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

Ladies and gentlemen, good day, and welcome to the conference call hosted by GE Vernova T&D India Limited for quarter 3 of financial year 2025-'26. [Operator Instructions] I now hand the conference over to Ms. Megha Gupta from GE Vernova T&D India Limited. Thank you, and over to you, Ms. Megha Gupta.

Good evening, everyone. Welcome to the GE Vernova T&D India Limited Earnings Call for Quarter 3 of financial year '25-'26. I'm Megha Gupta from Investor Relations team, and I'm 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, Communication Leader; and Ms. Shweta Mehta, Company Secretary of the company. During the call, we will discuss company's financial performance, including operational highlights. After the presentation, we will have a dedicated question-and-answer session. Before we begin, I would like to highlight that today's discussion may contain a few forward-looking statements which are subject to risk and uncertainties. These statements are based on our current expectations and actual results may differ materially from those expected or implied. We encourage you to refer to our public filings and documents for comprehensive understanding of the factors that could impact our future performance. Now I turn the call to Mr. Sandeep Zanzaria to initiate the discussion. Thank you.

Thank you, Megha, and thanks, everyone, for joining the call. India added nearly 38 gigawatts of solar and 6.3 gigawatts of wind capacity in calendar year 2025, marking the country's highest ever annual renewable energy additions. RE now accounts for about 50% of India's installed power capacity, underscoring the structural shift underway in the generation mix. What does that mean for transmission and distribution infrastructure? Every megawatt of renewable capacity added demands robust T&D network to evacuate power, ensure grid stability and deliver reliable electricity to home and industries across this vast nation. The draft NEP 2026 sets a target of 2,000 kilowatt hour per capita electricity consumption by 2030, rising to over 4,000 kilowatt hour by 2047, a significant leap from the current 1,460 kilowatt hour. The peak power demand is projected to touch 446 gigawatts by 2030. These targets reflect India's growing energy needs, driven by industrialization, urbanization and economic development. Renewable energy is increasingly being generated in remote locations, solar power in Rajasthan deserts, wind farms of Gujarat Coast, hydropower in Himalayas, far from urban and industrial centers where power is consumed. This is where HVDC transmission comes not just useful but essential. With our HVDC solutions, we are well positioned to support India's renewable evacuation backbone. Now turning to our financial performance. We had a productive strong quarter of robust demand, significant revenue growth and EBITDA margin expansion. Our order book remained strong in Q3, and we saw bookings of INR 29.4 billion, up by 41% year-on-year, compared to INR 20.8 billion in quarter ended December 2024. The numbers exclude the Adani Khavda HVDC project, which will be reported in subsequent quarters on achieving defined commercial milestones. Our Q3 revenues stood at INR 17 billion versus INR 10.7 billion in Q3 FY '24-'25, up by 58% year-on-year. New orders outpaced revenues, further expanding the order backlog to INR 143.8 billion as on December 2025 versus INR 131.1 billion, as on September '25, up by 10%. Our profit before tax and exceptional items for the quarter ended December '25 was at INR 4.6 billion compared to around INR 1.9 billion in the corresponding quarter of the previous financial year, growing by more than 2.4x. The cash and cash equivalent balance was at INR 15.9 billion as of December 31 versus INR 15.2 billion as on September 30. The cash generated in Q3 was INR 0.7 billion. This was our financial performance snapshot. I would like to convey that the Board has recommended the appointment of Ms. Rashmi Joshi as an Independent Director of the company for a period of 5 years subject to shareholders' approval. In conclusion, as India races towards a target of 500 gigawatts of nonfuel capacity by 2030, we're building the network through which this energy will flow. We are enabling grid modernization supporting renewable integration and ensuring that India's growth story as the power infrastructure it deserves. Our strategy is clear: execute with excellence, pursue profitable growth and be India's trusted factor in building the energy infrastructure of tomorrow. On behalf of the leadership team at GE Vernova T&D, our sincere thanks to our valued customers, our dedicated investors, our exceptional teams and our partners. Now I'll request Abhishek to share further insights.

