Ladies and gentlemen, good day and welcome to conference call hosted by GE Vernova T&D India Limited for quarter two of financial year 2026-2027. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. I now hand the conference over to Ms. Megha Gupta from GE Vernova T&D India Limited. Thank you, and over to you.
Good evening, everyone. Welcome to the earnings call of GE Vernova T&D India Limited. I am 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, and other members of the leadership team. Before we begin, I would like to highlight that today's discussion may contain few forward-looking statements which are subject to risks and uncertainties.
These statements are based on our current expectations, and actual results may differ materially from those expressed or implied. Now, I hand over the conference to Mr. Sandeep Zanzaria to open up the discussion.
Thank you, Megha. Good evening, everyone, and thank you for joining the second quarter earnings call. The Indian power transmission sector is at its historic inflection point, moving from a centralized grid towards a more dynamic, digitalized, and decarbonized architecture. Three key pillars are defining the industry. First is unprecedented grid expansion and modernization. India's energy demand is scaling at a pace that requires aggressive expansion of transmission infrastructure.
The integration of large-scale renewable energy, often far from consumption centers, requires robust long-distance high-voltage direct current and alternating current corridors. Second is the digital transformation of the grid. The grid has grown more complex, making advanced automations, real-time smart substations, and predictive maintenance essential to reduce AT&C losses and improve the reliability. GE Vernova is focused on providing the software and digital infrastructure required to manage this complexity.
Third, the T&D sector is the backbone of India's energy transition and net zero ambition. The greener grid requires not only solar and wind capacity, but also the hardware and intelligence to balance the intermittent power sources. Systems such as Flexible AC Transmission Systems and energy storage integration are therefore becoming essential for grid resilience. Coming to the financial performance. During the second quarter, we saw an order book of INR 24.4 billion, up 52% year-on-year compared to INR 16.1 billion in quarter ended September 2025.
Our Q2 revenue stood at INR 20.3 billion versus INR 15.4 billion in Q2 FY 2025-2026, up by 32% year-on-year. Order backlog stands at INR 214.4 billion as of September 2026, versus INR 214.6 billion as of March 2026. The order backlog stands at more than three years of revenue for FY 2025-2026. Our profit before tax and exceptional items for the quarter ended September 26 was at INR 5.8 billion compared to around INR 4 billion in the corresponding quarter of the last financial year, growing by 1.4x. Cash generation of INR 10.1 billion during H1.
With this cash, our balance stands at the end of September at INR 32.5 billion. Looking ahead, our priorities are consistent. First, execution excellence on mega projects, especially our HVDC. Second, deeper localization, expanding our manufacturing footprint in India, reducing exposure to global supply chain risk, and supporting the vision of self-reliant energy sector. Third, growing our services and software business, particularly grid automation and asset performance management, where predictive maintenance and software optimization help utilities get more from the assets they already have.
A heartfelt thanks to our colleagues at the project sites and in our factories. As the volumes grow, they continue to deliver with rigor and never compromise on safety. Now, I turn to Abhishek to walk through the specific operational highlights for the quarter.
Thanks, Sandeep. Good evening to all of you. I will take you through the key network augmentations that we achieved in the last quarter. First of the notable mentions is the 400 KV substation for NEA in Nepal. This is for the backbone of 400 KV grid network that Nepal is trying to develop. Earlier we had commissioned Khimti, and this is the second in the league. After that, 400 KV GIS station was commissioned for GETCO at Babarzar.
In addition to that, we had been strengthening the transformation capacities at various existing and new substations, and in that, we commissioned 765 KV reactor for our customers PGCIL at Bidar, Resonia at Beawar, and then 765 KV generator transformer for NUPPL at Ghatampur. In addition to that, we had GIS commissioning done at Narela in Delhi, and some export jobs, one in Spain and another one in Senegal.
All these commissionings are testament of our focus in terms of network augmentation and our commitment towards operational excellence and continuously delivering on our promises to our customers. I hand over to Sushil now to take us forward.
Thank you, Abhishek. Good afternoon and good evening, everyone. First, I will talk about the order booking highlights for the quarter. During quarter two, we secured an order intake of INR 24.4 billion, bringing our cumulative H1 order intake to approximately INR 35.8 billion. This represents an 11% growth year-on-year.
Key wins during the quarter reflect our strong technical capabilities and diverse market reach, including a major package for 400 kV generator transformer and 420 kV GIS for a 1,500 MW pump storage hydro project in Maharashtra, 800 kV and 420 kV GIS packages for transmission projects in Andhra Pradesh, supply of 400 kV reactors and 420 by 220 kV GIS package for a TBCB transmission project in the state of Himachal Pradesh, supply of 765 kV shunt reactor for a TBCB transmission project in the state of Andhra Pradesh.
Transmission packages featuring 400 kV and 765 kV reactors in Himachal Pradesh and Andhra Pradesh, and continued export momentum with multiple equipment orders for GIS/AIS across North America, Europe, Middle East, Africa, alongside steady grid automation packages. Our order backlog closed strong at INR 214.4 billion, reflecting a healthy baseline as we efficiently convert our backlog into revenue. Turning now to the financial performance for the quarter and some highlights of the first half.
Revenue for the quarter robust stood at INR 20.3 billion, up 32% year-on-year, with H1 revenue reaching about INR 38.6 billion, up 35%. Gross margin for the quarter stood at 44.5%. Disciplined cost management across operations enabled us to deliver an EBITDA of INR 5.5 billion, approximately 27.1% of revenue. This EBITDA is at the higher end of our mid-20s guidance band that we had been communicating to the stakeholders in the past. Profit before tax for the quarter rose to INR 5.8 billion, and profit after tax is at INR 4.3 billion, representing 21.3% of revenue.
