GE T&D India Q1 Results Review - Healthy All-Round Beat; Demanding Valuations: Yes Securities

Yes Securities Report

Our view

GE T&D India Ltd. reported an excellent of numbers surpassing our estimates with revenue growth of 21% YoY. The company managed to clock in its highest Ebitda margin since FY19. Order inflows at Rs 10 billion grew by 68% YoY.

As on Q1 FY24 order book stands at ~Rs 39.4 billion (1.4 times trailing twelve months revenue), robust ordering activity and a healthy tender pipeline led investment in power transmission infrastructure would support revenue growth going ahead.

Looking forward

We believe challenges in the form of rising commodity prices have largely eased and margin recovery would be contingent upon cost rationalization measures which has been witnessed in Q1 FY24 to an extent.

We expect strong order pipeline, pickup in order inflows and execution ramp up, to benefit GE T&D India in the long run. Given the sharp run-up in the stock price, we believe the company is trading at demanding valuations of 81.9 times/44.2 times FY24E/25E earnings per share.

Accordingly, we maintain our 'Sell' rating with a revised target price of Rs 160.

Result Highlights

• Sales came in at ~Rs 7.2 billion (up 21% YoY) (our estimate: Rs 6.1 billion).

• Gross margins came in at 31.7%, ~280 bps YoY contraction.

• Ebitda grew by 127% YoY at Rs 508 million (our estimate: Rs 244 million) led by operating leverage benefits. Margins saw a ~330 bps YoY expansion at 7.1%.

• Profit after tax came in at Rs 282 million (our estimate: Rs 64 million) which was a 344% YoY growth on account of strong operational performance.

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