Good evening. So as Sandeep just mentioned, our commitment towards strengthening of the transmission infrastructure of the company -- of the country. We had added some new strengthening projects to our electrical network in the last quarter. Like for a customer renew, we commissioned 400 and 220 kV bays, strengthening the evacuation of wind and solar power from the state of Karnataka. For our customer, JSUNL, we commissioned 132 kV along with 50 MVA transformer. For a customer, WBSETCL, we commissioned 132 kV GIS. Similarly, we continued addition of transmission capacity through commissioning of transformers, shunt reactors. For our customer, Power Grid at Bhadla, we commissioned 6 number 80 MVAr single phase 765 kV reactors. Similarly for our customer, Resonia at Kishtawar, we commissioned 400 kV single phase shunt reactors, 3 numbers. At Power Grid Dausa and Power Grid Narela similarly, we added 3 number 500 MVA 765 kV single phase reactor and 10 number 110 MVAr 765 kV single phase reactors. The network -- transmission network was further strengthened through commissioning of gas insulated substation. Some notable mentions for the last quarter was GETCO where we commissioned 15 number bays of 400 kV, or KPTCL, where we commissioned 66 kV GIS 41 bays. Then we had an export project for Elecnor Dominic Republic where 400 KV CBs were commissioned. And then for Godrej Power Grid substation, we commissioned 10 numbers circuit breakers and CSDs. So our commitment towards this strengthening continues, and we will try to keep up this performance and keep on adding to the electrical infrastructure of the company. So I hand over to Sushil to take the floor.

Thanks, Abhishek, and good evening all. We delivered a robust growth in revenue and profitability due to our strong operational performance during the quarter as well as for the 9-month period. And as highlighted by Sandeep earlier, we booked orders of INR 29.3 billion during the quarter 3. This was the highest quarter for orders in this financial year. This quarter order performance includes the refurbishment of Chandrapur HVDC order from power grid. And as Sandeep mentioned, in addition, we won HVDC Khavda, South Olpad VSC order from Adani Group and the same is expected to book in subsequent quarter basis, the commercial condition -- commercial milestone achievement. On a cumulative basis, we have booked orders of INR 61.6 billion in the financial year '25-'26. Out of the 61.6 billion orders during the current financial year, 15% orders are from export market and about 85% orders from the domestic market. New orders continuously exceed the revenue execution, and this has led to further improvement in our order-in-hand position to INR 144 billion. Due to disciplined underwriting process at the company and phasing of the old low-margin orders, the margin on order-in-hand has also improved over the last financial year. 98% of the orders-in-hand are from private customers, center utilities and public center enterprises. The exposure to state utilities is limited to less than 2% of our orders-in-hand. Healthy order-in-hand gives us a strong visibility of continuing strength in our business. Our execution has ramped up, and this has led to the strong revenue growth as well. We delivered revenue of INR 17 billion presenting a 58% growth during the quarter. And on a 9-month basis, the revenues were INR 46 billion representing a strong 46% growth versus the corresponding period in the previous financial year. In this quarter, about 28% of the revenues were generated by execution of export contracts and whereas 72% revenue was generated by execution of domestic contract. On profitability side, we delivered another strong profitable quarter with EBITDA of 26.7%. On a 9-month basis, we delivered EBITDA of 27.1%, which represents 80 basis point improvement over the last financial year. The significant increase in EBITDA was driven by increase in volume, price improvement and execution productivity. During the quarter, we made a provision of INR 693 million on account of impact in the retiral benefit due to the new wage codes and this was reflected or reported under the exceptional item in the profit and loss statement. We continue to generate or convert our profits into cash. And during the 9-month period, we generated INR 6.7 billion cash operationally and end of December, we have healthy cash and cash equivalent of INR 15.9 billion with no debt. We are now happy to answer the questions.

[Operator Instructions] The first question is from the line of Mohit Kumar from ICICI Securities.

Yes. And congratulations on a very strong quarter and the 9 months. My question is -- first question is, can you please -- can you help us with the reason for not including the HVDC orders for Adani in the current quarter? And does the Adani HVDC orders also include transformers for the project? Or is it only for the terminal?

Thanks, Mohit. So not as per company's processes, there are certain processes, there are certain milestones defined on which the others are bid. So once we reach that milestone, that order would be booked and yes, the transformers for the HVDC are included as part of the order.

