GE Vernova T&D India Limited (GVTD.BO) 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. [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, ma'am.

Good evening, everyone. Welcome to the GE Vernova T&D India Limited Earnings Call for First Quarter of Financial Year '25-'26. I am Megha Gupta from Investor Relations team. During the call today, we will discuss company's financial performance, including operational highlights and will share key updates. Towards the end of the presentation, we will have a dedicated question-and-answer session. I would like to highlight that today's discussion may contain few forward-looking statements, which are subject to risks and uncertainties. These statements are based on our current expectations, and actual results may differ materially from those expressed or implied. We encourage you to refer to our public filings and documents for a comprehensive understanding of the factors that could impact our future performance. Now I'll introduce GE Vernova T&D India Limited management team available on the call. During the call, we are joined by Mr. Sandeep Zanzaria, CEO and MD of the company; Mr. Sushil Kumar, Whole-Time Director and CFO of the company; Mr. Abhishek Srivastava, Head, Business Operations; Ms. Kanika Arora, Communications Leader; and Ms. Shweta Mehta, Company Secretary of the company. Now I'll hand over to Mr. Sandeep Zanzaria to begin the discussion.

Thank you, Megha. Good evening. Welcome, everyone, to our first quarter FY '25-'26 earnings call. Globally, investments to enhance the reliability and resilience of power grids are accelerating at an unprecedented pace, a trend clearly reflected in India as well. This growth is underpinned by the country's ambitious target of 500 gigawatt of renewable capacity and the expectation that peak power demand will rise by nearly 80% by 2032. To meet this surging demand, India's transmission sector must expand rapidly with 20,000 circuit kilometers of high-voltage transmission lines and 125 gigawatt substation capacity required each year through 2032. Achieving this will call an investment exceeding INR 9 trillion or USD 110 billion. In this context, the recent approval of 6 gigawatt 800 kV Barmer-II to South Kalamb HVDC project by the National Committee on Transmission on May 30 marks an important step. This is the first in the series of new HVDC corridors, which are expected to be sanctioned and commissioned over the next decade, reinforcing the backbone of India's future power infrastructure. We are uniquely positioned to power India's electrified future. With a fully integrated value chain from R&D to local manufacturing, we combined scale and deep expertise to deliver world-class reliable grid solutions, spanning power transformers, GIS, circuit breakers, instrument transformers, grid automation, digital solutions, HVDC and compensation systems. Our facilities continue to evolve, strengthened by recent investments that expand capacity in critical technologies such as HVDC valves and compensation, essential for grid stability and seamless renewable integration. This strong manufacturing footprint ensures we are future ready to support India's ambitious transmission expansion and its transition to decarbonize 24/7 powered economy. Above all, we remain steadfast in our commitment to serve as a trusted long-term partner in building the grid of tomorrow for India. Turning to our financial performance. We had a productive strong quarter of robust demand, significant revenue growth and EBITDA margin expansion. Our order book remains strong in Q1 as we saw bookings of INR 16.2 billion, up 57% year-on-year compared to INR 10.3 billion in the quarter ended June '24. Our Q1 revenue stood at INR 13.3 billion versus INR 9.6 billion in Q1 '24-'25, up by 39% year-on-year. New orders outpaced revenue, further expanding the order backlog to INR 129.6 billion as of June '25, up by 2% quarter-on-quarter. Our profit before tax and exceptional items for the quarter ended June '25 was at INR 3.9 billion compared to INR 1.8 billion in the corresponding quarter of the previous financial year, growing by more than 2x. The cash and cash equivalent balance was at INR 12.2 billion as on June 30 versus INR 10.5 billion as on 31st March '25. The cash generated in Q1 was INR 1.7 billion. Beyond the strategic market tailwinds, our focus remains firmly on operational excellence across all our businesses. This commitment to continued operational improvement is critical for us. It allows us to not only enhance our efficiency and cost structure, but also ensure we consistently deliver high-quality products and solutions that meet our customers' evolving needs, ultimately driving sustainable growth and profitability. On behalf of the leadership team at GEV T&D, GE Vernova T&D India, our sincere thanks to our valued customers, our dedicated investors and our exceptional teams. Now I invite Abhishek to share the insights on key commissioning for the quarter.

