GE Power India Limited ($532309)

Ladies and gentlemen, good day, and welcome to the GE Power India Limited Q4 FY '26 Investors Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Puneet Bhatla.

Thank you, and over to you, sir. Thank you. Good morning, good evening all are there over the globe in case somebody is joining us from the other side of the and thank you for joining us for the GE Power India Limited Q4 and the Full Year FY '26 Earnings Call. I would like to extend a warm welcome to our investors, analysts and all the stakeholders. Our financial results for the quarter and the full year has been released and are available on the stock exchanges and on our website. Joining me on this call is our Chief Financial Officer, Mr. Ashish Ghai, who will take you through the financial performance in detail after my remarks. Let me begin with a brief perspective on the business environment. India's power sector continues to be supported by structurally strong demand driven by industrial growth, urbanization and the need for reliable baseload power. At the same time, customers are increasingly focused on plant availability, efficiency improvement, emission compliances and life cycle cost optimization. This continues to create opportunity for the service-led offering upgrades and the targeted performance improvement solutions. Coal-based power generation remains critical for ensuring baseload reliability and the grid stability even as the renewable energy capacity continues to expand rapidly. India's approach to energy transition is calibrated balancing sustainability goals with the energy security. In the environmental and the compliance landscape, there has been a recalibration of emission norms, particularly around the flue gas desulfurization. The revised framework prioritizes the installation in the high-impact area while excluding certain categories of plant thereby taking a more practical and a phased implementation approach. While this may impact the near-term ordering, but for affordable, reliable and sustainable electricity need such solutions would remain in the need for the upgrade. Against this backdrop, FY '26 has been a year of steady operation and strategic progress for GE Power India Limited. Over the course of year, we remain focused on strengthening the company as more service-led execution-driven and financially disciplined business. Our emphasis continues to be higher margin, shorter cycle and lower working capital-intensive opportunities and selective approach to orders that do not meet our return and the cash flow threshold. This disciplined strategy has supported better business quality, improved execution consistency and stronger cash flow visibility. During the year, we saw encouraging momentum across our core services and upgrade portfolio better project selection, tighter execution and sustained cost discipline contributed to improved operating performance. At the same time, we continue to expand our offerings across both GE Power India and non-GE Power India installed thermal basis, supporting a healthy flow of service-led orders. Core orders, the backbone have risen by 32% from FY '24, '25 with the revenue for the same period witnessed 12% upside and for this year, 15% above the budget for the [Technical Difficulty] - . As of March 31, 2026, our order book stood at INR 1,628 crores, which remains healthy and provides the visibility for close to 2 years of execution from continuing operations. Importantly, this order book is now increasingly aligned with our strategic priorities with a higher share of service-led margin accretive opportunities. During FY '26, we also made meaningful progress in strengthening our balance sheet. Resolution of legacy receivables have been a key focus area, and we have seen encouraging movements in the settlements and improved collection. The settlement of Bharat Electricals Limited has significantly enhanced cash flow visibility while the closure of Jaiprakash Power Ventures Limited has reduced uncertainties and improved our financial positions. This year on the portfolio front, we have taken decisive steps to simplify and sharpen our business model. Following the earlier exit from hydro and gas businesses, we are on track for the demerger of Gurapur manufacturing facilities to JSW Energy. This transition marks a significant shift towards an asset-light service debt structure, reducing fixed cost exposure while ensuring continued access to manufacturing and service capabilities through appropriate commercial arrangements. As a result of these actions, combined with disciplined cash management, our financial position has improved materially. Our network has strengthened and we are now operating with more efficient capital structure better aligned with the nature of our business going forward. From a growth perspective, we have also made steady progress in diversifying our [Technical Difficulty] during the year, we have expanded our presence across multiple international markets, including Saudi, Turkey, Australia, UAE, Malaysia, Indonesia and Morocco. These engagements support service across our meaningful installed base and reinforce our position as a reliable and preferred partner in the [Technical Difficulty]. Occasionally [indiscernible]important milestones across the business. [Technical Difficulty]looking ahead, our priority remains clear driving disciplined execution, accelerating cash conversion and sustaining profitability. We will continue to focus on strengthening our core service franchise, improving margins and maintaining financial. With our streamlined portfolio, improved profitability and order book position, we have closed 2026 on a positive note and are well positioned to build on this momentum as we move forward. We are pleased to also announce that the Board has recommended dividend payout of 70% of the face value, which is subject to the approval of the shareholders of the company at the ensuing Annual General Meeting. Thanks for your patience and belief in us for the last 4 years and your company could not declare the dividend in those tough periods. With that, I will now hand it over to Ashish, who will walk you through the financial performance in much more detail. Thank you. Aashish.