Understood. My second question, how to think about the impact of the -- of the FTA with Europe, does it make our product more competitive in the -- for the European region, thereby improving our export chances or does it reduce our cost of raw materials since you, I think, import a significant part from Europe?

So Mohit, we are yet to get the details of the FTA. So once we have the FTA details available with us, then only we will be able to make a judgment on what is the impact both on export side and also on the cost side. So it will be too premature for us to comment on FTA.

But sir, how much exported in the last 9 months to Europe? Is that number available?

I don't think that, that will be available, that how much we have exported to the European market. But I don't think that from India, the custom duty is so high that FTA is going to make a meaningful impact in terms of increasing the export numbers in a big way.

The next question is from the line of Umesh Raut from Nomura India.

Congratulation for a very good set of numbers once again. Sir, my first question is pertaining to HVDC order bid that we had in last quarter. So assuming that we will have commercial finalization by maybe next couple of months, so what could be delivery time line for this particular project? And how it will span over a period of, say, multiyear in the next few years?

So Umesh, order is already with us. 0 date has already started. And it's only that once we reach certain commercial milestones, we are going to book it into the system and declare it to the market.

Time line.

Execution time line for the process, yes.

Execution time line is very near to what has been defined by the TBCB development requirement, it is very near to that, about 4 years.

Okay. Okay. And if I look at...

Sorry to interrupt you, Mr. Raut, but we can hear disturbance from your line. May we request you to please mute your line when management is answering your question.

Okay, understood. In terms of HVDC project, so if I look at our current capacity, on the basis of existing capacity, are we in a position to execute this project immediately? Or will we require to add more capacity and then we are thinking about execution?

Sir, as a good governance process, we don't take orders when we don't have the capacity and thinking that we're going to add the future capacity and then execute the process. So whatever capacity is required to execute this order is already available with the company.

Understood, sir. And last question on the HVDC project between Barmer ad South Kalamb. So you mentioned during last interaction that probably that order of finalization might happen by the end of fiscal year FY '26. So any color on updated status of that project?

So we expect that order to get finalized in Q2 of '26, '27 for the developers and then whatever time additional it requires for the OEM to take.

Understood.

As of today's visibility, but it might change depending upon the extensions and things like that, which is not in our control.

The next question is from the line of Amit Anwani from Prabhudas Lilladher.

First question, sir, on the base order inflow for 9 months which is about 6,100 versus 7,700 and we understand that there was an export order. So just wanted to understand the status of one export order we were expecting from the parent, is it expected in 4Q? And on the base order side, what are the opportunities that are still there in terms of pipeline or areas and what is our kind of estimate or confidence on the base order growth for 4Q and even for next year? So if you could highlight the pipeline there?

Okay. Thanks, Amit. So on the export order that was in the pipeline. It is still in the pipeline, but there has been some delay from the customer side in terms of the decision. And now we expect the order to move to quarter 2 of the next -- sorry, second half of the next financial year. So it will be from, let's say, September to March of the next financial year, when we expect the order to be decided. And I request Sandeep to talk on those orders.

So Amit, we are not seeing any major -- any slowdown in the market. So we have today a number of TBCB opportunities coming up. I don't think that we are seeing any slowdown in the ordering and now with states also going for TBCB, for example, we have seen Maharashtra and Karnataka going and a few more states thinking of going or moving their pipeline towards TBCB. I think we are pretty confident on achieving the growth in orders in the base order this year as well as next year.

Right, sir. Sir, next question on the Chinese news which was circulating. Are you seeing any impact to you, any assessment you guys have done, if at all the government reverses -- relaxes that order, which was there 4, 5 years back for Chinese players to bid for HVDC or T&D orders? So any color on that, any impact or any assessment?

So Amit, one thing is there. It's a media reporting, so the government has not issued any clarification on that. Without any government clarification, if we try to do anything or if we try to do anything on that, it is purely speculation. But we don't think that government is going to dilute its Make in India criteria and for example, we have built a very strong -- since we have put up the manufacturing capacities, the teams have worked together in developing a lot of supply chain in the country. So I don't see a major impact coming in terms of even if the existing factories, which are based in India, are approved -- of the Chinese make, which are approved. I think to reach that maturity level, it's going to take them a lot of time.