Thanks. Thanks, Sandeep. So good evening, all of you. It gives us immense pleasure to share the key contributions of your company in terms of strengthening the transmission network. We have been actively working on building up good -- strong transmission network to cater to the power demand and to enable this renewable energy transition. Some of the key notable contribution made in the last quarter was augmentation of the transmission scheme at PGCIL Kotra, wherein we added a transmission capacity of 3,000 MVA by commissioning of transformers and outdoor GIS of 400 kV. Then another key thing was Adani Khavda, which is a hub for renewable generation. And there, we have been partnering with developers like Adani to set up GIS sub stations, and we successfully commissioned 765 and 400 kV GIS and additionally, adding a transformation capacity of 3,000 MVA. Then we have been working in terms of supplying our transformers and helping our customers to again augment more and more capacity. Aditya Aluminum Lapanga was one of the key contributions done by our company in terms of adding 315 MB, 400 kV ICT. Then another one was WBSETCL Purulia, which was 400 kV 125 MVAR reactors. These projects have been done in very short time line and in line with the expectation of our customers. In terms of gas insulated switch gears, so we have been working with data center customers, again, working against tight time lines, focusing on operational excellence and delivering to our customers' expectations. So we commissioned 5 days of 220 kV for NTT and another one for KPTCL. So these contributions are just examples of our engagement with our customers working in a time-bound manner and adding to the transmission capacity of the country. So I'll hand over to Sushil to take us through further details.

Thanks, Abhishek, and good evening all. Moving to the financial slide, Slide #5 to 7 in the investor presentation. Overall, we had a very productive first quarter, positioning us well to continue to accelerate our growth and margin expansion. We delivered strong results in quarter 1, '25-'26 with continued growth in orders, growth in revenue, significant EBITDA margin expansion, and we also generated a positive cash flow and now maintain a healthy cash and cash equivalent balance. As highlighted by Sandeep in the beginning, demand remained robust as we booked orders of INR 16.2 billion, representing an increase of 57% year-over-year and 1.25x of revenue during the quarter. In this quarter, most of the orders were booked from domestic customers, representing 86% of the orders in the quarter. Rest, 14% orders were received from customers outside India. Once again, in this quarter, orders were received from a very diverse set of customers and projects for all our served markets across all our businesses. These included orders for transformers and reactors, GIS and AIS equipment, automation products from various utilities, TBCB players and EPCs. As a result of strong orders, our backlog continued to expand both sequentially and year-over-year, now reaching INR 129.6 billion. We continue to build a strong backlog supporting long-term growth in our business. We are growing this backlog in a very disciplined way through disciplined underwriting with 97% of the backlog from private customers, central utilities and PSUs. The exposure to state utilities is limited to less than 3% of the backlog. We executed well during the quarter, delivering a revenue of INR 13.3 billion, making progress sequentially and delivering a significant 39% growth on a year-on-year basis. In this quarter, about 39% of the revenues were generated by execution of highly profitable export backlog, whereas 61% of the revenue was executed from the domestic contract. We reported a strong EBITDA of 29.3% during the quarter, representing an EBITDA expansion of about 1,000 basis points over the EBITDA generated in financial year '24-'25. This significant increase in EBITDA was driven by volume, price and productivity. Deep diving a bit more about individual components. First component is volume. As mentioned earlier, our volume is up 39% year-over-year basis and a significant part of the increase is from highly profitable export contracts. At the same time, we maintained a strong focus and control over fixed costs. So this helped in expanding the EBITDA and EBITDA percentage through strong operating leverage in the financials. The second component is price. Through a disciplined underwriting, we were able to realize better price in last couple of years. This price increase, coupled with phasing out of the old backlog has expanded the margin on the backlog and the execution of these healthy projects is now supporting the EBITDA. Third component is productivity. We have been able to execute well through lean, delivering on time and saving on the material cost and the overhead cost. While the EBITDA for the quarter is very strong and is reflective of the strong momentum in our business, however, we are in long-cycle business and the EBITDA of the quarter should not be construed as a new benchmark. Overall, the annual EBITDA performance is a good reflection of our business. So last year, we delivered an EBITDA of 19%. This was the high end of the range of mid- to high teens that we called out earlier. And as communicated earlier, the endeavor of the management is to improve and deliver better than last year. With a strong performance in the quarter 1, we have higher confidence to deliver better EBITDA this year. In addition to strong P&L performance, we continue to generate positive cash flow with approximately INR 1.7 billion cash generation in the quarter, driven by significant profit during the quarter, down payments on the new orders and the disciplined working capital management despite 40% increase in revenue. As a result of this positive cash generation, we now have a healthy cash and cash equivalents of INR 12.2 billion with no debt. We continue to utilize this cash with a combination of return to shareholders and a meaningful investment within the business. So far, we have announced a dividend of INR 1.3 billion, which is to be paid after the approval of the shareholders in the upcoming AGM in September. And we have also announced a CapEx of INR 2.5 billion. Excluding the announced utilization plans, now we have an available cash of INR 8 billion for which management continues to evaluate the options. So overall, we are very encouraged by our financial performance in the first quarter of '25-'26 with 40% revenue growth, 1,000 point EBITDA expansion and INR 1.7 billion of cash generation. Our growing backlog with healthy margins provide a strong foundation for continuing improvement in the financial performance moving forward. So we can now take up the questions, and we'll be happy to answer your questions.

