Buy Genus Power Infra Ltd for the Target Rs.550 By Emkay Global Financial Services Ltd
Execution momentum sustains; maintain BUY
GPIL continued to deliver strong execution momentum, driven by a robust opening order backlog and tight cost control, resulting in its highest-ever quarterly revenue and profitability in Q2FY26. Revenue/EBITDA/PAT grew 136%/200%/162% YoY, surpassing both the management guidance and our estimates by a wide margin. The performance was underpinned by accelerated execution of ongoing smart-meter installation projects and higher offtake of smart meters from various utilities. While order inflow was muted at Rs1.3bn, the management pointed to the strong tender pipeline worth Rs270-280bn expected to be awarded over the next six months. Given the improved visibility, the management raised its FY26 revenue guidance to Rs45bn (from Rs40bn earlier) and expects FY27 revenue of Rs55–60bn with EBITDA margin of 20- 21%. We maintain BUY on GPIL while raising our TP by ~8% to Rs550.
Robust growth on the back of strong execution and operating leverage
Standalone revenue surged 136% YoY (up 22% QoQ) to Rs11.5bn, driven by robust execution across ongoing smart-meter projects. GPIL installed 1.9mn meters in Q2FY26, taking the total number of installations to 3.6mn in 1HFY26. EBITDA margin expanded by 456bps YoY to 21.3%, benefitting from the strong operating leverage. As a share of sales, employee costs declined by 216bps YoY to 10.8%, while other expenses fell by 552bps YoY to 9.4%. Consequently, absolute EBITDA grew 200% YoY to Rs2.4bn. Interest cost increased 42.6% YoY to Rs407mn, though it improved to 3.5% of sales (down 232bps YoY) due to a higher revenue base. PAT jumped 162% YoY to ~Rs1.5bn, marking GPIL’s best-ever quarterly profitability.
Raises guidance for FY26
Given strong execution momentum and robust order backlog of Rs287.6bn, the mgmt raised its FY26 revenue guidance from Rs40bn to Rs45bn, and further guided for FY27 revenue of Rs55-60bn. Going ahead, we see strong opportunity for GPIL as 100mn meters of the total 250mn announced have yet to be awarded under the RDSS scheme.
Net capital improvement remains the key monitorable
The number of NWC days improved from 244 in FY25 to 200 in 1HFY26, mainly led by a decrease in the number of debtor days on the back of increased collections. The management gave guidance on the NWC day-count gradually improving, and the company achieving ‘Operation Go-Live’ across several projects.
View and valuation
Building in a strong 1H performance and revision in mgmt guidance, we raise our estimates by 8-9% for FY27/28 and roll forward to Sep-27E. We remain positive on GPIL, given its market leadership and strong opportunity ahead; maintain BUY, raise TP by ~8% to Rs550 from Rs510. Key risks: 1) delay in execution of orders, 2) sustained slowdown in tendering activity, 3) rising competition, 4) major rise in commodity prices.
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