Thank you, Puneet. Good morning, everyone. Thank you for taking time to join today's earnings call. And once again, congratulations to all the investors for the strong financial performance for the quarter and year ended March 31, 2026. I would share a few insights from that. Starting with the commercial update. During the quarter, the company secured orders worth INR 254 crores compared to INR 285 crores in the corresponding period of the previous year. Please note prior year figures include orders worth INR 52 crores. But notably, the company's pivot to margin and cash accretive core services business is on the right track with orders increasing by 22% quarter over-quarter INR 27 crores to INR for the complete financial year, your company has booked orders worth INR 877 crores compared to INR 2,183 crores in the previous financial year. There is a steep decline, which is contributed by orders of [indiscernible] worth INR 775 crores, which we booked last year and also 2 large complex upgrade orders of [indiscernible] worth INR 591 crores, again booked in the previous financial year. But again, on the core services, which, as Puneet mentioned rightly, is the backbone of the current and the future strategy of the company. We have successfully delivered a strong year-over-year 32% growth, which reflects the continued strength of our strategy execution and market positioning in that portfolio. As of March 31, 2026, has an order backlog of INR 1,628 crores, down from INR 2,662 crores 12 months back as on March 31, 2025. This reduction is driven by the termination of 2 FDCs [indiscernible] which we declared or disclosed in the due course. Coming to the financial performance. Revenue for the quarter ended March 2026 stood at INR 316 crores driven by upgrade volumes in the quarter, which is up from INR 26 crores in the corresponding quarter last year. This marks a 19% quarter over quarter. Revenue for the full financial year stood at INR 1,269 crores, which is up from INR 1,047 crores. This marks an impressive 21% increase in year-over-year performance, which is driven by core and up grew by 14% and respect. Profit before tax and exceptional items from continuing operations for the quarter stood at INR 119 crores compared to loss of INR 15 crores in the quarter ended 31st March 2025. This reflects the sustained efforts in improving the operating performance across the business and transition to a healthier project and portfolio mix. The steep quarter-quarter profitability increase is also complemented by certain one-off items like reversal of ECL provision for DHL collect, which is around INR 44 crores. I would also like to update our investors that pursuant to the settlement agreement signed with DHL earlier this year, the company has successfully received INR 343 crores in the financial year '25 '26 with receipt of the above stated amount all the obligations from your company in respect to the projects covered under the settlement agreement stand closed. And both parties have fully released and disparged each other against any and all future claims. Profit before tax and exceptional items from continuing operations for the full year stood at INR 340 crores compared to INR 22 crores in the previous financial year. This substantial increase also comes from operational excellence, but at the same time, complemented by certain one-off items like reversal of provision for DHL, which was around INR 116 crores, Solapur extension of and settlement around INR 22 crores and insurance claim from Solapur was around INR [Technical Difficulty] -- there have been certain one-off gain in the financial year augmented the strong performance. However, I'm happy to share that excluding the one-offs, your company delivered 11% EBITDA at the entity level in the current financial year, reflected solely by the operational performance. With an exceptional performance in the financial year, your company has recommended an exceptional dividend of INR 7 per equity share, which is 70% of the face value subject to approval of the share at the AGM, which is the highest dividend recommended in the last 10 years at least of the -- your company took certain critical actions in this financial year such as signing of settlement with DHL and JP plus signing of demerger transaction for Durgapur with JSW Energy. These actions are decisive and reflect our commitment to continue to reduce financial exposure, optimize operational costs and march towards sustained profitability at the back of core services business and disciplined execution. And the quarter-over-quarter profitability in this financial year is a testament to the effectiveness of this strategy. Despite the challenges posed by the limitations on FCD installations, we have managed to maintain a solid financial footing from operations. Our ability to secure key core orders position us well for the year ahead. Before I open the forum for Q&A, I humbly want to convey to you all that GE management remains fully committed to drive sustainable growth in strategic areas like core services, focusing on generating consistent profits and cash flow. We have made a significant progress in our financial turnaround journey over the course of this year and the results delivered reflect the strength of our execution. As we enter the new financial year, we remain focused on sustaining this momentum and continuing to strengthen the business across key operating and financial parameters. I on personal note, would also like to thank all our investors for their continued support and trust that you have shown in us during the last few years. Your trust motivates the management to drive the results and turnaround like the ones we are witnessing in the I enjoy every opportunity of engaging with you all through the quarterly calls, and I wish you all the very best. Thank you for joining the call once again, and I now open the forum for Q&A.