Finance costs remain negligible with our continued net zero debt position. On the balance sheet side, we generated INR 10.1 billion of cash during first half, taking our total available cash and cash equivalents, including funds lent to the cash pool, to approximately INR 32.5 billion. Regarding our capital expenditure, as previously announced, the company is progressing with the capacity expansion program of approximately INR 10 billion, out of which roughly 20% has been already incurred.
Management continues to evaluate various options for the utilization of balanced cash to optimize returns to the shareholder. I would also like to highlight the continued quality and segmentation of our orders and revenue. For the quarter, our order and revenue mix reflects a strong balance sheet, with export orders sitting at 21% and export revenues at 32%. Looking at our order and revenue split for the half year, orders stood at 29% export and revenue stood at 31% of exports.
Further, our ongoing counterparty de-risking strategy ensures that private customers and central utilities, PSUs, continue to form an overwhelming majority of our order backlog, maintaining a robust and secure risk profile. In the presentation, we have also given the status of material related party approvals. We had secured an approval of roughly INR 31 billion in the AGM of 2025. This was for export of various high-voltage switchgear components to two related parties in Middle East and France. This lapsed in AGM of 2026 because the shareholder approval for the related party is valid for a period of one year.
The reason is that the order is on hold from the customer side due to the operational planning delays from their side. We had also secured another approval for related party from a U.S. entity, largely for export of goods from India for approximately $151 million. This approval is valid till 15th of May 2027, and the order is in discussion stage with the customer. We hope that in H2 of this financial year, we should be able to conclude this order.
Summarizing before I hand back for the questions, order intake grew steadily, revenue growth, execution pace, cash generation, and backlog quality all remain strong and consistent with our full-year expectation. We are confident of converting our INR 214 billion backlog profitably over the coming years. With that, I'll hand over for the question- and- answer.
Thank you very much, sir. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sameer Thakur from Ambit Capital. Please go ahead.
Hi, thanks. My first question is that GE Vernova Global, they announced acquisition of Trench. They also said that they are evaluating funding the manufacturing of Trench products in India. Is there any view on that? Whether that will be part of GE Vernova India or they more need to say? Just wanted your comments on that. That's the first question.
Thank you, Sameer. The acquisition has been announced only two days back. As of today, the whole acquisition process is expected to end in the later part of FY 2027. It is too early to comment on that.
Okay, thank you. The second question is, what is the revenue contribution from services and software at the moment? Is there any target which you have in mind or any ambition regarding this?
Sameer, good evening. This is Sushil. Software and services business, we do not give a breakup as such because we operate as one segment, which is high-voltage products and transmission side. But I can give an overall color that we are off late booking lot of equipment orders because our order booking, including the HVDC order, has been very strong in last few years. As a ratio of the total revenue, the share of software and services may have dropped while every business is growing year- over- year.
Okay, thank you. I will leave that to you. Thank you.
Thank you. Next question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Congratulations on a super quarter. Thanks for the opportunity. My first question is on GE Vernova Global is talking about $900 million order which they have booked for giving the orders to global factories. My question is, are you in contention for those? And how many factories globally GE has for producing transformers, especially in Asia?
Hi, Mohit. Asia, we have two transformer factories. One is in Indonesia, but that's a much smaller factory because I think today they build up till 245 KV only. The higher rating transformers are all built in Vadodara only in the Asian continent. In the 9,000 million order, yes, there will be some orders which are going to flow for which we have taken a related party approval for INR 1,300 crores, and the finalization process is on.
My second question is on the, I think I mentioned the PPT, that there's a holdup on the two related party approval orders. One is, I think, GE Middle East, and one is, I think, it's France, right? In your opinion, do you think in the next 6-12 months, that holdup will get clear and there's an opportunity to participate in those orders?
That project actually is of a much bigger size, and the hold has been put by the customer. We are not very sure whether the hold is going to get lifted in six months, eight months, or a year. It will be too early to speculate on that.
Understood. My last question is, how are you seeing the new opportunities for HVDC developing over next 12 months? Is there a need to invest still more from our side to improve the indigenization content for HVDC as we go forward? Yeah.
We look at a very strong pipeline of HVDC going forward. We expect minimum two to three projects to come next year. HVDC is going to remain our key focus area as well. We keep on evaluating that if we need to do an investment in terms of more local. If you look at HVDC practically, most of the things have been localized. Today we are manufacturing transformers in India, valves in India, controls in India. At one point of time, a large part of the transformers and 100% of valves and controls were coming from outside.
With whatever capex we have done or whatever capex is under progress, all these things have been localized. However, there are components still which come from outside, not manufactured by GE Vernova, but manufactured by our subcontractors or sub-vendors. As a long-term strategy, we will be working on, in the next phase, we will be working on localization of that as well.
Understood. Thanks, and all the best, sir. Thank you.
Thank you, Mohit.
Thank you. Next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Hi, Sandeep, sir. Congratulations on a great quarter. In this quarter, we have seen a very significant pickup in the domestic orders. Last quarter was subdued. How do you see rest of the financial in terms of domestic market? Was there any one-off in this quarter, any large order in some of the domestic markets which would have contributed significantly to the overall order inflows?
I think we see order intake for the year as a positive story only. There was no one-off to it, but all regular orders which have come in. Also, you know that we have already declared that we are the lowest bidder in Power Grid for Barmer, and Barmer has already been acquired by Power Grid. So, we expect that this quarter will also be significant in terms of booking that order as well. I think on the order side, we are pretty confident that this year is going to be a much stronger year than what we delivered last year.
Any color on the domestic ordering, sir? How is it panning out for the second half, given Q1 was.
