GE Vernova T&D India Secures Major Power Grid Contract
Shares of GE Vernova T&D India Ltd (GET&D) surged by 9% in Tuesday's trading session following the announcement of a substantial order valued at an estimated Rs 13,000 crore. The contract, awarded by Power Grid Corporation of India Ltd (PGCIL), is for the design and establishment of a 6,000 MW, ±800 kV High Voltage Direct Current (HVDC) terminal station.
This critical infrastructure project aims to evacuate renewable power from Barmer-II to South Kalamb. The broader Barmer-South Kalamb interstate transmission system, for which PGCIL was declared the successful bidder on September 2, includes the HVDC terminals, a roughly 1,000-km HVDC bipole line, 400 kV transmission lines, and two synchronous condenser units. Nomura estimates the overall project capital expenditure to be around Rs 26,000 crore.
Nomura Upgrades Rating and Price Target
Following the significant order win, brokerage firm Nomura reiterated its 'Buy' rating on GE Vernova T&D India and raised its target price on the power transmission equipment maker's stock to Rs 6,000 from the previous Rs 5,675. Nomura analysts expressed pleasant surprise, stating, "GVTD's HVDC order win came in as a positive surprise as we were not factoring in a HVDC order win for GVTD in FY27E."
The brokerage has consequently elevated its FY27 order inflow estimate for GET&D to Rs 23,100 crore, a substantial increase from its earlier projection of Rs 12,000 crore.
Revenue and Earnings Outlook
In light of the new contract, Nomura has revised its revenue estimates for GE Vernova T&D India, increasing them by 4% for FY28 and 9% for FY29. The firm anticipates that the execution of the HVDC order will be back-ended, with revenue contributions expected to commence from the second half of FY28. Specifically, Nomura projects HVDC revenue of Rs 2,250 crore in FY28 and Rs 4,800 crore in FY29, leading to a 5% and 6% rise in earnings-per-share estimates for FY28 and FY29, respectively.
EBITDA Margin Projections
While Nomura maintained its FY27 and FY28 EBITDA margin estimates at 26% and 25%, respectively, it did adjust its FY29 EBITDA margin estimate downwards by 56 basis points to 23.9%. This adjustment factors in the anticipated execution mix. Despite this slight margin revision, the brokerage forecasts a robust increase in EBITDA, from Rs 2,039 crore in FY27 to Rs 2,832 crore in FY28, and further to Rs 3,676 crore in FY29.
Stock Performance Highlights
On Tuesday, GE Vernova T&D India's stock opened at Rs 4,614 and reached a high of Rs 4,755 on the BSE, marking an 8.98% gain over its previous close of Rs 4,363. The stock was last quoted at Rs 4,752, up 8.92%. The company's shares have seen significant movement, hitting a 52-week high of Rs 5,650 and a 52-week low of Rs 2,525.
About GE Vernova T&D India
GE Vernova T&D India is a prominent entity in India's power transmission and distribution sector, boasting over a century of presence in the country. Its comprehensive portfolio encompasses power transformers, circuit breakers, gas-insulated switchgear, substation automation equipment, HVDC solutions, and turnkey substation engineering and construction services.