Operator
Ladies and gentlemen, good day and welcome to conference call hosted by GE Varnova T&T India Limited for quarter two of financial year 2026-27. 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 touchtone phone. I now hand the conference over to Ms. Megha Gupta from GE Vanova T&D India Limited. Thank you and over to you.
Good morning, everyone. Welcome to the earnings call of GE 1 over T&D, India Limited. I am Megha Gupta from Investor Relations Team, and I am joined by Mr. Sandeep Zimzaria, CEO and MD of the company, Mr. Sushil Kumar, Wholescent Director and CFO of the company, Mr. Abhishek Shrivastav, Head Business Operations, and other members of the leadership team. Before we begin, I would like to highlight that today's discussion may contain 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 volt, 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&T losses and improve the reliability. G. Varnova is focused on providing the software and digital infrastructure required to manage this complexity. Third, the TNT 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 solutions 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 $24.4 billion, up 52% year-on-year, compared to $16.1 billion in quarter-ended September 25. Our Q2 revenue stood at $20.3 billion versus $15.4 billion INR in Q2 FY2526 up by 32% year-on-year. Order backlog stands at $214.4 billion as of September 26 versus $214.6 billion as of March 26. The order backlog stands at more than 3 years of revenue for FY2526. Next. Our profit before tax and exceptional items for the quarter of September 26th was at 5.8 billion INR compared to around 4 billion INR in the corresponding quarter of the last financial year, growing by 1.4x. Cash generation of 10.1 billion during H1. With this cash, our balance stands at the end of September at 32.5 billion. Looking ahead, our priorities are consistent. First, execution excellence on mega projects, especially of 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, thanks, Sandeep. Good evening to all of you. So, I will take you through the key network augmentations that we achieved in the last quarter. So, first of the notable mentions is 400kV substation is for NEA in Nepal. So, this is for the backbone of 400kV grid network that Nepal is trying to develop. So, earlier we had commissioned Hinti, and this is the second in the lead. After that, 400 kV GR station was commissioned for Gretko at Barbazar. In addition to that, we had been strengthening the transformation capacities at various existing and new substations, and in that, we commissioned 765 kV reactors for our customers, PGCL at Bida, Razonia at Biawar, and then 765 kV generator transformer for NPR. In addition to that, we had GIA commissionings 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. So, I hand over to Sushil now to take us.
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 35.8 billion INR. 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 megawatt 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 TBCV transmission project in the state of Himachal Pradesh. Supply of 765 kV shunt reactor for a TBCV 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, AS across North America, Europe, Middle East, Africa, alongside strategic automation strategies. Our order backlog closed strong at 214.4 billion IR, 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 $20.3 billion, up 32% year-on-year, with H1 revenue reaching about $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 $5.5 billion, approximately 27.1% of revenue. This EBITDA is at the higher end of our mid-20 guidance ban that we have been communicating to the stakeholders in the past. Profit before tax for the quarter rose to 5.8 billion IRR, and profit after tax is at 4.3 billion IRR, representing 21.3% of revenue. Finance costs remain negligible with our continued net zero debt position. On the balance sheet side, we generated ILR $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 $32.5 billion. Regarding our capital expenditure, as previously announced, the company is progressing with the capacity expansion program of approximately $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 revenues. 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 revenues 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. So we had secured an approval of roughly 31 billion INR 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. And 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 a 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. So, 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, and we are confident of converting our $214 billion backlog profitably over the coming years. With that, I'll hand over for the question and answer.
Operator
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 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use hands-up while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The fourth question is from the line of Samir Thakur from Ambit Capital. Please go ahead.
Perfect, thanks. My first question is that they announced acquisition of French. They also said that they are evaluating funding the manufacturing of French products in India. So, is there any view on that, whether that will be part of G1 or India, or is it only to say? Just wanted your comments on that. That's the first question.
So, thank you, Samir. I think the acquisition has been announced only two days back. So, as of today, and the whole acquisition process is expected to end in the later part of FI 27. It's too early to comment on that.
Okay, thank you. And the second question is, what is the revenue contribution from services and shopper at the moment? And is there any target which you have in mind or any ambition regarding this?
So, Samir, good evening, Sushil. So, software and services business, we don't 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-date booking a lot of equipment orders because our order booking, including the XHGC order, has been very strong in the last few years. So, 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'll get that easy. Thank you.
Operator
Thank you. Next question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Congratulations on the Super Quarter. Thanks for the opportunity. My first question is on the GE 1 over global is talking about $900 million order which they have booked for, 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?
So, 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. And the higher rating transformers are all built in, but they're only in the Asian continent. In the 900 billion orders, yes, there will be some orders which are going to flow for which we have taken a related party approval for 1,300 crores and the finalization process is on.
My second question is on the, I think I mentioned the PPT, that is a holdup from the, holdup on the two related party approval orders. One is, I think, G-Midlis, and one is, I think, France, right? Do you, in your opinion, do you think in the next six to 12 months that holdup will get clear and there's an opportunity to participate in those orders?
Well, that project actually is of a much bigger size, and the hold has been put by the customer. So, we are not very sure whether the hold is going to get lifted in six months, eight months, or a year. So, it will be too early to speculate on that.