I think it is strong because in last three to four months, there was a substantial strong pipeline of TBCB projects, and still the opportunities are now also coming in. So, I look at least in next four or five months also to the pipeline to remain strong.
Okay. On the RPT side now, we have seen fallback of two orders. I mean, they have got an indefinite suspension as of now, and may take time to come back. So, in terms of RPT opportunities, how does one look at it from here on, given even the U.S. data center order has been kind of slightly delayed and may come up, as we said, later part of the year? But as overall pipeline from Asia, Europe, America, how does one look at RPT from here on? Are there significant orders which can replace the lost opportunity which we had faced from these two orders?
I think larger opportunities definitely, yes, they are like really one-off. But the company is seeing a strong pipeline for the smaller orders which don't fall under the category of material RPTs, but then the order inflow for the normal product business is much stronger this year as compared to last year.
I will just add on, Parikshit. This year, in the first half, the company has booked INR 10.4 billion of export order, and as most of significant part of these order booking are from related parties. Compared to INR 11.8 billion in the entire financial year, 2025-2026. So, on a like-like basis, you can see that there is a significant growth in the normal order growth, excluding the large one. And if the company is able to close the material RPT, the U.S. one in the second half, then the entire year from the export perspective will be also very significant growth.
What is driving this smaller inflow, sir, from the related parties? I mean, is it broad-based or is it from some specific geographies? How would be the geography?
It is all broad-based, Parikshit . It is all broad-based.
Is it the effort of the certification which we have done for our factories, I mean, with new countries, and that's yielding this kind of performance? What is driving the sudden change, I mean, from the small order?
I think everything. Many geographies are now seeing a lot of investment coming in, and supply chain also getting stretched, so that's creating additional opportunities. And definitely, in many cases, it is the certification which we were working for last one year are also yielding results.
Okay. Sir, the last question from the competitive intensity. We are now seeing Chinese players coming in, some of the other domestic players are tying up with some foreign partners and planning to enter into HVDC. I think 400+ KV , and below that, we are seeing huge competition now. How do you see the competitive intensity panning out from here? Are you seeing the pricing now cracking down? Any color on that will be helpful for the future orders.
After we have won Barmer, there has been no HVDC tender, so we don't know that. Whatever strategy you're talking about, Chinese tying up with this, that, everything, that is not yet seen in the market. There have been no tenders subsequently, so we cannot talk about competitive intensity as of now.
Regular transformers, sir? I mean, your regular stuff, which are high-voltage transformers beyond HVDC, excluding HVDC, how is the competitive intensity there?
There is some slight pressure on the prices, yes, but very little. Not significant.
Okay. Sure, sir. Thank you, and wish you the best.
Thank you.
Thank you. Next question is from the line of Umesh Raut from Nomura. Please go ahead.
Hi, sir, and congrats for a very good set of numbers again. My first question is again pertaining to acquisition done by parent for Trench Group. Just wanted to have your view on two comments which are made by parent. One is basically expanding Trench Group's reach in select regions, including India. Second, they are talking about growing Trench revenue potential in India through GE's commercial capabilities.
If I look at probably product offering by Trench as well, it looks like they can complement us by providing additional supply of bushings as well as coils, which are necessary for HVDC projects as well as other products. In your view, how synergies can play out? I mean, just a primary view.
So, thank you, Umesh. Yes, you are right that, for example, the synergies are going to play out because obviously when we are talking about good HVDC pipeline and HVDC being our focus, not only HVDC but STATCOM also. I think with a larger control over the supply chain, it is going to make us more competitive and will put us in more better competitive, not only competitive, but more secure position in terms of supply chain. So I think it is a very positive development as far as India is concerned.
Understood, sir. My second question is pertaining to the order that you received regarding pump storage hydro project. Is this the same project which was awarded to other group company of GE?
No, no. This is standalone transformer and GIS packages, so this has nothing to do with other GE entities.
Okay, understood. At what stage hydro project potential in India in future can give you order for packages like transformer or GIS, whether it is in first year or second year of ordering in that particular project?
I think normally when the machines are ordered at the start of the project, today customers are ordering transformers and the balance of plant, which in most of the cases is GIS. So it is at the start of the project. People don't wait till, for example, one year or two years, because for transformers, et c., the timeframe is also a bit higher. So it is at the start of the project.
Got it. On the STATCOM side, if I look at probably order wins, I think even in Q2 as well, there were no orders on STATCOM, even for the other players in the industry. So when we can expect sizable portion of ordering on STATCOM to start in India?
I will expect just a sizable portion to get ordered in Q4.
Understood. Last question is only on the bookkeeping side. If I look at probably other expenses, they have grew by about 38% in the quarter gone by. Was there any one-off provisioning or forex loss that you have reported in other expenses?
Umesh, there has been some forex loss, but it's all operational. And overall, I think the growth is in line with the revenue. Nothing to worry about in terms of the overall impact on the P&L.
Got it, sir. Got it. Thank you so much, and all the very best. Happy Diwali in advance.
Thank you. Happy Diwali to you.
Thank you. Next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Hi, sir. Thank you, and congrats for the strong performance. First question on, again, the gross margins. This quarter gross margins has been quite resilient. Just wanted to understand, are we again sticking to what led to this gross margin performance, and are we sticking to the mid-20s EBITDA margin guidance for this financial year?
Hi, good evening.
That is my first question.
Good evening, Amit. Yes, you are right. We are sticking to our guidance because for the H1 performance has been good. We have been able to achieve an EBITDA of approximately 26.2%, which is slightly on the higher end of the mid-20s range. In terms of gross margin, quarter-on-quarter, it changes because of the mix of different products, exports, and so on. But we, as you rightly mentioned, have been able to maintain resilience and able to deliver the targeted EBITDA margin.
