Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

GE T&D India - Strong cashflow - ICICI Securities

Posted On: 2021-02-18 06:35:04 (Time Zone: Arizona, USA)

GE T&D India witnessed a 10% YoY growth in revenues to Rs10.3bn during Q3FY21, majorly driven by exports, which contributed 25% of revenues in 9MFY21. Improvement in working capital supported net debt reduction, which reduced to Rs1.75bn from Rs4.43bn in Sep'20. Other income grew 85% YoY to Rs228mn supported by Rs120mn of warranty provision readjustment and Rs60-70mn of tax provision reversal. The focus on self-reliance is expected to support market share gains for localised players like GE T&D under automation, statcom, GIS and transformers. Factoring in better-than-expected execution/earnings and improvement in cashflow, we raise FY21E and FY22E earnings by 17.5% and 3%, respectively, and upgrade the stock to BUY from Add with a revised target price of Rs146 (earlier: Rs122).

- Better-than-expected execution and one-off gains uplift earnings: Despite lockdown-related demand slowdown, the execution was better than expectation. The management is focusing on cost control, which is evident with 38% YoY decline in other expense for Q3FY21. One-off gains of Rs259mn from the sale of a residential guesthouse property resulted in reported PAT of Rs559mn. Current orderbook of Rs47bn (1.5x TTM sales) provides growth visibility.

- Ordering expected to improve in FY22 given buoyant ordering pipeline: As per management commentary, total investment outlay in the Indian renewable sector is expected at US$500bn of which US$150bn is expected in T&D sector in next few years. Internationally, ordering pipeline from Nepal and Bangladesh of Rs5-7bn can be expected within next 12-15 months. Although green energy corridor-related ordering was slow in Q3FY21 as only five packages were finalised in the quarter, we believe, this will pick up going forward. On the state-ordering front, activity pickup is being seen in states like Odisha, Delhi, Gujarat, Karnataka and West Bengal, while, Uttar Pradesh, Himachal Pradesh and North East are expected to catch up soon.

- AtmaNirbhar push by government will support market share: Although near-term order intake outlook is challenging, government is currently incentivising domestic manufacturing. We believe this will lead to an improvement in market share under transformers, statcom, GIS and automation-related segment for the company.

- Healthy cashflow led to an improvement in balance sheet: Working capital improved significantly as receivables reduced by Rs1bn and inventories by Rs2.5bn. As of Dec'20, net working capital was Rs6.8bn (80days) and net debt reduced to Rs1.75bn from Rs4.43bn in Sep'20. Furthermore, Rs870mn from the sale of Global Engineering operations division (India for Global) to another GE entity is expected to reduce debt further.

- Upgrade to BUY: Net debt decreased sequentially by Rs2.68bn in Q3FY21 and working capital has improved to 80days. The ordering activity from state government has picked up and green energy corridor tenders are expected to gain traction. Due to the recent stance of the government to encourage localisation, we believe, domestic market share of the company is likely to improve. Given the improvement in growth outlook, reduction in working capital and debt, we upgrade the stock to BUY from Add. We increase our valuation multiple to 22x from 20x and roll forward the valuation to Sep'22E earnings resulting in a target price of Rs146 (previously: Rs122).

Shares of GE T&D India Ltd was last trading in BSE at Rs.131.65 as compared to the previous close of Rs. 122.8. The total number of shares traded during the day was 76624 in over 988 trades.

The stock hit an intraday high of Rs. 132.95 and intraday low of 123.35. The net turnover during the day was Rs. 9971861.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Emerging Lenders Day - Conference Takeaways - YES Securities

Cement - Prices rise; earnings upgrade to continue - ICICI Securities

Affle India - Navigating privacy and technology challenges will be the key - ICICI Securities

IT Sector Investor Forum - Onwards and upwards - HDFC Securities Institutional Research Desk

Wipro - Beware of integration / impairment risks! - ICICI Securities

Easy Trip Planners Ltd - IPO Review - ICICI Direct

ICICI Direct - Derivatives Weekly View (March 5): Level of 14700 remains crucial for upsides to continue...

Easy Trip Planners Ltd. - IPO - Strong Financials - Reliance Securities

Bharat Forge - Initiating Coverage - Constant evolution - HDFC Securities

Mahindra Logistics - Large-ticket deal win - ICICI Securities

Company Update - Huhtamaki India - ICICI Direct

Gladiator Stocks: IndusInd Bank, VIP Industries - ICICI Direct

Warehousing demand expected to grow around 160% to reach 35 million sq. ft in 2021: JLL

Telecom - Spectrum auction: Prudent investment by Bharti Airtel - ICICI Securities

JB Chemicals & Pharmaceuticals - Analyst meet takeaways - ICICI Securities

IPO Review - MTAR Technologies Ltd - ICICI Direct

Auto Sector - Monthly Volume Round-up - Feb 21 - Decent YoY Growth Continues

Aditya Birla Fashion and Retail - Focus on scaling up new businesses - ICICI Securities

Automobiles (wholesale) - Wholesales push continues despite modest retail trends - ICICI Securities

Aditya Birla Capital - Thoughtful (inclusive) conglomerate business evolution commands premium - ICICI Securities

Jubilant Foodworks - Buying in-the-money options - ICICI Securities

Multi Commodity Exchange of India - Play on rising commodity prices? - ICICI Securities

Gladiator Stocks - Sudarshan Chemical - ICICI Direct

Monthly Commodities Outlook - March 2021 - ICICI Direct

ICICI Direct - Monthly Currency Outlook: Rupee to depreciate further towards 75.00 level...

ICICI Direct - Covid Recovery Pulse - E-way bill generation in February 2021 starts on strong note...

Company Update - Virtual JLR Investor Event - Tata Motors - ICICI Direct

Analyst Meet Update - Aditya Birla Fashion and Retail - ICICI Direct

MTAR Technologies Ltd. - IPO - Huge Opportunities from Clean Energy Bodes Well - Reliance Research

ICICI Direct Derivatives Weekly View (February 26): Failure to move above 14700 may extend declines towards 14300...

Bank: Sector Credit Trends - Slows, Yet again - HDFC Securities

Piramal Enterprises - Pharma day highlights - ICICI Securities

Polymer price tracker - PVC prices rise sharply again! - ICICI Securities

Greenply Industries - Growth returns, at an inflection point - ICICI Securities

Tata Motors - JLR future proofing itself with rapid electric transition - ICICI Securities

Dairy - Higher freight cost and increase in Global SMP prices - ICICI Securities

Analyst Meet Update - Nestlé India (Hold): Focus on product innovation, expanding rural reach - ICICI Direct

MTAR Technologies Ltd - A strong player in booming high precision engineering... - Geojit

Rollover Report for February - March 2021 : Angel Broking

Reaction from industry experts on Q3FY21 GDP numbers

M. Govinda Rao, Chief Economic Adviser, Brickwork ratings on Q3FY21 GDP numbers

Mr. Dhiraj Relli, MD & CEO, HDFC securities views on Q3FY21 GDP Growth Number

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on Q3FY21 GDP

Rollover Analysis - Feb 21, 2021 - YES Securities

Consumer Durables - Demand-driven recovery continues - HDFC Securities

Cement - Demand surprises; earnings upgrade to continue - ICICI Securities

Gladiator Stocks - TeamLease Services - ICICI Direct

Gladiator Stocks - Metals to outshine post multi-year breakout... - ICICI Direct

Company Update - Sundaram Finance - ICICI Direct

Indian pharmaceutical industry to meet an ambition of US$130 billion by 2030 through innovation-led growth: EY-FICCI report

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020