Right. Sir, lastly, on the export opportunity, we saw a few companies getting orders for the U.S. data centers on transformers and stuff like that. I wanted to understand I think GE Global also has been focusing there. So any strong traction you guys are looking, which will be directly related to the data center space in global markets and also in India. So just more color on the data center opportunity and what we are actually eyeing on that space there?

I think, yes, definitely, we are working with the global teams and India being a strong manufacturing base. So whenever the capacity is required and it is not available, obviously Indian factories would be available depending obviously the delivery slot, et cetera. But I think if you look at the data center or the IT company's announcement of close to about $80 billion of data center and AI factory by 4 major U.S. companies to be invested in the next 4 to 5 years. I think that itself is going to present a huge opportunity in terms of data center and AI for the Indian market as well. So we'll be concentrating on those opportunities as well.

Right. Sir, lastly, on the margins. So for 9 months, we had 27% margin already. So are we revising that upward for the full year? And after this order win of VSC HVDC, what is the margin expectation at firm level for the upcoming years? Will it dilute to a certain level or some understanding with the execution of HVDC coming in for the subsequent years?

Okay. Amit, so we talked about this year's expectation of delivering mid-20s kind of EBITDA, so now we expect with the first 3 quarters of good performance, it will be kind of delivering at the higher end of this range. And it's difficult to talk about individual order. Of course, the endeavor of the management is to continue to perform like this and to deliver good EBITDA in the coming years.

So Amit, I think you would have seen that we have been constantly saying that improvement of commercial terms and conditions, better cash conditions, better margins, these have been the focus of the company in the turnaround, what has achieved. And this is the area we'll be constantly keep on working. So I think we don't expect a major dilution or things like that happening on the margin front in the foreseeable time.

The next question is from the line of Puneet Gulati from HSBC.

Great performance here. If you can talk a bit about how are you really mitigating the negative impact of commodity inflation in your costs, it'll be very helpful?

So Puneet, for many of the products, what we supply in the market, they are variable price. That means if there's an increase or decrease of the raw material cost, the impact is directly passed on to the customer. Second, for orders which are on firm price. Based on our global assessment, we take depending upon the delivery time lines, et cetera, suitable provisions or built into the costing to take care of any material price movement. And also looking into the order book, order backlog situation, et cetera. So we keep on working with our supply chain to improve the cost on one side and to mitigate such risk if they -- at any point of time if they emerge into the business.

There is no hedging of commodity that you do here?

It's not required because we don't buy commodities per se because, for example, transformer, et cetera, where the commodity are very high, where variable prices are there. Other places the components come into small forms only, so don't require -- you cannot actually hedge into that form.

Okay. And if you can also give some sense of how much of your order book would be in the variable price and how would be firm price?

We don't give these details, so.

Okay. On just harping on back to Adani. You talked about once you hit milestone, you'll book the orders. What are these milestones that we are looking at?

So these are all commercial process-wise internal to the company. So I think you'll have to wait for it -- for a declaration when we are -- when the booking will happen.

Okay. And also if you can talk a bit about the scope of the project, what all will be a part? And will right of way be your responsibility? Or will that be their responsibility?

So Puneet, we are not doing the transmission line. We're just building the HVDC stations at both the ends at Khavda and South Olpad. We are not doing the civil work. The civil work is being done by the customers themselves. So obviously, the right of way for the terminal land, et cetera, everything is in customers' court.

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

Congratulations on a great quarter, sir. So first question is, is this power grid order of 3,500 MVA included in this current order book?

Yes.

Okay. Okay. Just on the export this quarter, we have seen a substantial jump, and if I see the 9-month numbers, the exports have picked up, third-party exports. So any color on like what has driven this improvement in exports, export order booking of INR 420 crores?

Yes. So overall the export orders are at 15% of the total order for the base. Yes. I think these are of the...

For the quarter also it is around 14% of the order booking. And see, earlier, we had a higher order share as well when we booked a large opportunity. So these are the regular orders. And as the domestic as well as the export market are growing in our industry. So that's the reason of significant growth in the order in value terms, though percentage-wise, it looks a little less compared to past because the domestic order booking has been very strong due to large PGCIL and HVDC refurbishment order.

