Axis Securities has reiterated its BUY recommendation on Genus Power Infrastructures Ltd, while trimming its target price to Rs 355 from Rs 430 earlier. The brokerage attributes the recalibration to a moderation in Q3FY26 performance, softer other income assumptions, and a valuation de-rating amid sectoral weakness. Despite a seasonal slowdown and execution-related delays, the structural story remains intact. With a formidable order book of Rs 27,217 Cr, strong visibility under the RDSS smart metering program, and optionality from gas and water meters, Axis believes Genus retains a 24% upside from the current market price of Rs 287.

Q3FY26: Growth Intact, But Seasonal Headwinds Visible

Revenue for Q3FY26 stood at Rs 1,122 Cr, up a robust 86% year-on-year but down 2% sequentially, reflecting festive-season execution slowdowns. The topline missed estimates by 8%, largely due to temporary delays in on-ground smart meter installations.

EBITDA came in at Rs 232 Cr, up 99% YoY but 5% lower QoQ, missing estimates by 11%. Margins were resilient at 20.7%, expanding 136 basis points YoY, though contracting 58 basis points sequentially due to operating leverage moderation.

PAT stood at Rs 148 Cr, rising 116% YoY but flat sequentially, missing estimates by 9%. EPS for the quarter was Rs 4.85.

The moderation, while notable, appears cyclical rather than structural. Installation activity, which remains the key revenue driver, saw 23.3 lakh meters installed during the quarter.

Order Book Strength Anchors Medium-Term Visibility

As of December 31, 2025, Genus reported an order book of Rs 27,217 Cr, including Rs 25,053 Cr from its GIC-backed platform with concessions extending 8–10 years. This provides multi-year earnings visibility.

Under the RDSS scheme targeting 25 crore smart meter installations, approximately 15 crore meters have been awarded and 5.6 crore installed, with Genus supplying around 2.5 crore meters. Importantly, tenders for another 5 crore meters are currently live.

While certain states such as Tamil Nadu may see election-related delays of 4–6 months, management expects 15 crore smart meter tenders over the next two years, including projects outside RDSS.

Guidance Maintained; Cash Flow Inflection by FY27

Management has retained its FY26 revenue guidance of Rs 4,500 Cr, alongside an installation target of 80–90 lakh meters. For FY27, revenue guidance stands at Rs 6,000 Cr, supported by a plan to install 1 crore smart meters within its AMISP portfolio.

EBITDA margin guidance remains at 20%, and the company expects to turn free cash flow positive by FY27 as working capital pressures ease.

Financial Trajectory: Earnings Compounding Ahead

Axis has marginally cut PAT estimates by 9% for FY26 and 1% for FY27–28, primarily due to lower other income assumptions. Revenue and EBITDA estimates remain unchanged.

Working Capital: Signs of Stabilization

Debtor days improved by 15 days in Q3FY26 to 111 days, indicating better receivables management. Inventory days rose marginally due to high installation intensity. Overall working capital days remained stable QoQ.

Net debt remains manageable, with gross debt at Rs 1,975 Cr as of December 2025. Peak borrowing is expected to cap at Rs 2,100–2,200 Cr in FY27, before moderating as cash flows improve.

Beyond RDSS: Gas and Water Meters as Structural Levers

India’s gas meter opportunity is substantial, with an estimated requirement of 12 crore meters over six to seven years. Management anticipates that prepayment gas meters could follow an RDSS-like procurement model, playing to Genus’ core competencies.

The water meter business, though nascent, is expected to scale meaningfully over the next three to four years.

Exports are projected to ramp up to Rs 500 Cr, further diversifying revenue beyond domestic smart metering.

Valuation: Derating Reflects Prudence, Not Weakness

Axis has reduced its valuation multiple to 15x Dec’27 EPS, from 18x earlier, citing concerns around order book sustainability post RDSS and broader sector sentiment weakness.

At the current market price of Rs 287, the stock trades at:

14.5x FY26E earnings

12.4x FY27E earnings

12.0x FY28E earnings

With a revised target price of Rs 355, Axis sees 24% upside potential over the next 12–18 months.

Return ratios remain compelling:

ROE: 25% in FY26E

ROCE: 20%

ROIC: 19–23% range through FY28

Risks to Monitor

• Delays in tender awards or project execution
• Working capital cycle elongation
• Slower-than-expected ramp-up in gas and water metering

Investment View: Execution is the Catalyst

Genus Power stands at the intersection of India’s digital power infrastructure transformation. While Q3FY26 reflected seasonal softness, structural fundamentals remain intact.

The combination of a large addressable market, multi-year concession-backed order book, improving working capital discipline, and diversification into adjacent metering segments strengthens the long-term investment thesis.

Axis Securities maintains its BUY call with a target price of Rs 355, implying meaningful upside from current levels. For investors willing to ride out near-term volatility, Genus offers exposure to one of India’s most significant infrastructure digitization themes.