[Operator Instructions]

Congrats on consistently showing such strong numbers. I'm a bit new to the company. So just some basic questions to begin with. We are seeing that all the gas turbine manufacturers are having these large orders and these turbines also make the [Technical Difficulty] about these systems a few times over the years. So if you can please share more on the same and what do we do exactly? I believe GE used to manufacture for the same in the T facility. So if you can just give me as to what are we doing here?

Thanks, Rahul, for taking time and connecting to the earnings call. With respect, yes, you are right that there is a global are the business for today, we are not in the gas turbines first, you are asking for a follow-up which is on the tail side of a gas plant you are talking of the HR and others, that also belongs to business [Technical Difficulty] is focused only on the thermal. So that's not your company, which is at this point of time working on that.

Okay. But I believe the systems are also used in thermal as a part of the combined cycle turbine, right, along with the steam turbine [Technical Difficulty].

Gas plant normally has a gas turbine combined cycle gas turbine and the gas business of this [Technical Difficulty].

Got it. And if I were to ask this as to how much of the core services order book is executable for us in FY '27?

Ashish, if you can give the numbers.

So typically, in a short cycle within 12 months, we execute the orders for coal services portfolio. So the order that you see as on, say, 31st March '26, expect around 85% to 90% of that to be executed in [Technical Difficulty].

And a broader question regarding the maintenance and on site repair. How should we understand the overall market demand for that as of date considering if I look at the order book we have seen in the last 3 years, what kind of rise we have seen for the thermal plant after a long 10 years of waiting. So as of date, according to you, how is this market shaping up? How big of a demand are we seeing here for our sort of services [Technical Difficulty]

It's a good observation which you have. And I think there is a lot of focus which is coming on the power stations when talking power station, [Technical Difficulty]32% or something like that [Technical Difficulty] I hope your question answered.

32% of the market share. I didn't hear you clearly.

32% the previous year. market size you are talking of the market size, I think it will be about INR 3,500 crores, INR 4,000 crores as a whole. When I say as a whole, [Technical Difficulty].

We will take the next question from the line of Tushar Deepkarogniz.

I have a couple of questions, right? Like our order backlog have declined, right, because of -- I would say, like INR 1,627 crores. So when you say like 85% will be clearing off in the year. So are we expecting like revenues of around INR 1,300 crores for the year '27?

[Technical Difficulty]That's one question. Correct. The other question is like you [Technical Difficulty] I see that we generated around INR 469 crores in operating cash from continued operation, but we have deployed like INR 450 crores as a loan to some party. What is this loan about Yes. I think you had a follow-up, you can complete. You said [Technical Difficulty] I didn't get it, sorry. So are your questions complete? Shall we answered? Yes, sure.

One question. One small other question is like once we exhaust this backlog, like how quickly we anticipate like for the backlog to grow? And are we increasing like the core sector that we have to only coal or we are expanding it to other areas.