I think as we have been communicating in the earlier calls as well, EBITDA becomes the right operating metric in our business, and there also a longer one-year view is relevant rather than a quarter-to-quarter performance.
Right. The second on this RPT order of INR 1,400 crore-INR 1,500 crore in U.S., what does it relate to? Is it transformer order, data center order? Any color on that? Also some color on the data center kind of contribution or number in terms of order book related to data centers that will have.
Amit, yes, it is related to data centers in U.S., definitely, and it is related to transformers for data centers in the U.S. Second, India data center, of course, there was not a very significant ordering which got decided during the quarter. So the numbers are not that significant to call out for the India data center market.
Right. Lastly, on the localization which you highlighted, and with this Trench order by the global parent, you also highlighted about the synergies. So in India also, are we like to secure the supplies as we hear that the lead times are just getting elongated and amid the strong demand? Are we also maybe looking for related acquisitions or something like that, or maybe there would be more investments for localization? Second, in terms of total addressable market, if you could give some color whether are we aiming to further increase the total addressable market in India?
So, I think yes, definitely by acquisition of Trench, it is going to give a much better control over the supply chain when we are bidding for HVDC and other projects as well. So definitely that's going to help in. Regarding the CapEx or localization part, of course, we keep on working on improving the localization, as we said earlier. But, for example, it could be part investment by us, but we also work with our developing new vendors or products which are actually coming from outside and finding an alternate supply chain in India.
So, it's a bit longer journey because we need to then work with various suppliers to develop the product according to our requirement. It goes through an extensive testing, and then only it gets launched into the market. But there, the CapEx is, of course, done by the, or the investment is done by the subcontractor. But we have already declared a CapEx of about INR 1,100 crore, and we have said that we are continuously evaluating the market, and if need be, we will not shy away from investing further CapEx in the country.
Right. What's the utilization levels today?
Sir, put it as pretty high for most of the factories.
Like more than 75%?
Yeah.
Understood. Thank you, sir. Thank you. All the best. Thanks.
Thank you.
Thank you. Next question is from the line of Rahul Gajare from Macquarie. Please go ahead.
Yeah. Hi. Good evening, and congratulations on a very strong Q2. My first question is, you did briefly touch upon localization. I want to understand how much time does it take you to deliver a 765 kV transformer for an order that you would have got today? Okay. I am sure with the acquisition of Trench, the delivery timeline would shrink. Is there any sense that you can give us in terms of the shrinking of the timeline?
Continuing with the same question, as of today, are all the bushings manufactured locally, or you are sourcing it from outside? Yeah, that is the first question.
Thank you, Rahul. First of all, I think what I said was that it is going to give a better control, but it does not mean that it is going to shrink, that Trench would also be having a pipeline of their own, and they would also be having their own delivery commitments which they would have made in the market. I do not think that simply they would be ignoring those delivery commitment and start diverting all to internal GE factory.
It is not going to work like that. If we, for example, today when we look at our bushing, so bushing 765 kV, most of the bushings are coming from outside because the manufacturing capacity in India is pretty limited. But now there is an expansion of capacity going on. Today it is getting imported, but in times to come, it is going to get localized. That is for sure. I think if we really look at 765 kV bushing lead times, that itself is more than 15-18 months.
The transformer delivery times, to manufacture a transformer, it will take, I think, what, three to four months only. But the raw material lead times are pretty high, so that is what gets defined the manufacturing timeframes.
But any timeline, 1.5 years, two years, for you to, if I were to give you an order today, when you will be able to deliver?
So, that will also depend upon our factory loading and other situations as well.
Okay. My second question is on the data center side now. I mean, all major global companies are focusing on data center, including GE Vernova. Today, how much of data center you can, the opportunity that you are able to capture today, and how will this TAM change over the next two to three years?
So, today the data center is basically The Indian data center market is mostly like a 200 MW, 300 MW data centers which are there, which is mostly operating at about 220 kV. So the TAM is not that great, but once the larger size data centers will be coming, then it will be 400 kV and 765 kV. So there will be a significant uptick of the TAM which is going to happen.
Okay. Sir, my last question is on this HVDC and STATCOM. You are manufacturing valves over here. How much of HVDC will be actually localized? Any way to put a number, 50% or 70% of HVDC value will be localized?
See, there is a difference in how we think of localization and what the government formula talks about localization. I will just give you an example. For example, when we manufacture a transformer in India, then we design the whole transformer, then we buy all the material, our supply chain buys it, we manufacture it in our factory, we test it, and we supply it. In a way, if you talk in a general sense, then 100% transformer is localized. For example, you look at CRGO. CRGO is going to be imported, so the government does not count it as a localized part.
For example, oil. The oil would be coming from somewhere outside, and you are just processing it, so a large part of that oil will not be considered as localized. There is a difference between, if you really look at that way, what definition, what we think internally. Most of the HVDC is localized because all transformers we manufacture here, thyristor valve we are manufacturing here, controls we are manufacturing here. The complete engineering solution, because we have a backend engineering center for HVDC in India.
It is like mostly an India-dependent or India supply chain story, but then there is a difference how government monitors or captures the information.
Okay, so whatever is possible, you are already doing it. That is the way.
Yeah, but then what happens is, for example, tomorrow. When we will start manufacturing, our valve factory is going to get commissioned, and then when we will start manufacturing thyristor valve, then we will go for individual component-wise. For example, gas-insulated switchgear, when we opened the factory in 2009, everything was coming from outside. But then what we did was we took component by component, certain things we went, we got it developed.
