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Target: ₹153
CMP: ₹126.80
GE T&D India’s (GETD) revenue declined 7 per cent y-o-y to ₹590 crore in Q1-FY23 as lower orderbook led to a muted execution. However, gross margin expanded 220 bps on account of reduction in commodity prices. This, supported by reduction in fixed expenses, led EBITDA to grow to ₹22.40 crore against ₹1.40 crore in Q1FY22.
Net debt during the quarter increased by ₹110 crore to ₹190 crore since Mar’22 on account of higher working capital requirement for execution over subsequent quarters. Although order
inflow improved 27 per cent y-o-y to ₹600 crore, it was muted due to delays in the finalisation of TBCB tenders already approved by the CEA; however, prospects remain healthy over medium to long term. Current orderbook stands at ₹3,660 crore (1.2x TTM sales).
We expect TBCB and RTM ordering of ₹70,000 crore over the next 24-30 months, mainly for the Green Energy Corridor (including Leh-Ladakh line).
We believe gross margin improvement will sustain and might see improvement with pick up in execution in FY23. We maintain our Buy rating on the stock with a revised target price of ₹153 based on 25x FY24 EPS (earlier: ₹124).
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