India Grid Expansion And Renewable Targets Will Fuel Future Success

Key Takeaways

• Strong project pipeline, margin expansion, and portfolio resilience are driven by renewable demand, grid upgrades, exports, and disciplined order execution.
  
• Manufacturing investment, technology innovation, and access to global R&D strengthen competitive position and underpin long-term revenue and margin growth.
  
• Intensifying competition, supply chain pressures, export risk exposure, slower order growth, and rapid tech changes threaten margins, revenue stability, and long-term profitability.

Catalysts

Engages in building power transmission and distribution infrastructure in India and internationally.

• Robust, long-term power demand growth in India, driven by ambitious renewable targets and grid expansion initiatives, is creating a significant project pipeline (e.g., new HVDC corridors and state-level TBCB opportunities), which supports sustained order inflow and visible multi-year revenue growth.
  
• Major investments in manufacturing capacity (e.g., ₹2.5 billion CapEx for HVDC valves, STATCOM, and debottlenecking) and localization are enabling cost efficiencies and fast execution, supporting continued net margin expansion as volume grows.
  
• Consistent increase in high-margin export orders (now ~30% of backlog and targeted for ~30% of revenues), plus disciplined underwriting, is structurally raising blended margins and underpins improvement in earnings quality, with export business providing portfolio resilience.
  
• Sustained demand for grid digitalization, automation, and next-generation grid reliability solutions-including for data centers and SF6-free switchgear-positions the company to capture share in high-value, technology-driven segments, widening its long-term addressable market and supporting margin improvement.
  
• The company's access to GE Vernova's global R&D and technology pipeline supports the rollout of advanced products (e.g., HVDC, grid automation, SF6-free), strengthening its competitive edge and enhancing both revenue growth and net margins in the coming years.

GE Vernova T&D India Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming GE Vernova T&D India's revenue will grow by 29.8% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 16.4% today to 15.7% in 3 years time.
• Analysts expect earnings to reach ₹16.0 billion (and earnings per share of ₹55.95) by about August 2028, up from ₹7.6 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as ₹12.7 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 72.3x on those 2028 earnings, down from 93.4x today. This future PE is greater than the current PE for the IN Electrical industry at 38.2x.
• Analysts expect the number of shares outstanding to grow by 0.06% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 15.6%, as per the Simply Wall St company report.

GE Vernova T&D India Future Earnings Per Share Growth

Risks

• Growing competition from both domestic and international players, including expansion of transformer and switchgear capacity by competitors, could put pressure on pricing and erode GE Vernova T&D India's market share over the next several years, negatively impacting revenues and margins.
  
• Persistent raw material price volatility (such as copper and steel) and continued supply chain challenges could lead to cost inflation that cannot be fully passed through to customers, resulting in potential margin compression and unpredictability in earnings.
  
• Heavy reliance on export orders (now comprising a significant proportion of backlog) exposes the company to geopolitical risks, shifting regulatory standards, and economic conditions in foreign markets, which could cause volatility in revenue growth and receivable cycles in the long term.
  
• The anticipated single-digit growth in non-HVDC order pipeline and management's cautious commentary around one-off large orders (not being sustainable) suggest that future backlog and revenue growth rates could moderate as the initial surge in domestic and export demand stabilizes, affecting long-term earnings visibility.
  
• Rapid technological evolution (e.g., adoption of new grid technologies, distributed energy resources, and digitization) may outpace GE Vernova T&D India's current product portfolio if not continuously updated, increasing the risk of product obsolescence and lost market opportunities, thereby impacting future revenues and long-term profitability.

Valuation

• The analysts have a consensus price target of ₹2925.429 for GE Vernova T&D India based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹102.0 billion, earnings will come to ₹16.0 billion, and it would be trading on a PE ratio of 72.3x, assuming you use a discount rate of 15.6%.
• Given the current share price of ₹2790.3, the analyst price target of ₹2925.43 is 4.6% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.