GE Power India Limited (GVPIL.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Earnings Conference Call in respect of [ Interalyia ] the unaudited financial results for the quarter and half year ended on 30th September 2025, hosted by GE Power India Limited. [Operator Instructions]. I now hand the conference over to Mr. Puneet Bhatla, Managing Director of GE Power India Limited. Thank you, and over to you, sir.

Thank you. Dear investors, good afternoon, good evening. Thank you for joining today's call where we will discuss our performance for second quarter and half year ending September 2025. We believe you all have reviewed our results and investor presentation, which is available on our website as well as on the stock exchanges. I'm joined today by our CFO, Mr. Aashish Ghai, Mr. Vinay Singh and Mr. Roshan Singh, the commercial leaders to update you on our performance across the business and to address any queries you may have. Before we discuss the quarterly and the half yearly performance, we would like to briefly touch upon the broader industrial context. India's power consumption rose 3.2% year-on-year basis to about 146 billion units, reflecting steady but moderated demand amid favorable weather patterns in September 2025. This follows a cumulative first half FY '26 growth of approximately 4%, which is aligned with the International Energy Agency projections for the full year. Peak power demand during the month stood at 229 gigawatts, slightly below the previous year's 230 gigawatt as abundant monsoon rains curb the cooling needs. While summer peak earlier in the year approached 250 gigawatt in May, the government's forecast of 277 gigawatts for the region was tempered by intermittent rainfall, highlighting the role of renewable in balancing the grid. Even though we witnessed 15% above normal rainfall, underlying electrification needs and the industrial rebound will sustain momentum into Q3 as we understand. Coal demand in India, the world's second largest consumer stabilized after robust 5.5% growth in 2024, reaching a record high of nearly 40 million tonnes, driven by economic growth and heat wave-induced power needs with coal-fired generation up by 5%. Looking to 2026, we anticipate 2.5% acceleration fueled by industrial recovery and moderated renewable penetration. Ministry of Environment and Forest and the climate change revised the notification, limiting flue gas desulfurization installation to about 30 gigawatts of India's thermal power plants by December 2027 and December 2028 progressively, while taking the category C plants, which are more or less like 70 gigawatts out of the scope of the policy. Your company is watching very carefully as to how does the market momentum of the new tenders build up on this segment in the coming months, while marketing is also witnessing the termination of few awarded orders at the same time. Now coming down to our business performance as we wrap up the first half year of 2026, our revenue streams are showing encouraging stability and a profitable first half, giving us confidence as we navigate the second half of the year. Commercial and the operational excellence has driven meaningful order intake and margin expansion in our core services segment. With the consistent focus to develop competencies and the products to serve non-JetL thermal installed base in India, your company increased the core order intake from INR 235 crores in first half of 2024, 2025 to INR 343 crores in '25-'26. The overall sales perspective, including the core and the upgrade, your company took a lead of 23% during the same period as stated above. Delighted to share about the amicable and the successful settlement of DHL outstanding, strengthening our financial position by unlocking cash inflow with clear time lines of payments in the subsequent quarters. Additionally, the dispute with JP Venture Power Limited has also been settled [indiscernible]. We have been able to penetrate 7 countries by securing orders so far, Saudi, Turkey, Austria, Australia, UAE, Malaysia, Indonesia and Morocco with intervention to about 8 gigawatts of the installed base where GEPIL supplies boiler spares worth INR 4 crores. They also give additional impetus to our core services segment as we move forward. Towards the clean environment commitment, GEPIL also won NOx abatement and the performance improvement order worth INR 47 crores from Adani Mahan for the 600-megawatt units in the first half of 2025, 2026. Year '25 has been a bold decisive year for the steps which we have taken to create the lasting value for our shareholders, including the strategic sale of hydro and the gas businesses in the previous quarters. Building on that, the first half FY 2026, we announced a key strategic demerger of our Durgapur undertaking to JSW Energy, effective from July 1, 2025 via a share entitlement ratio of 10 JSW Energy shares for every 139 [indiscernible]. This move streamlines our portfolio, unlock value for shareholders and allow us to sharpen focus on the high-margin shorter cycle opportunities. As a result, the stand-alone net worth position of our company stands today at INR 298 crores as on September 30, 2025 versus INR 233 crores as on 31st March 2025, a sure reflection of disciplined cash management. As disclosed in our previous various earnings calls, Durgapur's current capacity is about 2.5 lakh hours and this is being underutilized for only 2/3 of the sales being loaded in the previous year, primarily due to the nature of the services business. The payment contribution of Durgapur facility to Jaipur top line has not been very significant. The facility will be requiring expenditures to maintain township and the run factory, which brings significant pressure on the bottom line along with the underutilization situation. During the period, NCLT approval of the scheme of demerger and until the proposed transaction closing, the Durgapur facility remains the property of GEPIL and will continue to be accessible by GEPIL customer and suppliers who have service needs, including the buyer. Post the transaction closing, GEPIL will be able to purchase services from Durgapur facility through JSW Energy, the new owner of the Durgapur facility. GEPIL strategy remains largely the same as previously announced that is to serve the best to its customers and shareholders by focusing on profitable, fast turnaround and cash accretive orders. GEPIL is ahead on target of profitability of its core services. With the stronger operational discipline and the sharp focus on financial prudence, we are moving into the rest of FY 2026 with confidence and clear purpose to grow and stabilize and our focus on our services segment. I will now pass it over to Aashish, who will walk us through the financial details. Over to you, Aashish.

