Buy Genus Power Infra Ltd for the Target Rs.550 by Emkay Global Financial Services Ltd
Backed by a strong opening order book, GPIL sustained its healthy execution momentum during 4Q/FY26, delivering one of its strongest quarterly performances in terms of revenue and profitability despite the prevailing inflationary environment. Revenue/EBITDA/PAT grew 62.7%/36.2%/41.2% YoY. This was underpinned by accelerated execution of ongoing smart-meter installation projects and higher offtake of smart meters from various utilities. The current order book of ~Rs252bn, coupled with strong near-term tender pipeline of 80-90mn smart meters (likely to be awarded in the current year), offers strong revenue visibility. The management guided for revenue of Rs60- 65bn by FY27, with EBITDA margin of 18%. It expects to become cashflow positive by end-FY27, supported by pick-up in projects achieving a ‘go live’ status. GPIL remains one of the key beneficiaries of distribution reforms in India. We maintain BUY on GPIL and TP of Rs550.
Strong revenue momentum; margins impacted by cost pressure
Standalone revenue surged 62.7% YoY to Rs15.3bn, driven by accelerated project execution and strong progress across states in the smart metering portfolio. GPIL installed 3mn meters in Q4FY26, taking total installation in FY26 to 8.7mn meters. However, gross margin declined by 467bps YoY to 36.0%, primarily due to an adverse product mix and forex-led increase in raw-material costs. Employee expenses as a percentage of sales improved by 170bps YoY to 7.9%, while other expenses rose 65bps YoY to 9.4%. Consequently, EBITDA margin contracted by 361bps YoY to 18.6%. Despite the margin pressure, absolute EBITDA increased 36.2% YoY to Rs 2.8bn, supported by strong topline growth. PAT for the quarter rose 41.2% YoY to Rs 1.8bn.
Healthy order book to aid long-term growth
GPIL’s robust order book of Rs252bn provides strong revenue visibility over coming years. The smart metering opportunity remains in the early stages, with the management expecting >90mn meter tenders in FY27, supporting a healthy growth pipeline. In addition, rising export contribution and a meaningful scale-up in O&M revenue are expected to aid earnings growth. Sustained tendering activity across key states further strengthens medium-term growth visibility.
Increased debt, improving working capital; valuations remain reasonable
Net debt increased to Rs15.7bn vs Rs6.1bn in the previous year primarily due to higher short-term borrowings, with the management expecting gradual reduction post-FY28. Working capital days improved to 274 vs 343 days in the prior year, with guidance of another 50–75day improvement ahead; this points to stronger cash conversion. The stock is currently trading at 14x/11x its FY27E/28E EPS. We maintain BUY on GPIL with TP of Rs550, valuing the stock at P/E of 20x on Mar-28E EPS.
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