When the supply chain got stabilized in India, that component became an Indian source rather than. And there are times when those component manufacturers became so matured that they started supplying to our global factories as well. When we localize, for example, thyristor valve, when we are going to localize, then we are going to go component by component, try to see if we can work and develop those components with local Indian manufacturers as well.
It could be different industries, or it could be an automobile industry, it could be another industry as well. We work with those industries, we get. It is a journey. It is not something like that in one shot you do it at 100% or 0%. It is like a journey.
Okay, sir, thank you very much and all the very best for the second half.
Thank you, Rahul.
Thank you. Next question is from the line of Aditya Vikram from DB Securities Private Limited. Please go ahead.
Hi, sir. Good evening. Just wanted to check quickly upon few things. First one, even though we have achieved the higher end of the guidance EBITDA, right, 27%+ percentage, are we going to sustain it at this level for the next two quarters?
For the entire year, Aditya, we will maintain our guidance of mid-20s EBITDA.
Okay. Okay. The second question I have is this, the project which we took from Power Grid, the Barmer project, right? Will that have any negative impact on our EBITDA margin?
The order is going to be executed early in the next two to three financial years, maybe four financial years.
Okay, so there won't be any impact this year. Is that what you're saying?
Yeah. There won't be any execution from any of the HVDC orders, significant ones, in this financial year.
Okay. The last question I have is, sir, this related party, where the approvals have lapsed, right? Is that still part of our order backlog or that has been removed?
Aditya, the order was not booked. We took the approval, and customer put the project on hold. It is not a part of our backlog.
Okay. Are we sensing, considering all the things we are hearing right now, are we sensing some cancellations of order from the data center side or anything? Have we encountered any such queries from our existing customers?
We do not have any data center backlog, any significant.
No, we have a data center backlog, but there is no sense of any cancellation or anything. This is a news to me, what you are talking about.
No, okay. Okay. That helps, sir. Thanks. Thanks very much for clarifying. Appreciate it. That is all from my side.
Thank you. Next question is from the line of Basant Bansal from NBG Investments. Please go ahead.
Yeah. My question is around AI. We are hearing nowadays that AI companies are not getting funding and going slow on their expansion. Are you seeing any kind of impact because of this?
Mr. Basant, a large part of our order is basically coming from the transmission utilities or the TBCB segment, which is there, TBCB industry and these segments. India, for example, if you really look in many years, the installed capacity of data centers close to about 1.5 GW, which is very small. In fact, by 2030 also, it is expected to go up to 8 GW-10 GW . So, not very significant as comparison to U.S. market and other places as well. So, at least in India, we do not see a significant challenge in terms of these companies' capacity to raise capital and put data centers for AI.
You are not seeing any kind of demand pressure from that side? Am I right?
No. When the large data centers will start coming in, there will definitely be pressures in terms of. They will be requesting for early deliveries, etc . But yeah, today, many projects are on the drawing board, so we expect a much stronger traction on data centers to happen starting from Q4 or most probably next year.
Okay. Thank you.
Thank you.
Thank you. Next question is from the line of Suraj Malu from Catamaran. Please go ahead.
Hello, sir. Sir, in January 2026, we had taken an RPT approval for INR 3,000 crore, which you mentioned last quarter that it was on hold. What is the current status on that project, sir?
Suraj, good evening. The approval that we had taken in January, that was largely on the buy side, meaning we had placed order on our group company for largely including the products that we need for execution of HVDC projects. That was on buy side, which has been executed. The other order, two orders for which we had taken approval, mainly from the sell side or to get the export order from the customer, we have already given details in the presentation.
Right.
One of the order is on hold, and the other one is active.
Right. So, of the INR 3,000 crore, large portion was for importing components for HVDC?
Yes. For the January one.
Got it. All right. Thank you very much.
Thank you. Next question is from the line of Vijay Bhasin from InCred Capital. Please go ahead.
Hi. I just have two quick questions. One, do you expect gross margins to pull off from the current 55%-57% levels once the large HVDC projects sort of comes into execution starting, let's say, next year? Assuming that the current revenue mix is more skewed towards products than it is for projects.
Good evening, Vijay. First, a clarification that the gross margin is not around 55%. It is in the range of 45%. For this financial year, we have already clarified that HVDC's execution are not going to be part of revenue. In fact, the HVDC execution significant part will start coming from FY 2028 onwards. Even in the next year, next financial year, we do not expect significant HVDC contribution. We have maintained mid-20s guidance for this financial year.
We do not share long-range guidance which include HVDC execution over the next three to five-year cycle. We will communicate in the due course.
Fair. Just a follow-up to it. Can we say that the current gross margin levels possibly can hold for the next one to two years despite competition coming up, or can it actually get better from here on?
We do not give gross margin guidance. We have given the EBITDA guidance because, as I mentioned earlier, the gross margin changes quarter on quarter or even year- on- year, depending on mix of product versus projects and then export versus domestic and so on. Also, we have significant operating leverage benefit that we can avail. We have already shared guidance for this financial year, and we are actually executing well in the first half. We will communicate the expectation for the next year in due course of time. As of today, we do not actually share the long-range guidance.
Sure. Just lastly, how much would be, let us say, the data centers mix in your backlog right now?
It's a very small percentage, Vijay. It's mostly few products in 220 kV and segment and grid automation.
Fair. Okay.
Less than 2% entirely.
Sure. Thank you.
Thank you. Next question is from the line of Amit from UBS. Please go ahead.
Yeah. Hi, Sandeep. Congratulations on maintaining a very strong quality of business. My first question is on the capacities in manufacturing and power transformers and switchgears that are lined up in the next two to three years in the country. This is a question for industry, maybe not particularly for GE Vernova's profitability, because that's a different business mix. In 2027, do you think the ordering pattern is going to be such where the capacities will start having some impact on profitability and pricing?
