Axis Securities has issued BUY Call on Genus Power Infrastructures Ltd following its Q2 FY26 results, raising its target price to Rs 430 per share. The company demonstrated strong revenue and earnings beats on the back of a robust order book and expanding market opportunity in the smart metering space. Key growth drivers include aggressive tender wins, vertical integration initiatives, and future diversification into water and gas metering, with management optimistic on sustained industry tailwinds. While revised upward guidance for revenues and EBITDA margin underpins confidence, investors should monitor tendering timelines and working capital cycle improvements as potential risk factors.

Research Recommendation and Target Levels

Axis Securities maintains a BUY rating on Genus Power Infrastructures Ltd.

The revised target price has been set at Rs 430, down slightly from the previous Rs 450, reflecting a more conservative price-earnings multiple adjustment.

Current market price stands at Rs 354, implying a potential upside of 22%.

Valuation is based on an 18x PE multiple on estimated September 2027 EPS, lowered from 20x earlier to account for ongoing order book wind-down and gestation risks in new product segments.

Robust Quarter Performance

Q2 FY26 standalone net sales surged 36% YoY and 22% QoQ to Rs 1,149 Cr, beating both Axis and consensus estimates by 15% and 45% respectively.

EBITDA grew 100% YoY and 23% QoQ to Rs 244 Cr, delivering a 23% beat with margins expanding by 496 basis points to 21.3%.

Profit after tax (PAT) reached Rs 148 Cr, up 154% YoY and 15% QoQ, marking a 14% upside versus estimates.

Management guided for installation of over 8 million smart meters in FY26, supporting revenue and margin improvements in the near term.

Order Book Strength and Market Opportunity

As of September 30, 2025, the company's order book stood at a substantial Rs 28,758 Cr, including Rs 26,473 Cr from the GIC platform with long-term concessions.

Tendering remains active with 3.8 crore meter tenders live and expected to be finalized by FY26 end, while an additional 6 to 6.5 crore meters are expected to emerge for tendering within 12-18 months.

Expansion beyond RDSS states Karnataka and Telangana is forecasted to boost the total addressable market to approximately 30-31 crore meters.

Genus targets a 25% market share in future tenders, consistent with its historical capture rate.

Upward Revision in Guidance

FY26 revenue guidance was raised from Rs 4,000 Cr to Rs 4,500 Cr, reflecting higher execution visibility and order flow.

Maiden revenue for FY27 is projected between Rs 5,500 Cr and Rs 6,000 Cr.

EBITDA margin guidance moved up to 20% from the earlier 18%, signaling operational efficiencies and scale benefits.

Working capital cycle improvement targets remain focused on reducing debtor days, currently down 61 days to 126 days, aiming for stabilization at around 160-170 days by FY27 end.

Diversification and Capacity Expansion

The company is investing in vertical supply chain integration with a new injection molding plant in Rajasthan, scheduled for partial operation by FY26 end, enhancing cost control and component availability.

New growth verticals include gas meters, with Indian market needs of 12-14 crore meters over the next 5-6 years. Genus expects government initiatives on prepayment gas meters to mimic RDSS procurement models, leveraging its core competencies.

Water metering is another emerging segment, with small pilot projects underway in municipal corporations and long-term potential considered on par or exceeding the electric meter business within four to six years.

Financial Health and Debt Position

Gross debt increased to Rs 1,744 Cr as of September 2025 from Rs 1,365 Cr in March 2025, driven by short-term borrowing to support execution and investments.

Net debt currently stands at Rs 1,073 Cr, up from Rs 524 Cr in March 2025, with peak borrowings expected in FY27 capped around Rs 2,000-2,100 Cr.

The company expects deleveraging from FY28 onwards as project cash flows mature.

Key Risks to Monitor

Delays in awarding and executing tenders could disrupt revenue momentum.

Working capital cycle improvement could take longer than expected, impacting cash flow generation.

Export market and water meter business have long gestation periods, adding uncertainty to medium-term earnings visibility.

Valuation Snapshot

Bottomline for Investors

Axis Securities' research positions Genus Power Infrastructures as a compelling BUY given its dominant position in the mega smart meter rollout drive, superior quarter performance, and strong order book visibility. While some risks around tender execution and working capital persist, the upward revisions in guidance and diversified future opportunities in gas and water metering provide a robust growth framework. At the current CMP of Rs 354, with a target price of Rs 430, investors can anticipate a 22% appreciation over the next 12-18 months, making this stock a strategic addition for growth-oriented portfolios.