunity subject to tariff considerations however the base export business is expected to grow at 10–15% p.a. Project execution capabilities remain well placed with the existing manufacturing capacity together with ~INR10bn of capex while further investments will be linked to future project requirements. Management continues to maintain mid-20s margin for FY27 and 20% margin baseline over the medium term supported by operating leverage and expecting only a limited margin dilution from execution of mega HVDC orders. Overall, strong domestic transmission demand, export optionality and a comprehensive product solutions basket provides multi-year growth visibility, although order conversion, execution timelines, export project finalisation and industry capacity additions remain key monitorables.
We believe,
1) GVTD’s strong position in HVDC with the recent Barmer- South Kalamb win
2) a robust order book
3) the management’s focus on margin resilience augur well for strong revenue & profit growth of GVTD. We maintain our ‘Buy’ valuing the stock at 65x Sep’28E EPS (same as earlier), resulting in a TP of INR5,928 (same as earlier).
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