GE Vernova T&D India Limited (522275) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the conference call hosted by GE Vernova T&D India Limited for Quarter 1 of Financial Year 2026, '27. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Megha Gupta from GE Vernova T&D India Limited. Thank you, and over to you, Ms. Gupta.

Thank you, all. Good evening, everyone, and welcome to GE Vernova Earnings Call for Quarter 1 of Financial Year '26, '27. I am Megha Gupta from Investor Relations team. During the call, we will discuss company's financial performance, including operational highlights and initiative updates I'm joined by Mr. Sandeep Zanzaria, CEO and MD of the company. Mr. Sushil Kumar, Director and CFO of the company; Mr. Abhishek Srivastava, Head Business Operations; Kanika Arora, Communications leader; and Ms. Shweta Mehta. . I would like to highlight that today's discussion may contain the forward-looking statements, which are subject to risk uncertainties. These statements are based on open expectations and actual results may differ materially from those expressed or implied. Now I'll hand over the call to Mr. Sandeep Zanzaria to initiate the discussion.

Thank you, Megha. Good evening, everyone, and welcome to our quarterly first quarter earnings call. India is currently executing 1 of the most ambitious grid expansion ones in the world to the target of 500 gigawatt of nonfuel capacity addition and the road map towards the 800 gigawatt by 2035. The transmission bottleneck is being addressed with unprecedented urgency. The power demand is expected to rise meaningfully over the next several years and the government estimates. Now attributable a material part of that increase is going to come from newer category of loads, which is AI, data center and EP, which are expected to add around 30 gigawatt of India speed demand over the next 5 to 6 years. At the same time, distribution losses remain a persistent drag in the system. The national AT&C losses average stood at just over 15% in FY '25. Still well above the government's own target of bringing this down to 10% by 2030. We are successfully translating our order book into revenue through an enhanced manufacturing -- our indoor the gold strategy continues to yield the wells as we balance domestic and great opportunities with strong demand from global markets. the grid aging and renewable integration and creating similar infrastructure pressure. Our recent investment of all our manufacturing facilities are tracking on schedule. These CapEx investments are a strategic necessity to ensure that we can meet the delivery time lines demanded by our customers. Coming to financial performance during the first quarter, we saw at INR 11.4 billion, down 30% year-on-year compared to INR 16.2 billion in the quarter ended June '25. The primary reason for the lower order intake was due to lower realization of TBCB market in Q4 '25, '26. Our Q1 revenue stood at INR 18.4 billion versus INR 13.3 billion a growth of 38% year-on-year. Execution outpaces because of which the order backlog moderated to [indiscernible] billion of June '26 versus INR 213.6 billion. as of March 26, down by 2.5% quarter-on-quarter. The other backlog stands at more than 3 years of our revenue for FY '25, '26. Our profit before time exceptional items of the quarter ended June indices was at INR 4.9 billion compared to around INR 3.9 billion in the corresponding quarter of the previous financial year growing by more than 1.2. We have had a solid start to the financial year, positioning us well to see an vicious energy transition goal. As a nation, power landscape evolves, we remain committed to a disciplined strategy of pursuing margin-accretive growth while maintaining operational excellence. We remain committed to the margin profile we have established I'd like to extend my gratitude to our teams on the ground who are exhibiting the increased scale with discipline and safety stands that represent giver move. I will now turn over to Abhishek to walk us through specific operational highlights for the quarter. Abhishek?

Thanks. Thanks, Sandeep. Good afternoon, everyone. So I will just take you through the key highlights or the key achievements for our company in the last quarter. So in our continuous journey towards the strengthening of transmission network for India and its neighboring countries, the journey continued for the last quarter. We had commissioned 400 kv substation in Nepal for NET Kanti, which is going to be the first stone in the backbone of 400 kV in Nepal. Post that, we have also partnered with Adani and headwind building substations for the vacation of renewable power from the solar park in Tara. In addition to that, we have been partnering with our key customers in terms of augmenting the power transformation capacity at various existing substations. And in this journey, we commissioned our added transformation capacity for PGCR, Resonia NP. And similarly, a lot of new bases have been commissioned for our customers like renew Tata projects, Adani, BBC, we remain committed and have been working continuously in terms of honoring our commitment through timely completion of these projects. and continue in the journey of its strengthening of the transmission network for the country and other neighboring countries. So this was our performance for last quarter. Now I would hand over to Sushil for further updates. .