No, no, sir. I'm saying for 9 months, we have INR 918 crores. And in this quarter, we have booked INR 420 crores. So any particular reason why our exports -- order inflows are higher this quarter? Is it like we have...

There is no -- there is no specific trigger on this. It's just the regular orders that what we are getting, sometimes it is high, sometimes it is normal.

Okay. Just on -- I mean, the parent has been highlighting strong order wins in Asia, and I think we have been posting on social media and other places that our HVDC current expansion will supply to whole of Asia. So just wanted to get a sense and color on how is the certification going around Europe and now I think Europe has also signed an FTA, it may come into effect next year. But how are you progressing with the certification across these geographies? And earlier, there was a mandate, I think, in U.K. that there has to be localization. So how do you think now with the FTA in U.K. and Europe, how the export opportunity unfolds for us?

So I think to understand one thing is that HVDC is a big market in Europe. And today, we have European facilities which are catering to that HVDC market specifically in the Europe. So I don't see any big role what we will play -- India can play in Europe HVDC market.

I'm sorry to interrupt you, Mr. Kandpal, but we are unable to hear you, sir. Mr. Kandpal, we are unable to hear you. As there is no response, we'll move to the next question, which is from the line of [indiscernible].

Am I audible?

Yes, go ahead.

Actually, my question is already answered.

The next question is from the line of Nitin Arora from GE Securities.

This is Nitin from Axis Mutual Fund. Am I audible?

Yes, yes. You are audible, Nitin.

Sandeep, just first question on your international opportunities. I know you said that the order has been moved in the second half. So if you can highlight, is it more of a capacity constraint issue that it moved to second half or not, but just a one-liner on that. But given the opportunity on the international side for the last quarter to this quarter, how you are looking at it? I mean, from the inquiry perspective, and also, I know you stated in the starting of the call that even states are looking on the domestic side, I'm saying. But can you elaborate a little bit how the opportunity pipeline are because -- and why I'm asking you this because Street is getting very nervous and lot of narratives have been doing the rounds, like, for example, the first narrative which came that China is coming to India. A lot of Chinese companies will certainly start and India will welcome them. That was the first narrative. The second is because solar addition has been lower for the rightly reason. I mean you know much better how government is now working on the battery aspect, which also get eventually lit up by solar only eventually. So just if you can articulate on the domestic side, how is the inquiry pipeline, how you're looking at it? Because I remember times when you used to announce an order size of INR 400 crores or INR 500 crores or INR 600 crore used to announce to exchange. But today, we are winning more than INR 1,000 crores a single order, we are not announcing. So it looks like the ordering is strong. But if you can articulate a little bit on the domestic and as well as on the international side. That's my first.

So Nitin, on your first question that the large order on which we took the RPT approval, that is not a capacity issue, but that is primarily the delay at the customer end. So that is just 1 clarification, which Sushil talked about that we expected to get deferred to the second half of next year. That is one thing. I think second on -- Nitin, on the domestic market, at least I'm not seeing a slowdown happening. So when I'm saying that there is a huge -- not huge, but there is a sustainable pipeline of projects even if you go to like PFC website, REC website, you see the number of TBCB opportunities which are there and even states are coming in. So -- and also, as I said at the start, of course, China policy needs to be clarified by the government because until the time there is no government clarification, everything is a speculation. But for us to reach whatever position we've reached under Make in India of like 60%, 70% in different products, et cetera. It has taken a lot of time where we have spent effort, energy to build local supply chain, qualifying vendors because we are talking about these components being used in 400, 765 kV. It is not that just you develop in 2 months and then you are able to use it. It requires a rigorous process of testing and then when it goes under the implementation first on a smaller scale and then it is scaled up on a bigger scale. So it's not a very small process. So even when if even the Chinese factories get locally qualified, they would still take a lot of time to reach those maturity levels. So I expect that -- and also we are expecting the market to grow. So today, for example, the TBA, whatever is the TBA. TBA is today a large part of the TBA factories are blocked by Indian developers only who would be supplying to solar and all those things. So suppose tomorrow if TBA gets qualified, and it takes 1 order in power grid. Then obviously, the renewable capacity, which he was earlier supplying in XY developer, that will be available for third party. So what is the challenge is that. Market is not going anywhere.