[Operator Instructions] The first question is from the line of Umesh Raut Nomura India.

Congratulations for a very strong set of numbers. Sir, my first question is pertaining to exports revenue growth of about closer to 80% in the quarter and the contribution at about 40% of total turnover. So how do you see this sustaining going forward and in a way impacting in terms of better gross margins for the company?

Yes. So overall, last year, we had significant level of export contracts. And overall, our backlog mix has moved higher towards the export orders. So earlier, we had export backlog as a percentage of total backlog, which is in the range of 20%, 25%, but now we have a backlog of about 30%. So overall, on the long term, we expect that revenues to the extent of 30% should be contributed by the export side on a long-term basis.

Got it, sir. And if you could also share the contribution from product services and projects within your turnover for this quarter?

Umesh, we don't give quarter-wise split of that information generally because it keeps changing quarter-on-quarter. It's not a thing which remains consistent. I think we will request to evaluate this as a portfolio of product projects and services in the long term, and that's a better benchmark to analyze.

Got it. My next question is pertaining to HVDC tendering prospects. So here, if I look at, I think there are 2 projects now which are, I think, in the discussion. First is pertaining to Khavda-South Olepad and second, as you mentioned, Barmer-South Kalamb. So how do you see finalization happening, tentative time lines for these projects to kind of get awarded to OEM?

So Umesh, we expect that both these orders to be finalized in this financial year.

Okay. So by March 2026, is that correct?

Yes. Yes.

Got it, sir. And any assessment from your point of view in terms of comparison between, say, the LCC-based HVDC project, VSC-based HVDC project and BSS system now that I think the CA has already assessed for that option in one of the HVDC projects. So what is your view between these 3 technologies?

So I think as the CA is also evaluating, we are also evaluating the impact, if any, it can create on the upcoming HVDC project. But I think looking into the growth aspirations what the country has, obviously, both will be complementing each other, but it does not compromise the project requirement of HVDC in the upcoming time. So the demand is -- the demand expected is substantial. So I don't think that it is going to be hugely impacted with the introduction of this.

The next question is from the line of Subhadip Mitra from Nuvama Wealth.