So I would answer it one by one. Your first and the third question are very interlinked. I'm going to take them together and then we'll talk about the operating cash and the loan which you have. So yes, the order in hand have declined from previous year. And like I said in the beginning, there are 2 reasons to it. One, we have terminated one of the HDP contract, which was worth INR 770 crores. So that we have terminated for which we disclosed. So that's one big driver of it. Number two, if you see the journey of the company, a where the company which we launched in July 2024 and that is what we are implementing for the last few years. As a result of that, at least for this year growth 32% but over 4 years,AGR25% [Technical Difficulty] so I think that strategy is proving to be quite effective in terms of the growth. But at the same time, there is new build, I'm talking about the greenfield project in projects. Those are on the project, meaning that it would consistently go down and because we are closing those you will see reduction in order in hand the nature that itself are spending the commercial efforts, where we are going to continue our business and our future at the back of that is core, are we doing there? And I can tell you that order in hand for core 40% [Technical Difficulty] what is increasing is the core order backlog. So that message is important I want you to take away from this call. Now why that order in hand is increasing for core is because our orders are increasing to your third point, yes, and we are working towards growth in core. At this point of time, I think there is in the previous question to Mr. Rahil answered that there is a INR 4,000 crores of targeted fleet which we are working on. And currently, we have roughly 18% of the market share there. Our endeavor is to grow that market share stabilize for the next year or so and then think of expanding if we have to in other areas. For now, we remain committed on the strategy we had announced and we are delivering on that. Coming to the last point, which you said about the operating cash and the loan. The INR 450 crores loan that you see is loan or lending to our cash pool account versus any surplus cash, either we have 2 options. We have taken a kind of a diversification. We have invested in for the working capital surplus with the commercial bank. And we have also benchmarked our internal cash pool, Vernova cash pool entity, which is benchmarked with HSBC and we lend that money and earn interest on that, which is reflected in the other income of the financials. So that is the surplus working capital cash, which is lended to be used as and when we require by the company. So that is the INR 450 crores that you see in the deployment. I hope you have received your answers.

Yes, I do. Mr. I'll just remind you with respect to the strategy which we have changed or which we have painted about 1.5 years back, we got into our service-led strategy. And we are -- we really understand that the headline for the order intake is remaining muted, but I think this is in line with the strategy which we have taken. And this was taken because we always believe that the relevant metrics at this stage for us is the earnings quality rather than the order backlog. And I would even like to extend it that historically, we have seen in the industries. There are several examples which were largely focusing on the EC, but they could not translate into the shareholder value because of the weak margins or the long cycle and the uncertainty. And for that, just to remind everybody that we took a conscious call about 1.5 years back or 2 years back and get into a quick short cycle highly accretive margin opportunities on which we are working. And I think we have been consistent on that.

We will take the next question from the line of Milind Karmarkar from Dalal Broacha Portfolio Managers.

I had a couple of questions. Basically, I wanted to understand how large is the opportunity for you in core services globally. And while trying for this opportunity, do we get help from our parent? That was my first question. Second question was that also wanted to understand more about this INR 450 crores being via HSBC. What kind of yield do we get on this? And how safe is this type of lending? So these are the 2 questions which I have?

I could not take the last time when you mentioned with respect to the promoters. What was that? So what I was saying was that in your endeavor to basically focus on core services globally, do we get some kind of a help from our parent We are a part of the [Technical Difficulty] entity has got amended or a perimeter for the India region. So we are not for a larger perspect, only focused on India. But then we are also focusing on 13 countries specifically for the boilers in Saudi or Indonesia -- that gives you the answer -- with respect to the global or the promoter support, yes, we have got the support with respect to the IP. And -- but you should also take a pride into this that your company within the overall global perspective is the only company which is working on the G as well as non-GS. So this is one of the overall global perspective which we are carrying. I hope that satisfies your question.

Yes. only one more addition here was that when it comes to non-GE, are we restricted to Eurasia or we can sort of service anywhere in the world?

No, it is non-G, perimeter remains only the India Yes. So your second question was to throw more light on the INR 450 crores. So what we do and we have been doing for almost all our working capital surplus cash, we have a common pool entity within the promoter group. And we borrow. So in our testing times, we borrowed significant money from that pool. And now when we are lending to our company, we have approval for both lending as well as borrowing and borrowing rates and benchmark with national commercial bank. In this case, we have benchmarked with HSBC, which is also mentioned we kind of disclosed it in the AGM. The range on the safety of this lending. So the rates vary, of course, between the benchmark change it remains in the -- for the year, it has remained in the range of 5.5% to 6.5% during the year. And like I said, if it is benchmark, we typically get 0.25%picercial banks. the lending is reviewed, approved by the management but by the Board of the company and audited by the auditors when they come. And at our end, we do a thorough financial health of this company every year. So this is also the other businesses also the balance sheet of that company is very healthy. The net worth and the position of that company is healthy. So from a safety standpoint, I think it's a very healthy company. And every year, we perform the financial health of the entity. We have been doing it for decades now. And I mean, since beginning, let's say, when we took over and we have operational benefits of that and also financing Surplus cash position in the company.

