Buy GE Vernova T&D India Ltd for the Target Rs 5,100 by Motilal Oswal Financial Services Ltd
Miss on inflows
GE Vernova T&D’s (GVTD) 1QFY27 revenue, EBITDA and PAT were ahead of our estimates. However, order inflows remained weak at INR11.4b, resulting in an order book of INR208b (up 60% YoY). This was due to delays in finalizing certain export orders related to a US data center project. Going ahead, domestic ordering is likely to ramp up from 2Q/3QFY27 and export orders worth INR13b can materialize in 1-2 quarters. We expect contribution from HVDC project to commence mainly from FY29. With a strong pipeline of transmission projects, we expect ordering to revive in the coming quarters. We cut our estimates by 4%/5% for FY27/28 and roll forward our valuation to Dec’28 estimates. We maintain BUY on GVTD with a revised TP of INR5,100 (vs. INR5,200 earlier), based on average of DCF and 58x P/E Dec’28 EPS.
Results better than our expectation
GVTD’s 1Q revenue, EBITDA and PAT came in above our estimates. Revenue increased 38% YoY to INR18.4b, 10% above our estimates. Gross margin came in at 41.3%, slightly below our estimate of 42.8%. Absolute EBITDA increased 19% YoY to INR4.6b, 6% above our estimates, whereas EBITDA margin stood at 25.1% vs. our estimate of 26.0%, mainly due to higher-than-expected COGS. Supported by better-than-expected execution and higher other income, PAT came in at INR3.6b (+25% YoY), 11% above our estimates. Order inflows decreased 30% YoY in 1QFY27 to INR11.4b, taking the implied closing order book to ~INR208b (+60% YoY) as of Jun’26-end.
Ordering to ramp up with increased tendering activity
Order inflows declined 30% YoY to INR11.4b in 1QFY27, as order booking was impacted by a lower TBCB tender finalization during the previous quarter. Despite muted headline inflows, the quality of orders remained strong, with export orders accounting for 46% of quarterly bookings. Key wins included CT/CVT orders from GE Vernova North America, 400kV GIS orders for Spain and Morocco, a 155MVA 245kV transformer for a semiconductor customer, and multiple grid automation packages for state utilities, EPC contractors, and data centers. Overall inflows were impacted by delays in converting the previously approved INR13b US data center export order, which has been deferred to 2Q/3QFY27 following the changes in project location and voltage configuration, and the INR30b export project, which has been put on hold by the customer due to budget-related issues and will require fresh shareholder approval once revived. The domestic TBCB pipeline has improved materially during Jun-Jul'26, with several large projects already under developer evaluation. While award timing could spill over between quarters due to longer ordering cycles, the company remains confident of achieving its annual INR70-80b base order target. We bake in a CAGR of 13% in base ordering over FY26-29E, coupled with additional HVDC wins every alternate years for the company.
Financial outlook and valuation
We cut our estimates by 4%/5% for FY27/28E to factor in 1Q performance. We expect revenue/EBITDA/PAT CAGR of 26%/24%/24% over FY26-29E. The stock is currently trading at 69x/53x on FY27E/FY28E EPS. We maintain BUY rating on the stock with a revised TP of INR5,100 (vs. INR5,200 earlier), based on average of DCF and 58x P/E Dec’28E EPS
Key risks and concerns
Key risks include lower-than-expected growth in base orders, margin pressure, higher competition, and delays in execution ramp-up across HVDC projects
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