GEPIL - GE Power India Limited Share Price

Management Outlook and Major Points:

Outlook:

• Global Context: Geopolitical tensions (Middle East, Ukraine) highlight energy security risks. Clean energy growth faces policy uncertainties due to elections in key economies, though economic factors (cost reductions, competition) drive adoption.
• India's Growth: GDP expected at ~7%, with energy demand rising ~8% annually. Coal remains critical for decades, prompting investments in emission reduction (e.g., FGDs) and plant efficiency upgrades.
• Strategic Focus: Shift toward high-margin services (core/upgrades) and execution of FGD orders. Strong order pipeline (INR 2,560 crore backlog) supports turnaround efforts.

Key Highlights:

1. Operational Wins: Secured INR 446 crore orders (Q2), including steam turbine R&M (INR 243 crore) and boiler R&M (INR 65 crore). Focus on core/upgrades drove 2x growth in strategic orders (INR 436 crore vs. INR 209 crore YoY).
2. Financials: Revenue at INR 217 crore (continuing operations); Profit (pre-exceptionals) of INR 9 crore. Gas Power divestment added INR 58 crore (exceptional gain).
3. FGD Market: Delays persist, but opportunities remain (INR 3,000 crore expected over 3"“4 years). Recent wins include Jaypee Bina/Nigrie orders (INR 750+ crore).
4. Challenges: Niti Aayog study on FGD necessity caused concerns, but no policy shift yet. Execution timelines for FGDs extend to 33"“35 months.
5. Durgapur Facility: Targeting breakeven at 265,000 man-hours (current run rate: ~170,000 annually).

Forward Focus: Turnaround hinges on execution discipline, margin improvement, and leveraging India's energy transition needs.

Question 1:
"In between, there was a report in the newspapers from Niti Aayog's study on FGDs that coal-based power plants may not require FGDs because sulphur dioxide is not harmful to the environment. So what are your takes on this because FGD being the main product line for the company? How do you all look at this kind of a study?"
Answer Summary:
The report is a study by CSIR and NEERI, not an official Niti Aayog recommendation or policy decision. GE Power India (GEPIL) remains engaged with stakeholders, including ministries, to advocate for FGDs. Current projects and bidding continue unaffected, with no immediate policy shift anticipated.

Question 2:
"What kind of order book growth do you envisage for the next two years?"
Answer Summary:
GEPIL anticipates ~INR 3,000 crores in FGD-related business over the next 3"“4 years, despite delays. Recent orders include a ~INR 750 crores FGD contract from Jaypee Bina and Nigrie. Execution timelines for projects typically span 33"“35 months.

Question 3:
"Do you have any near-term margin and top line guidance for FY '25?"
Answer Summary:
No explicit guidance provided, but the company emphasized its turnaround focus. Execution of FGD EPC contracts and growth in higher-margin core services are expected to stabilize performance. Margin recovery is tied to operational efficiency and strategic priorities.

Question 4:
"On 1st of October, we had received an order some Nepal-based company had given a INR240 crore order related to some hydro business, which in the notice, you had mentioned that this will be considered against the demerger of the hydro business. So, what kind of consideration would this be? And by when would this happen?"
Answer Summary:
The Nepal hydro order (Super Trishuli project) pertains to discontinued hydro operations. Its valuation was included in the earlier INR 1 transaction for the demerger. The order's cash flows were pre-accounted in the hydro division's March 2024 valuation, resulting in no additional financial impact.

Question 5:
"What is the Durgapur factory clocking now? [...] And again, do you think you'll be able to achieve the target of breakeven by next year?"
Answer Summary:
Durgapur factory logged ~40,000 man-hours in Q2, with FY25 target revised to 165,000"“170,000 (from 190,000"“200,000). Breakeven requires ~265,000 man-hours. No definitive breakeven timeline provided, but execution improvements are prioritized.