We will take the next question from the line of [indiscernible] Shah, an individual investor.

First of all, congratulations to the management for walking out and delivering good numbers. So I have a set of 3 questions, if I may ask one by one. So as what I read about the government mandate regarding the FGD that any coal plant having 20-plus gigawatt capacity must install the FGD. So in that sense in terms of desulpurization what scale power given the fact that we have a technology backing from the parent? And if the broad range or ballpark range of margin expectation in such kind of orders.

I'll hand it over to my commercial leader for FGD.

Is the government mandate. Install FGD. [Technical Difficulty] that is more than 20 gigawatt, which was supposed to be FGD days taken out. So first of all, that specific segment is the government category has [Technical Difficulty] category as an option they have to review the app submit to the government this is what we have found and we require, we don't require if they go for [Technical Difficulty] totality, it is hardly so far has been left which is supposed to install with respect to the not June 2025 which is quite slow plants Maharashtra and 2 plants in Central India.

Yes, fair enough. So you're saying that mandate effectively has not much of weight in the business sense for us unless obviously, it is done proactively by the power I'll come to the second question. We have a net cash of INR 880 crores in the books. So I mean, what are we planning? Are we trying to use it in terms of working capital. But at the same time, we have moved from a capital intensive to a low capital intensive and high-margin business is what I would understand as per the last 1.5 years which we are having with the management. So what are we trying to plan with this INR 880 crores?

Observing this very honest and [Technical Difficulty]-- is it audible now? [Technical Difficulty] Thanks for this question and probably I think this is something which I would like to answer and try to give you an under on this aspect. This is into our continued evaluation so that we can effectively deploy it towards our business growth and the operational strength while also creating the share value -- but our strategy still remains the same which we have been saying for last many, many quarters that we would be focused on the service, which is high margin, short cycle and cash accretive perimeter. And as we develop further on this, we will keep you updated on the develop which are taking place on this so that we also share it with you. And most important for us is the share value Ashish to I think an... Right.

So I'll come to the last question. I could -- I mean, get -- I could understand that the shareholder value in terms of either in the growth of the company or in whatever way is the focus. So I'll come to my last and third question is -- if I were to ask you about Power analysis in terms of -- and more focus would be in terms of the opportunity and threats. And these opportunities and threats, let's say, could be highly probable and it could be a probable thing. But if you can define something in terms of what opportunities and what are the threats if maybe you can dwell on that.

Maybe I'll start with the easier one, the opportunities. We are focused on the thermal business of the installed base. And as you would have been seeing whatsoever in the media, et cetera, the demand is constantly increasing as the economy we are in the part of the is going to continuously be available to us. So I see that this is one of the big trends for your company. Now coming on to the [indiscernible] -- the threat is the renewable is coming in, there could be a little bit of a slowness. But at the same time, let me give you a back of the envelope calculation S10 gigawatt of still require 300 gigawatt of the embedded energy that embedded energy the renewing from the thermal now at this point of time. You can a threat again within this I hope I would have conveyed.

We will take the next question from the line of [indiscernible].

My question is on the [Technical Difficulty] demerger. So what are the specific regulatory approvals are pending? And what is the realistic time line for the…

Yes. [Technical Difficulty] in close within this calendar year, that's the target. But I can say that within 2 months from 31st March '26 is definitely the expect. The target remains 3 months ahead of that.

Okay. And sir, what -- how does it benefit GE and minority shareholders like demerger?