Many congratulations on a great set of results. Just wanted to dive a little bit deeper on the point on margins where you mentioned that naturally, I think this particular quarter has seen exponentially high margins because of very high exports. But given that you are expecting export mix to continue at around 30%. If I heard you correctly, you were looking to better on the overall full year margins of 19% delivered last year. Is that right?

Yes, Subhadip.

Perfect. And in terms of the HVDC, you expect both Leh-Ladakh and the Barmer project to get ordered out in the current year?

Can you repeat, Subhadip, the question?

Yes, I'm saying that both the HVDCs, the Leh-Ladakh project and the Barmer project, are they expected to get ordered out in the current fiscal?

So not the Leh-Ladakh project, Subhadip, but South Olepad-Khavda and Barmer-South Kalamb, we expect it to be ordered this financial year.

Understood. And the configuration still remains similar, LCC for Barmer and VSC for the South Olepad project?

Yes, yes.

Understood. Sir, lastly, in terms of the CapEx, I think Sushil mentioned an amount, I'm sorry, I missed that particular number. Has there been an upgrade to the CapEx number?

So I think what we declared in our press release and also to the stock exchange that $1.4 billion -- sorry, INR 1.4 billion for valves and controls for HVDC and STATCOM.

And another INR 1.1 billion as a regular CapEx debottleneck of our capacities in the factory. So overall, put together, INR 2.5 billion of CapEx we have already communicated.

Perfect. Perfect. And lastly, would it be possible to also share what is the capacity utilization that your current facilities are working at?

I think, Subhadip, I think it is -- the way our revenues are growing, the capacity utilization is increasing. And of course, we are adding people as well as debottlenecking the capacity through lean. So I would say it is pretty good in terms of AIS product and transformers. But for grid automation and all, yes, we can take much more orders.

The next question is from the line of Mohit Kumar from ICICI Securities.

Congratulations on a very good set of numbers. My first question is, sir, do we have the ability to produce synchronous condenser? And are you seeing any demand from the Indian market?

So, of course, we work with other group companies and all external partners. So some part of synchronous condenser because when you look at synchronous condenser solutions, this requires some part of transmission as well. So we do that part. And of course, the actual synchronous condenser as a product comes from the other companies which are into the power generation side because it's a rotating machine. But yes, there are -- when we participate in various forums, et cetera, yes, there is a talk which is going on that synchronous condensers will also be introduced into the Indian market.

Understood, sir. My second question is, GE Vernova Global in its commentary has categorically said that they are benefiting materially from data center opportunity. I think they received a $500 million in the first half. But do we, which is GE India, has any product suite to service the domestic data center? Are we looking to pick up some order from this particular segment?

So we are regularly taking the orders from the data centers. So mostly, for example, data center offtake is either at 220 kV level, which now we expect with higher data centers to grow to 400 kV. So we offer GIS, we offer our projects, we offer grid automation. So all the products which go in these, power which is required for the data center, we are there. And in India, we have -- with these products, we have supplied to multiple data centers, including the CtrlS, CapitaLand. So many data centers which are there, I've been -- our products have gone in building those.

My last question, did we execute any HVDC in this particular quarter, which explains the high margin?

No, no. Presently, we don't have any HVDC project in our backlog.

The next question is from the line of Nitin Arora from Axis Mutual Fund.

Congratulations, Sandeep, sir, and the team, great execution. Sir, just first question on -- if I just leave aside the HVDC opportunity, just your take on how the inquiry pipeline looks like, especially in the 400 kV also because you won a large order last time also from Power Grid. How is that overall inquiry pipeline looks like? And second part to it, as I think in the call, it is mentioned, now on a sustainable basis, we look 30% of revenues coming from exports. How is the pipeline looking like there? Do you expect any large chunky orders to come in? And that's the reason you're looking for next few years this revenue to sustain as a mix? That's the first question, if you can throw some light on that.