Thank you, good afternoon, good evening, everyone. Let me move to our order booking highlights for the quarter. while the headline order intake moderated, I want to answer the quality and diversity of what we did. We secured CTs and CVTs from GE Banno entity in North America. This order is different from the next in RPT approval that we have secured from the shares for that maturity or group entities are still under discussion and negotiation with the pad how we expect that this in to get finalized in the next 3, 6 months. We also secured 400 kv GIS order from Wanaentities in Spain and Morocco, [indiscernible] kV transformer for a semiconductor customer. Multiple orders for supply of grid automation packages from state utilities, EPCs and data center. This export diversification, which now stands at 46% of our Q1 orders is exchange we have been building forward and had flagged in our earlier calls. Our order backlog stood at INR 2.9 billion as of June 2026, down a modest 2.5% sequentially from the record INR 214 billion that we closed financial year '26. I will characterize this as a healthy number given the pace at which we are converting that backloading to revenue. Turning now to the financial performance for the quarter. Revenue in the quarter came in at INR 18.4 billion, up 38% year-on-year from INR 13.3 billion in the same quarter last year. I do want to address the margins directly here rather than leave it for the question and answer. Gross margins moderated to 41.3% from 48.4% a year ago and 47% in the last quarter. However, in our business, sometimes in the annual margin is a better reference point. During financial year '25 '26, we achieved a gross margin of 45.3%. This quarter, gross margins are lower at 41.3%, representing 4%. This can be classified into 3 categories: number one, on account of lower export driven. So in this quarter, we had 30% of revenues from ex whereas last financial year and also the execution of very high profitable export order in the last financial year. So this resulted in 1 to 1.5 percentage of reduction in the gross margin. Number two, there is some impact on elevated commodity prices impacting lower savings in execution compared to the initial plan. while we are still indicating within our expected margins, but the savings that we anticipated during execution are lower versus the anticipation earlier made by the company. And number three, about 2 to 2.5 percentage points reduction is on account of ramping up of revenues for a part of our HP business, which has lower gross margin compared to the rest of the business, but overall benefition at the EBITDA level due to better operating leverage. So this kind of washes out in the EBITDA. Accordingly, we see the 50% of overall gross margin impact was mitigated at the level, and we delivered an EBITDA of 25.1%, in line with mid-20 brands we have consistently guided earlier. Going to profit before tax. Profit before tax for the quarter was INR 4.9 billion, up from INR 3.9 billion in the quarter 1 of financial year '26 with finance costs remaining net a 0 debt position. On the balance sheet and capital allocation side, we related INR 4.3 billion of cash during the quarter. taking our total available cash, including funds that will lend to the cash pool to INR 29.3 billion. . Out of this cash balance, company has announced utilization plan of approximately INR 13 billion, which includes INR 10 billion of capacity expansion program announced in the last financial year and approximately INR 2.5 billion of dividend in quarter 2, subject to approval of shareholders. The management continues to evaluate various options for utilization of balance cash to optimize returns to the shareholder. I would also like to highlight the continued quality of our order book, private customers now account for 77% of our backlog. In center utilities that PSU contribute another 21% and state securities exposure just down to 2%. This is consistent with the counter-party derisking trends we have discussed in prior calls. So to summarize, before I hand back for the question. Order intake for the quarter moderated but with an growth, execution as cash generation on backlog quality all remain strong and consistent with our full year expectations and we are on net of converting to INR 209 billion backlog profitably over the coming years. So with that, I'll hand over for the question and answers.

[Operator Instructions] Our first question comes from the line of Sameer Thakur with AMBIT.

So just wanted to check on this U.S. data center order for which you had RPT approval of up to INR 1,300 crores. So I just wanted to have you booked a part of it in this quarter? Or we should expect more orders or the entire order in the second quarter. .