Thank you, Puneet. Good evening, everyone. Thank you for taking out the time and joining today's earnings call. I would like to build on the commercial update shared by Puneet just now by adding a few data points and I'll follow it up with a detailed discussion on the financial performance. On the commercial update, during the current quarter, your company secured orders of INR 240 crores compared to INR 446 crores in the corresponding period of the previous year. Notably, the previous year figure included a significant order for [ Wanakbori complex turbine ] upgrade, which was valued at INR 243 crores. Your company's pivot to focus on margin and cash accretive services business with core services as the main driver of it is on right track and core orders have increased from INR 112 crores in September 2024 quarter to INR 162 crores in the current quarter. This marks a 45% increase. CORE is poised to build on its momentum and deliver double-digit year-over-year growth. As of September 30, 2025, your company has an order backlog of INR 1,825 crores. It is down from INR 2,662 crores as on March 31, 2025, which is driven by the termination of 2 FGD EP contracts with Jaypee Bina and Jaypee Nigrie combined at INR 773 crores value. Coming to the financial performance now. Revenue for the quarter ending September 2025 stood at INR 281 crores versus INR 217 crores in September '24 quarter. Important to note here that majority of the sales now come from core services. Profit before tax and exceptional items for the quarter stood at INR 33 crores compared to INR 8 crores in the quarter ended 30th September 2024. Also, I want to update our investors that we have received full and final settlement of Solapur fire insurance claim during the current quarter amounting to INR 6.6 crores. With this, now we have closed the insurance claim recovery process for both Solapur and [indiscernible]. Your company has taken some critical steps in the current quarter such as signing of settlement with BHEL and GEPIL plus signing of demerger transaction for Durgapur with [indiscernible]. These actions are decisive and reflects management 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 this quarter's performance is a testament to the effectiveness of this strategy. Despite the challenges posed by the limitation on [indiscernible] observations, we have managed to maintain a solid financial footing from operations. Our ability to secure key core orders and a healthy backlog positions us well for the year ahead. Before I open the forum for Q&A, I humbly want to convey to you all that as management, we remain fully committed to drive a sustainable turnaround for your company, focused on generating consistent profits and cash flow. This is a long-term journey, and we are advancing with disciplined execution one quarter at a time. Thank you again for joining, and we can take the questions now.

[Operator Instructions]. First question from the line of Rahul, an individual investor.

So my first question is about the fall in outstanding orders. How would the management explain this?

Rahul, thank you for having a sharp eye on to this. The fall of the orders is basically it's a comparison where in the last figure, the FGD numbers and upgrade number for Wanakbori was also there. So that's the reason [indiscernible] which is mostly [indiscernible] business for us. So that's the reason you are finding the fall. But if you look at the apple-to-apple comparison, you will find that it will be about 18% up on the order intake [indiscernible]

Yes. So the quantum of orders in hand currently are...

INR 1825 crores. INR 1,825 crores is the order backlog as on 30th September Rahul.

Okay. My second question is about the gross margin. So the current quarter, I think the gross margins are about 22% against a much higher gross margin about 42% in the corresponding quarter last year. How do we -- and how much of this includes the shipment to [indiscernible] Power for which the revenue hasn't been recognized?

