Genus Power: Spearheading the Smart Meter Play
We initiate coverage of Genus Power Infrastructures Ltd. (GPIL) with a BUY recommendation and a target price of Rs 505/share, implying a potential upside of 20% from the CMP. GPIL is one of the largest players in the electricity metering solutions industry in India. With over 8 Cr meters installed globally; Genus has been at the forefront of electricity metering since its inception in 1992. It commands ~27% market share in India and is poised to scale to new heights. It has 1.1 Cr meters production capacity per annum and is currently expanding it to 1.5 Cr. GPIL offers comprehensive metering solutions to residential, commercial, and industrial users through Power Utilities and Discoms. For the optimal performance of Utilities and to reduce AT&C losses, smart meters play a vital role. GPIL’s comprehensive product portfolio includes Smart Meters, Advanced Metering Infrastructure (AMI), End to-End Deployment, and Allied Software Support Services.
Investment Thesis
• Huge Opportunity in Smart Metering: The Revamped Distribution Sector Scheme (RDSS) has a target of installing 25 Cr smart meters across India by 2025. Out of the 25 Cr smart meters, only 50% i.e., ~12 Cr are awarded while ~1.5 Cr are installed, providing enough future potential for smart metering players like Genus. Apart from the smart meters, GPIL also supplies gas meters at 40-50k meters/month (which has 8-10 Cr units of market potential in the next 7-8 years), water meters, as well as exports its meters (exports contribute ~10% of its annual revenue) which will provide future revenue streams.
• Executing a Large Order Book: GPIL’s order book has grown significantly over the last three years. Including all SPVs and Platform with GIC, the order book has increased from Rs 4,115 Cr in FY23 to Rs 21,006 in FY24 and further rose to Rs 32,500 Cr in Aug’24. Out of the Rs 32,500 Cr order book, Rs 2,500 Cr are the legacy meter supply order on GPIL’s own books and the remaining Rs 30,000 Cr are AMISP orders which go to the GIC Platform. Half of the Rs 30,000 Cr from GIC will be towards meter supply and installation which will be executed over ~3 to 4 years, 25% will be towards O&M orders which will start post meter installations and will be for 6-10 years, and the remaining 25% will remain with the GIC Platform.
• GIC Platform A Game Changer; Will Lead to A Reduction in the Working Capital Cycle: Last year in Jul’23, GPIL signed a definitive agreement with Gem View Investment Pte Ltd, an affiliate of GIC, Singapore (GIC) to set up a “Platform” – a JV Company with 26% stake of GPIL and 74% of GIC, for undertaking Advanced Metering Infrastructure Service Provider (AMISP) concessions. The bulk of the order book and subsequent revenue will come from the Platform in future, which will lead to shifting of the credit risk to the JV from Discoms earlier. This will result in the reduction of the working capital days from ~212 days in FY24 to around ~140-150 days by FY26.
• Revenue and EBITDA to Jump Up Significantly: Management has guided ~100% revenue growth for FY25 to Rs 2,500 Cr as the huge AMISP orders start full-scale execution in Q3FY25 and onwards. The robust order book positions GPIL well for sustained growth in the coming years. EBITDA margin guidance is maintained at 15-16% (vs. 9-11% EBITDA margin over FY22-FY24) led by operating leverage and cost control measures. We build in revenue/EBITDA/PAT CAGR of 64%/81%/101% over FY24-27E to Rs 5,309/796/614 Cr.
• Robust balance sheet: While the company’s gross debt stands at Rs 587 Cr, it retains its netdebt-free tag. The Capex guidance stands at Rs 80 Cr for FY25 and it will be mainly towards meter capacity expansion across geographies (majority at Guwahati plant). With no significant Capex needed in future, along with cash flows from higher order book execution, we foresee positive FCFs for the company from FY26 onwards.
Valuation & Recommendation: We initiate coverage on the company with a BUY rating on the stock and arrive at our Mar’26 target price of Rs 505/share, valuing it at 25x FY27 EPS. The TP implies an upside potential of 20% from the CMP.
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