Because the demand-supply mix, especially in CY 2027 ordering, will be very different vis-à-vis what we have seen in last two years. That's my first question for the domestic market.
I think it's a lot of capacity expansions what people have announced. If you hear them, what they have been saying, they're putting up capacity mostly for the export market, not for the domestic market. If they follow what they are saying, then I don't see too much pressure coming on the domestic market prices.
Okay. Because qualifications have their own time, and not everybody who are planning export might be able to do that going by last 20 years history in the country. That's why that question.
But there's a large capacity expansion happening mostly on the transformer side, but not so much on the switchgear side.
Okay. Fair point. Second question is, when GE Vernova T&D India exports to U.S., Europe, and the MENA region, you also have a lot of domestic companies, large ones, who have started to get capacity orders. Which part of, and you can directionally give this answer, sir. What part of your business today is vulnerable to indirect competition to, say, four, five large exporters, non-MNCs in India? Because I understand a lot of your business is technology-led, where Indian companies don't have a competition or offerings like GIS, et c. So, yeah.
Normally, I've not seen us fighting too much in the market globally with Indian companies. Then it is very difficult for me to predict that how this whole thing will play out with the Indian companies getting more export. If there is a trend which starts emerging, and suppose, I'm just giving a hypothetical example, don't take it. Suppose in Europe, some X country, for example, Spain or Portugal or whatever it is, there if my bid is there, and with that, there are three Indian companies, then I can make an assessment that what impact it can have.
But today, that is not the scenario. It is very difficult to me directionally that which markets will get impacted and where, and what is the volume which is going to get impacted.
Hmm. Sure. Third and last question, quick one is, yeah, and is basically, do you think the capacity expansion. So, we've seen Korean companies expanding capacities. A lot of investors raise question about the conservative behavior in expanding. Do you think even GE Vernova T&D India, in your INR 11 billion CapEx, you would want to call it a conservative expansion going by the global demand assessment and domestic demand assessment? Yeah, thank you.
So, if you look at that way, Korean companies are not that big in India, right? For example, transformer and all, there is no Korean company which is there. Korean companies are putting the capex either in Korea, or they are putting a large capex which is happening in U.S. So, we cannot compare them with GE Vernova T&D India's capex. Regarding the conservativeness of our capex, I will say that we take an informed view about the market, the supply chain demand, our ability to play in that market, and then only we decide on the capex numbers after due diligence with the board.
I will just add on. We also consider what maximizes the return to the shareholder. Most of the investment that we are doing, almost more than 90%, is in our existing plants where we already have the land, and it makes s ure it will integrate with expansion. The need of capex versus the other player is lower to produce or generate similar or higher volume.
Sure. Anyways, I meant Korean companies expanding in Korea for U.S. and Korea. But yeah, thank you and good luck.
Thank you.
Thank you. Next question is from the line of Aritra Banerjee from Nomura. Please go ahead.
Yeah. Hi, sir. Congrats on a very good set of numbers in this quarter, and thanks for the opportunity. I just wanted to ask that for the upcoming three HVDC projects, two in Bombay and one in Navtha here, so what is the kind of timelines you're expecting in terms of tendering and awarding? If you could provide some clarity on that, please.
I think the project not yet been cleared by NCT and all, so it's going to happen in 2027 only, next year.
Understood. My second question is regarding this discussion regarding the ultra-high voltage 1150 KV corridor. If that actually fructifies, what kind of tailwinds you expect regarding your TAM and demand opportunities going forward?
That will also depend upon how many projects come in a year. We have to wait for that kind of feedback to come in when the first project comes in, and then subsequently, what is the pipeline. Then only we will be able to give concrete numbers on the TAM, about the scope, that how many bays are there, how many transformers are required. It is still bit away.
Understood, sir. Any idea on who might be your competitors in this segment if it comes along?
1150 KV?
Yeah.
For different projects, for different products, it will be different competition. For instrument transformer, it will be different. For transformers, it will be different. It will be different for different products.
Understood, sir. Thanks for answering my questions, and all the best for the coming quarters, and a happy Diwali in advance.
Thank you, Aritra.
Thank you. Next question is from the line of Shirom Kapur from Jefferies. Please go ahead.
Hi, sir. Thanks for the opportunity. Just had a quick question on the HVDC bit. Could you somehow quantify, typically of an HVDC project, how much would be, let's say, a INR 20,000 crore HVDC project, how much is typically the equipment component or the component that is addressable by you?
That changes upon the line length and other factors as well. Because, for example, one HVDC might have 800 km of line, and the second HVDC might have 1,200 km or 1,500 km of line. So, the composition in terms of percentage will change, but you can take it somewhere around, say, probably 40%-60%, 65%.
Understood, sir. And just secondly, you mentioned that, obviously, last three, four months, the TBCB pipeline has picked up substantially. So, I think by my calculations, close to about INR 1 lakh crore of TBCB projects have been tendered out so far. So, how much of this would you say could still be up for ordering on the equipment side? Typically, once a project is awarded to the developer, how long is it before it is awarded to the equipment supplier? That is one.
And just continuing on the TBCB projects is, how much do you see in terms of a market opportunity coming up from the intrastate TBCB project side as well? Because a lot of the recent tenders have been in interstate. So, how do you see the pipeline shaping up in intrastate as well?
Shirom, thank you for the question. So, I think on the TBCB intrastate pipeline, of course, many states have expressed that in future, all their expansion, at least the 400 and the 765 KV, they would like to go it on a TBCB mode. But they have not been If you ask me a number for the year, probably it will be difficult for me to quantify because I think the numbers would be tracked more by the developers rather than by us. That is first thing. Second, I think what you asked about, so normally earlier what was happening that TBCB projects, the delivery timelines were like 18-21 months.