So yes, I can take that one. -- so firstly, I think the gross margin, if you see our COGS and work in progress, which is primarily project-related direct cost, our gross margin stands at roughly 33% for the current quarter on the INR 281 crores of top line that we have earned. This is at the back that now majority of it, around 55% comes from core services where we have better gross margins. Yes, you are right that it also has an impact of GEPIL in the current quarter where we have taken a charge on the P&L for INR 27 crores. So that is a dent in the current P&L that we would have coming from GEPIL. We have done the settlement. We have signed a settlement with them, which is effective as we speak. And as per the agreement, we have to complete the supplies of all the material in the projects that were procured so far. Subsequent to that GEPIL would pay us the money for the settlement that we have done. We expect that to complete within October to December quarter. And if there are gains from that settlement and falling collection, that will be booked in the October to December quarter, which is also given in the [indiscernible] account. So we have declared that in the financial results as well.

So am I right in understanding that the charge of exceptional charge of INR 27 crores on JV and there is a onetime credit of INR 23 crores, which is taken on account of the BHEL reversal of provision, right?

You are right. Both the understanding is correct.

Okay. And what is the [indiscernible] order...

[indiscernible] Just to clarify the question. The contract price that we signed?

Yes. What is the value of the JP order, which is likely to be booked in the current...

INR 775 crores both combined. So there are 2 contracts, Jaypee Bina and Jaypee Nigrie. Both combined are valued at INR 775 crores.

Likely to be booked in the current quarter?

No, no. This is the one which we have terminated Rahul. This was booked in the previous year. This contract got terminated in the current quarter.

So, the notes to the accounts, it says that you have made some shipment and on fulfillment of certain conditions, you're likely to receive some consideration from J.P. Power, right?

Right. Yes. That is the settlement. That is INR 25 crores, which is the settlement amount. Once we have completed those shipments and accepted by the customer, customer shall pay us INR 25 crores.

Okay. Okay. So any other new lines of business you think of [indiscernible]

So not at this point, Rahul, we introduced last year the export opportunities in our portfolio, which 2 years back, we were not doing. And we declared to our investors and to the market that we will be focusing on 7 countries plus eyeing some more. Like Puneet has informed earlier, now we have foot on the door in these 7 countries. And over the last 6 quarters, we have been successful to slowly enter these markets. Now is the time that we would focus on penetrating them. But there is no plan to now find new industries or new avenues. The idea is that we are focusing on core services, domestic and exports, both. Now is the time when we would look for sustainability and stabilizing these and growing in these areas. So that's the strategy that the company has announced, and we are fully committed to that.

And...

Which you can also see is that over the course of the previous period, both the sales as well -- both the order intake as well as the sales have grown substantially up. And we would like to really focus ourselves on our strategy, which we have worked out earlier to now start getting it amplified and multiplied.

[Operator Instructions]. The next question is from the line of [indiscernible] Shah, an individual investor.

Congratulations for a good set of numbers. The team has really done well in the last 4, 5 quarters to turn this around. Appreciate it. Am I audible?

Yes [indiscernible]

Same here. Same here. Now my first question is regarding the settlement agreement with BHEL. What kind of a settlement agreement is this? And why is BHEL paying you INR 340 crores?

Aashish [indiscernible]

Sure. Sure. So BHEL is an old customer for us to who as a vendor partner, we have supplied a lot of boiler pressure parts in various new build projects that they have executed. So in our receivables, today, we have INR 357 crores of receivables coming from BHEL. So what the settlement comes from is at the back of the receivables that is already there in the balance sheet, number one. This settlement typically what it warrants is that they have agreed because there were some technical gaps that BHEL had identified and the technology comes from another Vernova entity, our promoter group. So it's a joint settlement of GE Power India Limited, the offshore Vernova entities and BHEL, where certain amounts are agreed between the Vernova entity and BHEL. But as far as GE Power India Limited is concerned, they have agreed to pay us what is owed to us to the [indiscernible] of INR 340 crores. It's already there in the receivable in a phased manner, which would -- and the cash flow would come in the next 2 to 3 quarters. We have received the first tranche in the month of October to the tune of INR 50 crores and the effect of that has been taken. So that is a brief on the settlement. If there are certain or specific questions, we can take that.

Yes. And it also mentioned that note also mentioned that there are certain fulfillments that GE would have to agree upon. And what are those fulfillments?

Sorry, which section...

The same note regarding BHEL paying you INR 340 crores. Those INR 340 crores would come if there are certain fulfillments which GE has agreed upon.

Yes. So currently, what we need to do is -- there are technical field contracts, service contracts which are there with BHEL, we need to fulfill on that. And other than that, we have closed on as there basis for most of those contracts. What remains to a commitment from other Vernova entities will be added. We will continue to support them [indiscernible] that they have to do, where our technical field advisers would be there in assisting them. So that's an obligation we have agreed to take to support our customers so that they are successful in their [indiscernible] Test.

