Accumulate GE Vernova T&D India target of Rs 1946 Prabhudas Lilladher

Prabhudas Lilladher's research report on GE Vernova T&D India

We revise our FY25/26E EPS estimates by +7.5%/+4.4% factoring in the healthy margin profile owing to operating leverage, and upgrade the rating to ‘Accumulate’ from ‘Hold’ with a revised TP of Rs1,946 (Rs1,601 earlier). GE Vernova T&D India (GVTD) reported robust quarterly performance with 58.8% YoY revenue growth and EBITDA margin improvement of 979bps YoY to 18.5%. The recently finalized National Electricity Plan’s (NEP) goal of transmitting 500GW of renewable energy by 2030 is expected to lead to strong demand for GVTD’s grid integration and automation solutions. This energy transition will also drive sustainable demand for products such as transformers and STATCOMs. The NEP’s planned 9 HVDC lines, with a combined capacity of 33.25GW, offer a potential market of USD1-2bn per project for GVTD. With a focus on high-margin selective order booking and cost controls, the company is well-positioned for improved margins and growth in emerging sectors such as data centers. We believe 1) a healthy order pipeline in the power market, 2) a robust order book (Rs98.4bn), and 3) the management’s focus on margin improvement augur well for strong revenue & profit growth.

Outlook

The stock is trading at a P/E of 83.8x/55.7x/41.9 FY25/26/27E. We roll forward to Sep’26E and value the business at a PE of 55x Sep’26E (55x FY26E earlier). Upgrade to ‘Accumulate’.