So, whenever the developers were winning, they were in a hurry to award the packages in order to secure the timeline and meet those timelines. But now it has become like from 24 months to 30 months. Even after the developer wins the project, they take some time to decide on that. There is a float which has got created, which now rests with developers. I will say it is difficult to now make a prediction that whatever a lakh crore TBCB pipeline, if it gets decided this year, how much it is going to fructify for the equipment manufacturers like us.
Noted, sir. But fair to say, given that the timeline is stretched, it could be about 6 months or more, or could it be less than six months typically after?
No, normally it would be like three to five months, the whole product will get awarded after the developer has win the job.
This as per the latest longer timelines you're saying, right? That given in the current scenario, it could be three to five months typically.
Yeah. But for transformers and all, people do it earlier, but for other products, it then gets slightly delayed.
Noted, sir. Thank you. Thank you so much.
Thank you.
Thank you. Next question is from the line of Amitoj Singh from 360 ONE Capital . Please go ahead.
Yeah. Thank you so much for taking the question. My first question is on the exports. I think as of FY 2026 end, our exports order books stood at around INR 1,700 crore. If I see the first half execution, we have already executed around INR 1,200, roughly INR 1,200 crore of exports. Is it fair to say that exports are relatively short-cycle orders compared to domestic? Anything to add on that?
Most of the flow orders or the orders which are spread across multiple geographies, they are short cycle. But in past, we did book certain projects which are long cycle of three to five years. The large projects generally have a longer delivery time period, the material related party orders that we take, and rest of the flow business is a short-cycle one.
Got it. Roughly the new orders that also we have been taking in the first half, they will also be short-cycle products, right? Is it?
Yes, absolutely.
Got it. Got it, sir. The next question is from the IGBT technology. Our South Olpad project is based on the VSC technology, and we have a tie-up with Mitsubishi Electric for supply of IGBT conductors. Can we say that that HVDC order will have a relatively lower gross margin compared to HVDC, given that we will be sourcing some of the components from Mitsubishi Electric, the main semiconductor technology?
These IGBTs which we source from Mitsubishi, or for that matter, any other supplier as well, that is a standard model which we operate. That does not decide whether that is a component. For example, when we build a transformer CRGO, obviously we source outside from an outside company. Similarly in an HVDC, IGBTs are sourced from outside, but the complete valve assembly is done by us. The design and manufacturing of the valve, including that IGBT, is done by us.
Buying IGBTs from Mitsubishi has no role in defining what gross margin the project will operate.
Got it, sir. Got it. Similarly for LCC, like we manufacture the thyristor valves, but do we also manufacture the thyristors, or that is also being sourced from international players or from a parent?
We source the thyristors from outside, like we source IGBTs, but the thyristor valve as a unit is manufactured.
Got it, sir. Got it. Thank you so much for taking my question, sir. Thank you.
Thank you.
Thank you. Next question is from the line of Jainam Vora from Saltoro Investment. Please go ahead.
Congratulations on a great set of numbers. My question is regarding the export opportunity, having done exports through related party as well as other orders. I wanted to get some qualitative as well as quantitative color as to how different is it for an Indian company to do exports in markets abroad, particularly in the U.S.? Is there any difference in terms of the certification or timeline or approval? If you could provide some color, that would be very helpful.
Particularly right now, given the kind of demand-supply imbalance that is there, is there a sort of a different approach than visibly what you've seen probably five years or so back? That would be very helpful to know.
I'll not be able to comment that what was happening five years back, but definitely if you want to export anything to European customers or for that, or American customers, definitely it will require an approval of the factory and other things as well from the customer side. I think that is the most important starting point. Then it will also depend upon that whether you are working for a utility or whether you are working for a data center.
If you are working for a data center and the equipment is going to go in the data center itself, then it will depend upon that how flexible they are in terms of technical requirement. But when you go to utilities, they are pretty strict about following the technical requirements, etc . I think this also depends upon you. It's not like you have one-stop solution. It will depend upon the equipment, it will depend upon the customer type, that what kind of requirement comes for the approval.
Understood. In terms of the biggest bottleneck right now, what is it that the numbers are solid, the inflow is there, you have won the L1 bid is also there. I'm just trying to understand right now what is the biggest bottleneck that the company is facing as it plans to continue to forge forward with the growth ambitions that it has? Is it supply chain? Is it the skilled workforce? If you can provide some color on that, it will be very helpful.
Yeah, obviously supply chain remains a challenge which teams keep on working to mitigate that because, one, the global demand is pretty high, and then second, the geopolitical disturbances, they keep on emerging. Yes, supply chain today is one of the things which can have a very severe impact on the operations.
That would be the number one risk.
Yeah.
In your opinion. Okay. Last question is on the GEC-3 approval that recently the government gave. While you did provide some perspective on the interstate opportunity, from a broader lens, how big the opportunity or TAM opens up for you? While it may be hard to give a color from a yearly perspective, but from a midterm perspective, mid to long-term perspective, what does it mean for a company like us?
I think if you would have seen that recently we did an investor meet in Bombay, and at that point of time, we had uploaded the presentations. Our guidance on the market remains the same. A large part of that GEC-3 corridor is anyhow covered under the electricity plan which has been issued by CEA.
Okay, understood. Thank you. Congratulations and all the very best.
Thank you.
Thank you. Next question is from the line of Sameer Thakur from Ambit Capital. Please go ahead.
Hi, thanks . Thanks for taking my question again. I just have one. You mentioned that on pricing there is slight pressure. Just wanted to check, is that on new orders? Because the copper prices have increased, like, more than 50% in one year. I thought the order pricing should have at least, like, should have improved by at least 15% or so, just to mitigate that impact. Just wanted to check on this one, whether.