Okay. And as per the ECL policy that GE has, against the INR 50 crores, you all have reversed INR 23.8 crores. So what would be the reversal against INR 340 crores?

You have been a very consistent attendee to these calls. We refrain from giving any futuristic statement. However, what I can tell you is that as and when the collections keep coming as per the policy that we have adopted, the current provision in the balance sheet would get reversed. So I think it's a good win for BHEL for us and for Vernova Group as a whole.

No, that's quite true, no doubt. Okay. I'll go on to the second one. Now this JP FGD order getting canceled, understood. No problem on that. But then the thing is that you all must have done some work in the last 1.5 years, right, receiving the orders. So if this order is being canceled, what is the approximate cost GE Power has actually incurred on this project? And what is the kind of return are you going to get from Jaypee?

So it is going to be almost breakeven. We might have maybe in the range of INR 2 crores to INR 4 crores of overall, but we had a balance sheet exposure of around INR 27 crores, which is what we have taken a charge already. And like I said, we expect INR 25 crores to see from Jaypee. So I would say, again, a good win, an amicable settlement that we have entered into. What remains to be seen, of course, we have -- we are not -- we are in process of also settling our agreement of the unpaid work with the vendors. So if something plus/minus comes there, it will come. Otherwise, I would say it's almost at a breakeven settlement [indiscernible] that we have done.

Yes, that sounds good. So that's okay. Now third one is what is the scalability of this service business? It's more of a manpower thing because now that the hydro business has gone, the gas business is gone and the Durgapur factory is gone, so manufacturing activity is going to be literally negligible. So there will be upgrades. And who's going to take care of those upgrades because you don't have a factory to manufacture anything, so you will be outsourcing that?

Yes. So first, this is not just manpower. What we typically do in the services are 2 sets of business. One is the core services in which there are 3 parts of it. We are a supplier of the spare parts for all the products that exist in our power plant. So it's actually end-to-end solution for all the product lines, be it generators, turbines, boiler, EPCs or automation and control. So we provide spare parts to them. That's one. Second, what we do is that we have a very strong in-house repair capabilities with our technical field advisers who are extremely skilled in this and for any of the repair work which comes or third part, which is on the services side on the overhaul and maintenance of this. These are the 3 subsets of the core business that we have. And core remains the focal point. This is very short-term average. It takes like entity plus 12 months to complete the contract. So it's a low risk faster working capital cash and margin accretive projects that we enter into. That's core. Then we have upgrade, which is typically modernization and retrofitting of these mostly boiler or tenders for turbines that we get, complex upgrades that we do. In terms of our capability, within the Vernova Group, we had a factory in Sanand where -- which is now [indiscernible] solution. However, we have a 5-year contract with them where we had access to their facility. So that gives us an access for generator and turbine manufacturing solutions. Now with this current demerger also announced, we have again signed a 5-year contract with JSW Energy, which would give us access or continuity to serve our customers on the boiler and these core orders and upgrade orders, plus also give us flexibility to flex our supply chain arrangements in the next 5 years. So I would say there are sufficient measures taken to make sure that we have that skill available. And within Vernova promoter group, there are factories in Europe, there are factories in U.S. who are the OEMs of that technology, which is installed in India. So we have that edge also coming from Vernova supported. -- [indiscernible] just to add on to this, just to give you a little bit of a more flavor on to this. This was all on the cost capability perspective. But all said and done, the thermal generation is still poised to be to the level of more than 55% or so in terms of the electricity generated [indiscernible] if you take it like 2030 or 2032, something like that. And with the PLF getting increased day by day, which means that the chances of servicing of the business will definitely be increasing. And we also rely a lot which is a differentiator for us on the emergency repair. So all said and done, the confidence which we have already been explained by Aashish in terms of the supply chain and marketing also.

Yes, there's no doubt about it. That was a good explanation. And what about the scalability of the service business because now that this is going to be the main chunk of the business that is going to be coming in. No doubt, I've been seeing quarter-on-quarter, INR 240 crores, INR 250 crores, INR 260 crores of service orders coming in. But then how much can you scale this business up to?

So maybe if you have looked into our web presentation, which we have presented, you will find that the CAGR for the -- at least for the period of half yearly has seen a consistent growth. And we have got a real big focus sharp, very much focused on our services growth of the non-Japan fleet also for which we are constantly improving our capabilities and the capacities and the technical readiness. So that's the area which we are focusing on. So I think I would like to explain it with this rationale the answer to your question.