Yes, as I highlighted in my opening remarks, -- we have not booked any part of that order as of now. That order is yet under discussion by our group entities with the end customer. And now we expect the timeline to the quarter 2 or quarter 3 of this financial year. .

Okay. And the INR 3,000 crores approval which you already had, and that was -- that is, I think, supposed to get converted in H2 of this year. So that is still in place, right? And probably you have to get renewed approval in the AGM in September. Is that right? .

So we had 2 approvals. I would like Sandeep to answer that. .

So Sameer, thanks for the question. So basically, the approval was we took to INR 3,000 crores that bet has been put under hold as of today by the customer. So when the customer reinitiate the process then at that point of time, we will again go back to the shareholders. If at that time, -- and because Agilis going to happen in September, it I don't see any order that in place and like by September. So probably then that opportunity becomes live, we'd like to join go back to the shareholders for revaluation.

Okay. And the second question is how do you see the HDC pipeline, it looks like the Lakadia project is on hold now, and Begonia was converted to EHC. And again, this South Kolam project is still not awarded. So what is your view there? Do you see any risk of delays or cancellations ?

The bidding has already happened for the deload I think the first take build on the first stage building that has been submitted by the developers. So this should happen probably in August or September, it should have defended on the developers. So that's a good thing. Secondly, I think we are expecting maybe 1 or 2 more projects to come in the upcoming entities. So I'm not saying that the pipeline is going a little bit the pipeline remains strong. Of course, the pace at which we would like it to come slightly getting delayed, but it's not going away. .

Our next question is from the line of Parikshit Kandpal with HDFC Securities. .

Congratulations on a decent quarter. So my first question is on the export orders in this quarter. It seems to be a very high run rate. Typically, third-party exports used to be about INR 800 crores, INR 1,000 crores, excluding RPT. So what is driving this? I know some of these are entities. So if you can help us understand in this quarter, how are these orders driven? Is it certification? Is it like -- so what is basically driving this new...

I think -- so if I understand the correction -- sorry, if I understand the question, for example, that normally, the overall yearly order intake from exports, the third party and the smaller ones is not so high. But this quarter, we have seen a much higher run rate, right? That's what you're saying, right? .

Can you come close to the mic, unable to understand..

Okay. So Parikshit basically see that it all depends upon the opportunities which are coming that not only from data center opportunities apart from that when the data center portion developed in U.S. and there is a lot of a lot of utility pipeline also getting generated in the U.S. So I think there's a lot of orders which have come from utility customers in the U.S. as well because -- and then, of course, we are close to some 2 tapes of 400 kvs BIS with customers in different countries as well. So of course, we don't have a fixed kind of a target for a quarter because whatever comes and whatever is -- whatever comes when we are able to bring those orders get built into the system. So it and the opportunities we think the pipeline for the last quarter was much better. And accordingly, the instrument transformed a big pipeline got converted. So thankfully, it's about INR 550 crores what we build around for the exports.

Sir, I'm not able to understand it. The voice is really not clear, I don't know.

Can we disconnect and reconnect?

I will reconnect your line one moment. Ladies and gentlemen, we have reconnected with the management. Over to you, sir. .

Parikshit, is it better now? .

Yes, much better. Thank you.

So the pipeline this time because of the utility customers in U.S. requirement for instrument transformers, et cetera, was much better. And then we had a few opportunities of 400 kv GIS decide opportunities. So everything contributed to much better pipeline and other realization in the port side. .

Sir, I mean, these RCTs are back to back, there has been delay in both the RPTs, bigger one is 1000, now it's put on hold and if the client decides to come back for a gain approval. And same thing is happening for data centers. So -- is it the overall concern around -- is it the geopolitic for us it concerns around data centers. So why is the delayed decision making from the customer and -- and how is the PT pipeline looking for the rest of the new pipeline for the rest of the year? .