Thanks, Nitin. I think inquiry pipeline when we talk about -- so another development which has happened, which is positive for us is that now even various states are also moving and encouraging, or I would say, not encouraging, but moving towards TBCB. So normally, as Sushil said that out of our backlog, we have only 3% state portfolio. But once these states also move on a TBCB backlog, I think that market will also open up to us. Today also, it is open to us because the various EPC players when they take orders, the product goes from us, not as a direct supply, but through EPC market as well. But that is again -- second, I'll -- Sushil, if you can...

Nitin, when I said that we have 30% of the backlog and if you look at our numbers, the backlog is about INR 130 billion, which is 3x of last year revenue, roughly. So which means that even with the current backlog we have, next 3 years of revenue, we have confidence that 30% of revenue can come -- roughly in that range can come from the export side. So while answering that question, we are not factoring in the export growth pipeline, but just what we have in our backlog with us.

Got it. Second, sir, I know we've been asking you this question for long now. Just if you can articulate something on the pricing environment. And why I'm asking this to you again, we thought that the pricing would stabilize someday. I mean you -- I think I remember in the last call, you said very clearly, very openly that you don't see pressure in pricing the way demand is. But the way we saw few results, people selling conductors or cables, their margins are also going very high. How would you like to look that? I mean, as an investor, how one should look? These prices are going to stay for the next 2, 3 years is what one should keep in mind because the demand is something will remain strong? Just one articulation on that. And second, which you touched base on capacity utilization. When do you think apart from that INR 140 crore expansion, which you announced, is this something you're envisaging another round of CapEx that would you entail given if the demand from both domestic and the export, what you're looking is pretty strong, then don't you think you need a little decent-sized CapEx going ahead just on these 2 aspects, sir?

So Nitin, I think on margin expansion, I will not be able to comment on the conductor or the cable business part, that industry. But apart from a few pockets, I think in our segment, the prices are stabilizing a bit. That is what I will say. And when I tell prices, it is normally you have to also understand price is also a factor of if there's another increase in input raw material cost. So I think there is a difference between increasing price and increasing margin today. So that is -- I think we need to differentiate between the 2. I think more important question is that if the cost is increasing, do we still have the flexibility to pass on that increase to the market? So partially, I would say, yes, that today also, we are able to do that. On capacity utilization, I think in his comments, Sushil clearly said that apart from this, we keep on evaluating the -- how to use the cash and how to meaningful look at if there is any other possibility of capacity expansion and all. So this is something which we keep on regularly evaluating. And when the timing is right, we'll take the decision and whatever decision is taken will be communicated to the market.

The next question is from the line of Amit Anwani from PL Capital.

Congrats for a strong set of numbers. First question, again, on the HVDC orders which you highlighted. The South Olepad order, I think assuming that this would be about INR 12,000-odd crores and South Kalamb should be about INR 25,000 plus crores. Just wanted to understand if at all we are bidding for this project, will this be in partnership? What could be our scope or addressable market possibly if the orders comes to us? So just wanted to understand the quantum since these orders will be getting tendered out in the next 12 to 15 months.

So these -- so one of the South Olepad is already the bid for the developers have been submitted. And I'm not sure where the numbers have come like INR 24,000 crores, but I'll not be in a position to comment on those numbers. But any HVDC project, which is there, definitely, we have the capacity and capability to execute, and we would be interested in bidding and taking those orders.

So it will not be sort of like in jointly bidding. You'll be bidding individually for these projects?

These are all commercial strategies, Amit. So I don't think that this is something which we can talk on an open call.

And sir, second question on the margin. So I understand that you highlighted that the export was -- or the mix was better this quarter, and we had a kind of 47%, 48% gross margin. But still would love to understand, shall we assume that the 40% margin last year will be doing better numbers this year since export contribution has been higher in Q1? And even going forward also, as you highlighted, export should still be 30% even the product components will be increasing? So directionally, are we targeting sustainable margins better than 40% gross margin?