Sure, I can take that. I see a couple of benefits on the company side and as a company. are part of the company, all of us together. So one big benefit is I believe it gives the flexibility to our shareholders, to our investors to remain invested in a large power asset of the country. Durgapur an asset of 60 acres. Now this is no small land. This is no small asset. However, the way we have transformed over the last 5 years, which is the aging of this asset. [Technical Difficulty] demerger remains you choose to remain asset entitlement ratio of the shares in the company and the remaining business which [Technical Difficulty] value for that asset kind of tried a few things to not only fill the factory, but at least get some level of profit there, but we could not succeed honestly. And we have seen quarter-over-quarter, have reported losses in that from that factory or from that business. So it goes to a partner or it goes to a company that is very ambitious and which is growing on that and which would be effectively utilizing that factory a lot and they have shared the plans for Durgapur have shared the employment opportunity for Durgapur. So I think it is good for the country, good for the people in Durgapur at the same time, gives the shareholders an opportunity to remain invested definitely unlock value. From our side, from management perspective, we are able to focus on the remainder business. We are able to focus and grow on the core services business and in turn deliver better growth and in turn, deliver better results operation, more important and then, of course, as a function of operation financially. The idea behind this demerger which is put on the table. And I thank you for this question because it's important that our investors understand the intent of this demerger so that they can with the right level of in quest. [Technical Difficulty] how are we making sure that as part of the demerger, our core is not getting impacted by signing a long-term service agreement with JSW Energy. We have signed as part of the deal, we have signed a 5-year contract with them, which can be extended as convenient to both the parties, but 5-year contract with them under which we have reserved the right for determined schedule and price the right for manufacturing itself and will we have kind of reserved the capacity so that our core business is not impacted for the next 5 years. Now 5 years is a long period where we will then develop an alternate supply chain. We have already started working on that even before the demerger. We are making good progress there that I think over the next 18 months, I would say, we would be in a very good shape to have developed an alternate supply chain that post the completion of this long-term agreement, we would be independent by ourselves for core. But for the next 5 years, we have secured the order intake or avoided any loss of intake by signing.

And final question is on EBITDA. Q4 EBITDA roughly is around 14 [Technical Difficulty] EBITDA margin what we can take that as for FY '27?

Sure. '25-'26 after all these one-offs, I said in my opening remarks that the normalized EBITDA or the underlying after all these one-offs at the entity level is [Technical Difficulty] if not more at least at par for the future year. So I would not -- I can't give you a range or something on the guidance for the future in terms of margins, but I can say that at least the base is set in this year.

At par, should take like around 18% or 11%.

No, 18 for the quarter. We're talking about the financial year, which is 11% for '25.

[Operator Instructions] So we are guiding the We take the next question from the line of from [indiscernible].

Sir, most of the questions are answered. I have just one point. I just wanted to check in our reported revenue of probably INR 316 crores, if I have to arrive at the right number, I have INR 4 crores, right, the ECL I'm talking about quarter Q4. -- so out of that INR 36, I have to give INR 40 crores, which is probably the ECL, right?

Yes, around INR 41 crores benefit, but. Yes, in that range.

Understood. Sir, I was just wondering for how long it may continue further because probably for the last 2, 3 quarters, we have been commenting about it. But I was just wondering FY '27 will see these introductions from previous ECL?

No. I kind of clarified this in my opening remarks again, Mr. Giri, that with the last tranche in March with the amount that we have collected, we have fully honored and executed our settlement agreement with BHEL and both the parties have duly discharged each other of all the obligations under the settlement agreement and the agreement stand as on date. So to your question 31st March 2026. We will take the next question from the line of response was the last participant.

Ladies and gentlemen, this was the last question from Abhay Jain. I now hand the conference back to Mr. Puneet Bhatla for the closing comments. Thank you, and over to you, sir.

Thanks, everybody, for sparing the time and being available on this earnings call. And Ashish and myself, thank you for your support to us and thank you for the into the company. It has come back on to track. I would like to close it with saying this thing that we will continue to focus on the strengthening of our core services franchise, improving the margins and maintaining the financial discipline. Looking ahead, our priority remains driving disciplined execution, accelerating cash conversion and sustaining the profitability. With this, I thank you all once again. Thank you.

Thank you, members of the management. On behalf of GE Power India Limited, that concludes this conference. Thank you all for joining with us today, and you may now disconnect your lines. Thank you.