So the first one, it was like into the INR 3,000 crores was into much advanced stage of discussion and negotiation. -- and that is why we went further RPT approval of the shareholders. But then certainly, because of budget issues, et cetera, at the last minute, the utility has is kind of -- I will not use the word back track, but that has put it under hold for some time. So we are just waiting for them to resolve the internal things and then reinitiate the process of it. regarding the data center opportunities in U.S., et cetera. So yes, we took the -- because we were very close to the final negotiation going. But then there were certain other aspects like change of location, change of state. And so when the state changed and the complete solution is to be reversed because of different voltages, et cetera. So I think there were certain factors which were beyond the control of turnover. That's why the whole opportunity has shifted.

Okay. So -- but both of them are shifted, but can come back. So as of now, like a clarity. But as and when they come back, then we get it be invented or reapproved?

Both of them are not lost. .

And just the last thing on the -- what are the -- how is the now new RPT pipeline developing? So any color on that for the upcoming approval season? .

I think the RPT pipeline, once they -- once a large project gets identified, then automatically it comes up. So -- as of today, it will be difficult to comment on the new RPT pipeline. But as and when it comes, we'll be coming to the shareholders.

Okay. Just 1 thing I wanted to say on domestic offering. I mean we have seen a soft quarters. Q4 was a soft quarter. This was again a soft quarter. if you can give some color on domestic ordering and do you expect to pick up? We are also not seeing this deader power grid coming ante were there the last couple of years, but this year, we have not seen for some quarters. So how is the demand shaping up on the domestic...

I think if you look at January to March for TBCB pipeline was a pretty soft pipeline. And because of that, you see the order intake, which is impacting the April to June order intake, which is there. But we are seeing now the TBCB pipeline or decisions now getting much better last few -- if you really look at July, the pipeline is much better than what it was in January to March. Only thing is that with the large pipe decided in July, we'll have to see that when the ordering happens, whether it happens in this quarter or it spills over to the next quarter. So that is something to be seen yet. .

Our next question is from the line of [ Vidhi Shah with CR Kothari and Sons. ] Vidhi your line has been unmuted. You may proceed with your question. As we're not receiving a response to the current participant, we will move to the next question in queue, which is Amit Anwani from PL Capital. .

Congrats for the good set of numbers. My question, 1 is on the data centers. Just wanted to understand what is the data center portion in your current order book? And second, how is the data center pipeline building up for you, what is the addressable market in the data center CapEx for you -- if you could elaborate more on this side here.

So Amit, in the present order intake, the data entering is not significant, I would say, that it's a few product orders which are there in the data center. Of course, what we are seeing is that now on the drawing board, we are seeing much larger data center capacities being planned, which will be at higher voltages. So we are working with the customers on the data center opportunities, but -- is it going to materialize in next quarter or maybe in the next 2 or 3 quarters? This is something we had to be seen.

Right. Second, sir, I want to, again, follow on the domestic ordering question. You did highlight that ordering during Jan to March the tender pipeline was soft and that's how the conversions got impacted. But how 1 should look for the full year in terms of base orders, especially the domestic 1 for this year? Will it be double-digit growth? Or if you could give some medium- to long-term sense as to how much you're factoring for this year? .

So when we talk about market, I don't expect a double-digit growth, but I'm not looking at the slowdown of the market as well for the year. So market will either remain at the same level or we might see about 6%, 7% growth in the overall market, which will be realized this year on the TBCB side.

Right. Lastly, sir, on margin. You did explain the margin variation for this quarter. and you have been guiding mid-20s for the full year. So are we sticking to that? Or is there any change to the guidance for this year on margins?

So Amit, we maintain our guidance of mid-20s EBITDA for the year. There is no reason that we should part from that shut now. .

Our next question is from the line of Jason Soans with IDBI Capital.

My first question just pertains to the -- I mean, of course, the notification of the 4 Chinese players, which have been added. And of course, it increases competition, particularly on the GIS side. So I just wanted to know definitely the core product for us as well. So I just wanted some color from you on the side of how this can probably play on the margins or the orders? How do you see this shaping up for us going ahead?