I was talking, taking into account everything, then there is a slight pressure.
Okay. Got it. Fine. That is clear. Just one, if I can squeeze in. You had mentioned in earlier calls that the base order is like INR 70 billion to INR 80 billion for the year. Is that intact or you want to increase the target for the year, considering the performance for H1?
No, we would like to keep it.
Okay. Thank you. Thank you. That was all from my side.
Thank you. Next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Thanks for the follow-up. Just to draw attention in the past, I think Sushil Kumar used to earlier tell that export orders have almost 500 basis point better margins. Few quarters have passed by. Any change in the spread? Are the export orders more profitable now versus domestic orders? Any color on that?
Parikshit , broadly the trend remains same. Export orders do remain at the higher margin than the domestic ones.
Okay. Is it right to assume that the current order book of INR 20,000+ crore , will be carrying mid-20s kind of margin, excluding HVDC pieces right now in FY 2001?
Parikshit, I think there have been few questions in the past in this call as well regarding gross margin, EBITDA, and so on. Your question is on the margin of backlog. I will draw the attention and reply this differently. We have been growing at the rate of more than 30% over last three, four years. If you look at our backlog, INR 214 billion, plus HVDC L1 position, we have a very strong order book already with us. With this, going forward in next three, four years, we can continue to similarly grow at more than 30%.
With that kind of revenue execution, while we are expanding at our factories, it's only INR 10 billion of CapEx. With that small investment, we are able to execute this entire backlog, which means that without looking at gross margin or EBITDA, there will be a significant operating leverage that kicks in, and the absolute earning per share will grow significantly with the same amount of capital. The return on equity remains high for the future period, and the EPS growth will continue with the increase in the revenue.
I think the stakeholders or the analysts or investors should consider the absolute profitability and return to the shareholder in terms of return on equity, rather than the components of it, which is largely in terms of backlog margin or gross margin, et c.
Understood, sir. This is one bookkeeping question. In this quarter, we have seen employee cost going up. Any one-off there, or is it more of a trend now? I mean, is there any hike, any one-offs there? If you can just comment on that.
Employee cost has been growing, but it is less than the revenue rate. In order to execute our backlog and grow revenue at 30% + year- on- year, we have been adding people. Also, you would appreciate there is inflation, so obviously there are increment salaries. Those are the two normal business operation factors. Nothing exceptional in this number.
Just last question to Sandeep. Earlier, we used to see bulk ordering from Power Grid. We have seen couple of packages. We have won large ones, like I think upwards of INR 6,000 crores. So, any future pipeline there which you see building out? That will be the last question.
Yeah. Power Grid normally regularly comes out with tenders. But that's based on the TBCB pipeline only.
Okay. Understood. Okay, sir. Thank you, and happy festivities. Looking forward to connecting again.
Thank you. Same to you.
Thank you. Next question is from the line of Aditya Vikram from DB Securities. Please go ahead.
Hi, sir. One last question. This quarter, we have seen the gross margin at 45%, right? I just wanted to understand from your side that what has led to this outperformance. Is this the product mix or some sort of operating leverage which will remain in place for the next two quarters as well?
Thank you for your question. As I mentioned, Aditya, earlier that quarter-on-quarter gross margins do vary.
Okay.
Overall H1 performance, and that variation is because of multiple factors. Could be the operational execution, could be the mix of domestic versus export, project versus products, and different product components, and so on. The performance of 45% is not exceptional. We did the similar kind of gross margin the last financial year as well. So it is in line with the last financial year. Last year, we did 27% EBITDA. This year, our performance is more than 26% in H1, and in line with our guidance. So nothing exceptional of what we are doing.
But yes, the overall results are exceptional because we are the industry-leading company in terms of the performance of the P&L and profitability.
I completely understand what you are saying, right? Not going to harp on more about this. This is something which can be sustained for next two quarters as well, if you are sticking to your mid-20s EBITDA margin, right?
The mid-20s EBITDA that we normally guide is going to sustain, but not commenting on the gross margin because as I said, different components within that keep changing.
No, absolutely. I understand that. I just wanted to see if there is anything which might stick along. But thanks so much for clarifying. Appreciate it.
Thank you. Next question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Yeah, thanks for the opportunity again. My one question I have on the Pusauli HVDC expansion. If I recall correctly, the NCT has approved this INR 30 billion, INR 3,000 crore project. Have you heard anything on the I think that the significant part were done by the GE. Have you heard anything from the Power Grid about this project?
No, I have not. Actually, your voice was cracking, so I was not able to hear you.
No, my question was on the Pusauli expansion, Pusauli HVDC expansion. I think where Power Grid is The order has been given to Power Grid, and we already, we have implemented the phase one. So phase two, I think we will have substantial role to play. My question is, have you heard anything from the Power Grid? And the total project cost size was INR 3,000 crore, yeah.
I think Pusauli one was executed by us somewhere in year 2000, if I am not mistaken, or 2003. It is like about more than 25 years, and about 25 years, and it has outlived its life. The refurbishment of that project order has been given to Power Grid. Power Grid has launched certain discussions with us, but there is nothing concrete on that now.
Understood. Thank you, and have a good day.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Ms. Megha Gupta for closing comments.
Thank you all for joining the call today. We hope the insights provided by our speakers have been informative and valuable to you. We value the trust and support of our investors and analysts, and ensure to remain committed to maintain transparent communication and fostering strong relationships. If you have any follow-up questions, please feel free to reach out to me. Thank you.
Thank you very much. On behalf of GE Vernova T&D India Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines.