GE Vernova T&D India Limited — Q3 FY25 earnings call

Call held 5 Feb 2025

Management summary

GE Vernova T&D India Limited reported a strong Q3 FY25, with significant revenue and EBITDA growth driven by robust demand and operational efficiency. The company achieved a record order backlog, providing strong revenue visibility for the coming years. While export revenue saw a temporary dip, management remains focused on strategic growth areas like HVDC and STATCOM, despite acknowledging potential supply chain constraints.

Highlights

  • Revenue grew 28% YoY to ₹10.7 billion in Q3 FY25.

  • EBITDA surged 80% YoY to ₹1.8 billion in Q3 FY25, with margins expanding to 16.7%.

  • Achieved a record order backlog of ₹107.8 billion as of December 2024, a 72% increase from March 2024.

  • 9-month order inflow reached ₹77.8 billion, marking a 75% YoY growth.

  • Generated ₹1.9 billion cash in Q3 FY25 and ₹6.4 billion in 9M FY25 before dividend payment.

Concerns

  • Q3 export revenue saw a 29% YoY drop, attributed to project phasing.

  • Management acknowledged supply chain challenges, particularly for raw materials and components, as a potential bottleneck for future capacity doubling.

Key financials

3 periods

Headline

  • Cash & Cash Equivalents
    8.6 Bn

Q3 FY25

  • Revenue
    10.7 Bn
    YoY +28%
  • EBITDA
    1.8 Bn
    YoY +80%
  • EBITDA Margin
    16.7%
  • Profit Before Tax
    1.899 Bn
  • PBT Margin
    17.7%
  • Cash Generation
    1.9 Bn

9M FY25

  • Revenue
    31.3 Bn
    YoY +39%
  • EBITDA
    5.6 Bn
  • EBITDA Margin
    18%
  • Cash Generation
    6.4 Bn
  • Employee Cost
    3.1 Bn
    YoY +10%

What they filed

Q1 FY27: revenue up 38.0%, net profit up 24.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,108 1,074 1,153 1,330 1,538 +39%1,701 +58%1,637 +42%1,836 +38%
EBITDA205 180 252 388 396 +93%455 +153%445 +77%461 +19%
Net profit145 143 186 291 299 +106%291 +103%352 +89%363 +25%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹107.8 Bn

as of 2024-12-31 quantified

72% YoY

Inflow this quarter

₹20.8 Bn

Execution

2.5 years (mathematical extrapolation), some orders 3-5 years

Composition

Mix 4 geographies
  • Domestic (9M Inflow) 61%
  • Export (9M Inflow) 39%
  • Domestic (Q3 Inflow) 85%
  • Export (Q3 Inflow) 15%

Share of order book by geography· categories overlap, and sum to 200%

The company has a record high backlog providing strong revenue visibility for the next few years, with a focus on maintaining a high order inflow run rate.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹0.8 Bn
    I think in last call, Parikshit, we talked about $8 million to $10 million or about roughly INR800 million of capex that we plan. ... No, no, that was for FY '25-'26, because FY '25 is already largely over.
  • Liquidity Cash ₹8.6 Bn Cash and cash equivalent balance improved to INR8.6 billion as on 31st December versus INR2.8 billion as on 31st March 2024. The Board is evaluating options for deployment, currently investing in cash pools and fixed income securities. Other income includes interest on cash pools (INR100 million out of INR250 million), interest on tax refund (similar range), and recovery of bad debt (INR40-50 million).
    Cash and cash equivalent balance improved, and stood at INR8.6 billion as on 31st December versus INR2.8 billion as on 31st March 2024. ... So, there are various options the Board is evaluating, and we'll share when there is a specific decision from the Board. But at present, we continue to invest in the cash pool and fixed income securities. ... Roughly, let's say, INR100 million out of INR250 million is the interest on cash pools. Almost in similar range, we have a interest on refund. And the third element is roughly INR40 million to INR50 million of recovery of bad debt.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · ongoing · High confidence mid-teen to high-teen
    Instead of talking about margin, I think overall, we have always talked about profitability at EBITDA level, and we talked about mid-teen to high-teen as a range, and we are already there.

    — Sushil Kumar, Whole-Time Director & CFO

  • Gross Margin Profitability · ongoing · High confidence 35-40%
    Our aim is to maintain a gross margin in the range of 35% to 40%. And blended, we are achieving 39.8% in the first 9 months, which is a good performance.

    — Sushil Kumar, Whole-Time Director & CFO

Market Share

  • STATCOM Market Size Market Share · current · High confidence ₹3,000-3,500 crores
    So, we are looking at the market size, we are looking at about close to about INR3,000 crores to INR3,500 crores of market for STATCOM.

    — Sandeep Zanzaria, CEO & MD

Order Inflow

  • Export Order Inflow Share Order Inflow · long-term · High confidence 30%
    Yes, the target will be to keep that 30% should come from exports.

    — Sandeep Zanzaria, CEO & MD

Market Opportunity

  • NCT New Investment Market Opportunity · 2024-2032 · High confidence ₹9 lakh crores
    No. So, now the government is talking about the commissioning up till 2032 is like INR9 lakh crores, right? The new investment.

    — Sandeep Zanzaria, CEO & MD

What to watch in Q4 FY25

Export Revenue Growth

Coming quarters (Q4 FY25)
Current Q3 export revenue down 29% YoY
Target Pickup in export revenue

Why it matters

Export orders contribute to better margins and diversification, and management expects a pickup.

No specific reason, Umesh. This just depends on the phasing of the projects. And as you see that we have booked significant orders from the export side in this year and in the backlog as well. So, we expect revenues to pick up from the export side in the coming quarters.

Risks & concerns

  • Supply Chain Bottlenecks

    medium

    Challenge in raw material and component availability, especially if capacity doubles, potentially impacting execution run rates.

    Management acknowledged

  • Margin Pressure from Overcapacity

    low

    Potential for marginal pricing pressure from overcapacity, but not expected to be substantial in the short term.

    Management downplayed

Q&A highlights

7 direct
Gross Margin Sustainability and One-offs Direct
So, last quarter, while the reported margin was 41.2%, but we did call out in the investor call that there is about INR400 million of special income from a large project. Although it was operational, but it was, let's say non-repeatable income. So, excluding that, our gross margin on a normalized level was about 37.2%. Compared to that, we have done 37.8% of gross profit in this quarter. So, there is a parity between what we did in the last quarter and what we did in this quarter.

Clarifies that the reported Q2 gross margin was inflated by a one-off item, and the underlying Q3 margin is consistent with normalized levels, assuring investors about margin quality.

Asked by Mohit Kumar

HVDC Leh Ladakh Tender Delays Partial
So, we don't talk about specific project-related opportunities. Definitely, we have said it many times in the past that we are a serious player of HVDC. In fact, globally if you look at, GE Vernova booked more than 2 orders in the last quarter. So yes, we are quite serious about the HVDC business in the country, and would aim to take a decent market share of that. Also, in addition to that, I think Leh Ladakh is getting delayed because of multiple reasons, but probably that's more at the Powergrid end and not at the EPC end..

Indicates that GE Vernova is a serious contender for HVDC projects in India and that delays in large tenders like Leh Ladakh are due to the client (Powergrid) rather than the company's capabilities, suggesting future opportunities.

Asked by Mohit Kumar

Capacity Expansion and Capex Plans Direct
So, Parikshit, as we've said last time also that we are constantly evaluating these opportunities. In fact, there is an expansion, which is already happening which is happening at our transformer factory. And also, we are looking at other product lines as well where we can do the expansion. I think this is a constant thing which we keep on evaluating, depending upon the long-term demand and the capability and capacity what we have. ... I think in last call, Parikshit, we talked about $8 million to $10 million or about roughly INR800 million of capex that we plan.

Confirms ongoing brownfield capacity expansion and a specific capex plan for FY25-26, addressing concerns about the company's ability to meet growing demand.

Asked by Parikshit Kandpal

Supply Chain Preparedness for Volume Growth Direct
You're right. Today, there is a challenge on the supply chain side. And there are a lot of international vendors or there is a lot of international supply chain also on which the vendors are dependent or the integrators or the manufacturers of the end products are dependent upon. So, if we double the capacity, the challenge to get the raw material will be equally high. So, till the time the investments are not happening on an equal scale with the supply chain side, this challenge will remain as one of the biggest for the industry and the demand is not only growing in India, but growing globally.

Highlights a critical industry-wide and company-specific risk regarding raw material and component availability, which could constrain execution despite strong order books.

Asked by Renu Pugalia

Q3 Export Revenue Decline Direct
No specific reason, Umesh. This just depends on the phasing of the projects. And as you see that we have booked significant orders from the export side in this year and in the backlog as well. So, we expect revenues to pick up from the export side in the coming quarters.

Addresses a short-term concern about the dip in export revenue, attributing it to project phasing and expressing confidence in a future pickup, which is important for margin profile.

Asked by Umesh Raut

Order Book Execution Pace vs. Inflows Direct
So, Parikshit, if you look at, from last year to this year, we are seeing about a 40% growth. So, as the order inflow is growing, there is a delivery timeline which has been defined by the customer as well. But looking into the order backlog which we have, definitely, the quarter-by-quarter revenue is going to grow.

Provides clarity on how the large order backlog will translate into revenue, indicating a gradual, quarter-by-quarter growth rather than an immediate sharp ramp-up, managing investor expectations.

Asked by Parikshit Kandpal

STATCOM Market Opportunity Direct
So, we are looking at the market size, we are looking at about close to about INR3,000 crores to INR3,500 crores of market for STATCOM. And yes, definitely, so we are in the process of participating in bids for STATCOM and depending upon the outcome, we will be declaring the results...

Identifies a significant new market opportunity (STATCOM) that the company is actively pursuing, indicating potential for future order inflows and diversification.

Asked by Amit Anwani

Deployment of Cash Balance Direct
So, there are various options the Board is evaluating, and we'll share when there is a specific decision from the Board. But at present, we continue to invest in the cash pool and fixed income securities.

Informs investors about the company's approach to managing its substantial cash reserves, indicating a prudent, short-term investment strategy while long-term deployment options are being considered.

Asked by Suraj Malu

3 min read 7 chapters

Detailed narrative

Robust Q3 FY25 Financial Performance and Margin Expansion

GE Vernova T&D India Limited delivered a strong financial performance in Q3 FY25, with revenues growing 28% year-on-year to INR10.7 billion. This growth translated into a significant 80% increase in EBITDA, reaching INR1.8 billion, and an expansion of EBITDA margins to 16.7% from 11.5% in the prior year. Profit Before Tax (PBT) also surged to INR1,899 million, representing 17.7% of revenue, compared to INR730 million (8.7% of revenue) in Q3 FY24, indicating strong operational leverage and efficiency.

Record Order Backlog and Strong Inflows

The company achieved a record order backlog of INR107.8 billion as of December 2024, marking a substantial 72% increase from March 2024, which provides strong revenue visibility for the next 2-2.5 years. Q3 FY25 saw order bookings of INR20.8 billion. On a like-to-like basis, excluding a large exceptional order from the previous year, Q3 order booking grew 32%. For the nine-month period, total order inflows reached INR77.8 billion, a 75% increase year-on-year, demonstrating continued strong demand.

Strategic Project Execution and Market Focus

Key operational successes in the quarter included the commissioning of Reliance Jamnagar Phase 1, a 400 kV GIS project for Adani in Khavda for renewable energy evacuation, and a 400 kV AIS switchyard at Lohardaga for Power Grid. The company also completed the Dhalkebar 400 kV GIS project, enabling hydropower evacuation from Nepal to India. The order backlog composition highlights a strong focus on the private sector (68%), with central utilities/PSUs contributing 28% and state utilities 4%.

Proactive Capacity Expansion and Capex Plans

To meet the accelerating demand in the power sector, GE Vernova T&D India Limited is actively evaluating and undertaking capacity expansions. Brownfield expansion is already in progress at its transformer factory, and the company is exploring similar opportunities for other product lines. A capex of INR800 million (₹80 crores) is planned for FY25-26, indicating a strategic investment to enhance manufacturing capabilities and ensure readiness for future growth.

Healthy Cash Generation and Deployment Strategy

The company reported a robust cash and cash equivalent balance of INR8.6 billion as of December 2024, a significant increase from INR2.8 billion in March 2024. Cash generation for Q3 FY25 was INR1.9 billion, contributing to a total of INR6.4 billion for the nine-month period before dividend payment. Management stated that the Board is evaluating options for deploying this surplus cash, with current investments primarily in cash pools and fixed income securities, alongside other income from tax refunds and bad debt recovery.

Supply Chain Challenges and Export Market Dynamics

Management acknowledged that the supply chain, particularly for raw materials and components, presents a challenge, noting that global players feed the entire world and current capacity increases are insufficient to meet demand. While Q3 export revenue saw a 29% year-on-year dip, attributed to project phasing, the company expects a pickup in coming quarters. The long-term target is to maintain 30% of order inflows from exports, including those from group entities, leveraging India's cost-competitive structure.

Emerging Opportunities in STATCOM and HVDC

GE Vernova T&D India Limited is actively pursuing new growth avenues, including the STATCOM market, which is estimated to be between INR3,000-3,500 crores, and is participating in relevant bids. The company also reiterated its strong position in the HVDC segment, having secured global orders, and sees equally good prospects in India, despite tender delays like the Leh Ladakh project being attributed to Powergrid rather than EPC capabilities.

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