Jason, we are also watching because it has just got approved. And subsequent to that, so normally, whatever power grid bidding happened had happened before that -- so they were all with the domestic the non-GIS mix had been considered and the bidding has happened in power grid. Regarding the private -- so whatever private has won the TBCB bids they have not yet started the discussion of the impact of the Chinese and GIS. We tend to know once the thing will start the negation process will start. But we'll also have to understand 1 thing that the government has approved. So if you look at Chinese before they got before they were restricted from participating in the Indian market, the Make in India clause of like 60%, 65% local content was not there. So what will the Chinese leverage to go down on prices with 60%, 65% or 70% local content is also to be seen in the market. And if they were not present or they were not operational in the country for like last 3, 4 years and then suddenly to take orders and deliver in 18 months with 60%, 70% local content, that capability also needs to be understood.

So my next question pertains to -- I mean, your voice was a little bit muffled as an earlier participant spoken. So you did mention the reason for the lower gross margins and what 1 aspect of it that it was due to lower exports and execution of a higher profitability export orders in the last quarter. But the other 2 reasons that you mentioned were not audible. Could you just repeat that for just a clarity sake.

Yes. Thanks, Jason. I'll answer it again for the benefit of all the participants. So we are comparing our current quarter gross margin with entire financial year '25, '26 because in our business, a full financial year makes a better representation rather than comparing on each quarter basis. Last financial 45.3% gross margin. So this quarter, we are achieving 41.3%. So delta 4%. I highlighted 3 broader ease impact is due to the ramping up of higher revenue from the part of the HP business, which gives a lower gross margin compared to the rest of the business but also it enables a better operating later because we are growing volume with the help of this business and hence that impact largely was eliminated at the EBITDA level. . That is a thing that oral EBITDA is 25.1% compared to 27.1% in the last financial year. Now other reasons are approximately 1% to 1.5% of the impact on account of relatively lower export share in the current quarter and also execution of high profitable export order in the last financial year that you rightly highlighted. And the third reason I mentioned is the elevated commodity prices resulting into the lower execution savings that we anticipated compared to our initial plan.

Our next question is from the line of [ Anuj Jain with Globe Capital. ]

I just have 1 question. I mean, apart from a group level, what is our order book?

I mean overall order that we booked for the quarter was -- and out of this, at INR 5.5 billion was from the export side. In our business, largely, I don't have exact split for the quarter, but -- 90%, 95% of orders are coming from the group entry. So we can assume roughly INR 5 billion of the order on a broader basis coming from the group entities. So excluding that, we can consider INR 2.5 billion of orders coming from the third parties, which includes a large portion of the domestic customer and small portion from third-party customers in the export segment. .

And total order book you are saying about the quarter and talking about the total order book of 20,900-odd something out of that. .

Okay. So that is the order backlog which we are...

Yes, right. Order backlog...

It's about INR 20,900 crores. .

We generally do not give a breakup of the backlog in export versus domestic, and I'll give you some broader color export in the total orders we have backlog should be about 10% to 15% in that range. .

Our next 1 is from the line of Ankush Khandelwal, an individual investor. Ankush Khandelwal, your line has been unmuted. You may proceed with your question. There's no response from the current participant, we will move to the next participant in the queue, which is [ Shree Ram Kapur with Jefferies. ] Please go ahead. .

Just have 1 quick clarification on the RPT approvals that you have. So the -- you have the INR 1,300 crores, which is for the U.S. data center order -- that is not part of the total INR 3,000 crore RPT approvals you've taken, right? Could you clarify what that balance 3,000 RPT approval is for? Is that 1 single project? Or is that multiple projects? .

So that was 1 project and that was not a U.S. posters a different project altogether. .

Understood. So currently, you're about INR 4,300 crores of approvals where the orders are still pending. Just to clarify.

Yes, but of that INR 3,000 crore is going to expire by this AGM. So then it will be only INR 1,300, which will be left. .

Understood, sir. And secondly, just in your last earnings call, you discussed being content around base order flows of INR 700 cores to INR 8,000 crores a year. And this quarter, you've done around INR 1,100 crores. So of course, you mentioned that the pipeline TBCB was a little softer this quarter, but it's picking up. So do you remain confident on the INR 7,000 crore to INR 8,000 crore base orders coming through for the full year? Or are you expecting it to miss that guidance? .

No, we remain confident in terms .