Amit, this is Sushil. And I highlighted multiple factors leading to the higher EBITDA in this quarter. Export was one of that element. The volume being another one because higher volume gives a significant operating leverage because we are maintaining tight control on our structural costs. And the other elements that I highlighted were also related to the productivity, material cost saving, et cetera. So overall, the endeavor of the management is to perform better. And rather than just commenting on the gross margin and then going into the breakup of the other costs, et cetera, overall, we said that our endeavor now is to perform better than last year in terms of EBITDA performance. And with the strong first quarter, we have higher confidence of that.

Sure. Lastly, would love to also understand about the non-HVDC pipeline. What is the pipeline? And our addressable -- some color on the non-HVDC transmission pipeline also?

Amit, the pipeline remains strong for non-HVDC as well. So I don't see at least in the near future, any challenges on the pipeline.

Sir, any number with respect to the prospects?

No, I don't think so. But we are looking at about like growth in pipeline or the orders to be decided. As compared to last year, we expect a growth at least in some single digits, somewhere between 7% to 8% as compared to last year.

The next question is from the line of Renu Baid from IIFL Capital.

Congratulations for strong performance. Just two questions from my side. One, while Sushil did mention that long-term margin improvement guidance remain intact on a year-on-year basis, we definitely expect expansion, but 1Q has pretty strong numbers to look for. So does that mean that as we see incremental execution of our export order wins, especially comprising of HVDC equipment for transformers and others, we should see these healthy trends being sustained?

Yes. So as we mentioned that we are looking for improving. So the last year, we were talking about low to -- sorry, mid- to high teens, and we were able to deliver at the highest end of the range. And this year, we have endeavor to improve from that level. And multiple factors I talked about being the volume, price and other factors.

So Renu, just one -- Renu, one thing, which I want to clarify is that we should not look at margins in a particular quarter. Ours is a long-term business. So probably a right benchmark to measure margin will be 12 months rather than quarter-on-quarter.

Got it. Got it. And lastly, just a simple question there. From a market perspective, many investors tend to perceive that one needs to have HVDC projects to drive profitability and growth ahead of the market. But if you look at these numbers, without having large domestic projects, we have been showing strong outperformance. So from a longer-term perspective, do you think it's important for you to do large projects in India? Or even if you're able to execute HVDC product supplies for global projects, that should suffice in terms of the business mix for you and to deliver better margins?

So I would say, I think, Renu, that HVDC is basically, of course, the factories do get loaded, for example, the transformers and the technology part of that. But there are other businesses, for example, AIS, GIS, where the role of an HVDC project in that, the contribution is very limited. So of course, we would be focusing on HVDC projects because the returns which have -- which we now expect on HVDC project are also much better as compared to what used to happen about like 5, 10 -- not 5, but maybe about 8 to 10 years back. So it will be a focus area for us as well. And wherever possible, even if you are able to support any global HVDC projects, like, for example, what we have done in Korea, so that will also remain on our radar and focus.

So just to add on, Renu, the demand has been strong across the board in India as well as exports. And we have been highlighting for the last 2 to 3 years about disciplined underwriting, cash over revenue and our selectivity in the order booking. And that has resulted into a better price on the backlog and now is coming in the P&L being the execution stage. So we look for the best opportunity, be it HVDC, AC projects or in the export market wherever we get the best for the company.

The next question is from the line of Subramaniam Yadav from SBI Life Insurance.

Sir, you have spoken on the revenue front that from the order book for the next 2 to 3 years, we can execute 30% of the export orders. Just wanted to understand if you can give some color on the inflow also from the group companies or parent company. How much mix are you expecting this year?

Mr. Subramaniam, that's a very specific information and depends on the pipeline of the projects. When we look at any domestic market or the export market, it is irrespective of whether the channel is to the group companies or directly from the third parties. Most of the time, the orders come from the group companies because there is a compatibility in the technology, and we are able to participate and win together. But otherwise, also if we have the projects where GE Vernova T&D India can bid directly and win, we participate in those markets in the export as well. So it's very difficult to give a specific number broken into by export and the related party because that keeps changing about -- depending on the win by the parent company or the group company and about the pipeline in different geographies.