Buy Genus Power Infrastructure; target of Rs 185: ICICI Securities

ICICI Securities research report on Genus Power Infrastructure

Genus Power Infrastructure (Genus) has entered into the big league by: a) striking a marquee deal with GIC for an equity infusion of Rs5.2bn for 15% stake, and b) setting up a platform – an SPV (26% Genus and 74% GIC). This will enable Genus to participate in smart meter bids – an opportunity size of Rs300bn. Genus’s share in equity contribution towards the platform stands at US$210mn. It will be the exclusive supplier of smart meters to the SPV. Note that bidding for smart meters is picking up – orders worth Rs180bn have been concluded while another Rs780bn are under bidding. We also expect Genus to benefit from the easing semiconductor supply constraints and falling semiconductor prices.

Outlook

We expect 74% revenue CAGR and 6x profit growth through FY23-FY25E driven by strong order backlog and pick-up in execution. We value Genus at a target price of Rs185/share, or 28x FY25E EPS of Rs6.5/share (earlier TP: Rs121/share).