GE T&D India hits six month high; stock surges 41% in two months

The stock was up 5% at Rs 331, its highest level since June 22, 2018, on the BSE.

Shares of electric utility company GE T&D India hit a six-month high of Rs 331, up 5 per cent on the BSE on Thursday. The stock was trading at its highest level since June 22, 2018.

In the past two months, GE T&D India rallied 41 per cent on reports that the company has won Rs 162 crore contract from Power Grid Corp of India for a substation at Thoothukudi in Tamil Nadu and for extension of substation at Bhuj in Gujarat. The contract is likely to be completed by March 2020.

On December 4, 2018, GE Power’s Grid Solutions business announced the completion of a first-of-its-kind project for a 400/200 kV Gas Insulated Substation (GIS) at Magam village in the Baramulla block of north Kashmir. Part of the Northern Region System Strengthening 29 (NRSS 29) project, this project was awarded to Sterlite Power by the Indian Government through tariff-based competitive bidding in May 2014. The project was led by GE T&D India, the listed entity of GE Power's Grid Solutions business in India.

“The company’s order intake for September quarter (Q2FY19) remained flat at Rs 720 crore (up 2 per cent YoY) where there is a clear shift with increased orders from state electricity boards (SEBs) vs Power Grid Corporation of India (PGCIL). However, the company doesn't expect this to cause any major difference in terms of margin or working capital requirement. Thus, the company's order book stands at Rs 6,200 crore (down 23 per cent) with Rs 700 crore contract signed/won/L1 position till date in Q3FY19,” analysts at Antique Stock Broking said in Q2FY19 result review.

“The company sees the order inflow scenario to rest on two broad pillars - renewables and demand from neighbouring countries which include Bangladesh, Nepal, Bhutan, Srilanka etc,” the brokerage firm said with ‘hold’ rating on GE T&D India. The stock however, trading above target price of Rs 248 per share.

“Going forward, we expect the tendering and order finalisation to significantly decline in the domestic T&D segment over the next 6-8 months prior to the general elections. In the interim, GE T&D India’s focus would be to improve the networking capital with an emphasis on project closures, collection of retention monies and the past dues,” Emkay Global Financial Services said in result update.

In order to tide over the slowdown in domestic T&D segment, GE T&D India would have to focus on opportunities in Renewables and Exports of HVDC and other power systems to neighbouring countries of Bangladesh, Sri Lanka and Bhutan. Moreover, the break-up of GE Inc USA and the resultant divestment of businesses have cast a cloud of uncertainty on the future prospects of its Indian entity, it added.

At 11:06 am, GE T&D India was trading 4 per cent higher on the BSE, as compared to 0.26 per cent rise in the S&P BSE Sensex. A combined 100,098 equity shares changed hands on the counter on the BSE and NSE so far.