Understood. My last question is, how are you seeing the new opportunities for HVDCs developing over next 12 months? And is there a need to invest still more from our side to improve the indigenization contained for HVDC as we go forward?
So, we look at a very strong pipeline of HVDC going forward. We expect minimum two to three projects to come next year. And HVDC is going to remain our key focus area as well. And we keep on evaluating that if you need to do an investment in terms of more local. So if you look at HODC practically, most of the things have been localized. So today we are manufacturing transformers in India, valves in India, controls in India. So at one point of time, a large part of the transformers and 100% of valves and controls are coming from outside. But 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 Varnova, but manufactured by our subcontractors or sub-vendors. So, as a long-term strategy, we will be working on, in the next phase, we'll be working on localization of data.
And just to thank and all the best, thank you.
Operator
Thank you. Next question is from the line of Parikshit Kangpal from HDFC Securities. Please go ahead.
Hi, Sandeep, sir. Congratulations on a great quarter. So, in this quarter, we have seen a very significant pickup in the domestic orders. So, last quarter was subdued. So, how do you see the rest of the financial in terms of domestic orders? And was there any one-off in this quarter, any large orders from the domestic markets, which would have contributed significantly to the overall order in place?
So I think we see order intake for the year as a positive story only. There was no one-off, so it were all regular orders which have come in. And also, you know that we have already declared that we are the lowest bidder in PowerGrid for Barmer, and Barmer has already been acquired by PowerGrid. So we expect that this quarter will also be significant in terms of booking that order as well. So 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 to the second half given Q1?
I think it is strong because in the last three to four months, there was a substantial strong pipeline of TBCP projects. And still the opportunities are now also coming in. So I look at, at least in the next four or five months also, the pipeline to remain strong.
Okay. So on the RPT side now, so we have seen fallback of two orders. I mean, they've got an indefinite suspension as of now, and they take time to come back. So in terms of RPT opportunity, so how does one look at it from here on, given even the US data center order has been kind of slightly delayed and may come up as we said later part of the year. But as an overall pipeline from Asia, Europe, America, so how does one look at RPT from here on? Are there significant orders which can replace the lost opportunity which we have faced from these two orders?
So, I think larger opportunities definitely, yes, they are like really one of, but we are 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'll just add on, this year, in the first half, we have booked 10.4 billion an hour of export order, and most of, like, significant part of these order bookings are from related parties, compared to 11.8 billion in the entire financial year, 25-26. So, on a like-to-like basis, you can see that there is a significant growth in the normal order flow, excluding the large one, and if you are able to close the material RPT, the US one in the second half, then the entire year through the export perspective will be also a significant growth.
So, what is driving this smaller and closer from the related parking driving? Is it broad-based or is it from some specific geography? How would be the geographical? It's all broad-based.
Is it the effort of the certification which we have done for our cycling going with new countries, and that's yielding this kind of performance? So, what is driving the sudden change, I mean, from this one? I think everything, everything.
Many geographies are now seeing a lot of investment coming in, and supply chain also getting stretched. So, that's creating an additional opportunity. And definitely, in many cases, it is the certification which we are working for last one year are also yielding results.
Since our last question from the competitive intensity, we are now seeing Chinese states coming in. Some of the other domestic players are tying up with some foreign partners and planning to enter into HVDC. And I think 400 KV plus, below that, we are seeing huge competition now. So how do you see the competitive intensity panning on from here? Are you seeing the pricing now cracking down? So any color on that will be helpful for the future others.
Sorry, after we have won Balmer, there has been no HVDC tender, so we don't know that, so whatever strategy you are talking about, Chinese tying up with this, that, everything, so that is not yet seen in the market. There has been no tender consequently, so we cannot talk about competitive intensity as of now.
But regular transformers, though? I mean, your regular stuff, which are high-voltage transformers beyond HVDC, exploding HVDC, so how is the competitive intensity?
There's some slight pressure on the prices, yes, but very little.
Okay. Thank you, Nishudha Master.
Operator
Thank you. Next question is from the line of Umesh Rava 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 a parent for Trange Group. So, 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. And second, they are talking about growing Trench revenue potential in India through GE's commercial capabilities. So, and if I look at probably product offering by the 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. So, in your view, how synergies can play out? I mean, just a primary view.
So, thank you, Omish. 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. So, I think with a larger control over the supply chain, it's 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's a very positive development as far as India is concerned.
My second question is pertaining to the order that you received regarding pump storage hydro project. So, is this the same project which was awarded to other group company of G?
No, no. This is standalone transformer and GIS packages. So, this has nothing to do with other G entities. Yes.
Okay, understood. And 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 balance of plant, which in most of the cases is GIS. Yes. So, it's at the start of the project. People don't wait till, for example, one year or two years, because for transformers, etc., the time frame is also a bit higher. So, it's at the start of the project.
Got it. And on the StatCom site, if I look at probably order events, 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 Stratcom to start in India?
I will expect there is 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?
Mesh, there has been some forex loss, but it's all operational. And overall, I think the growth is in line with the revenue. So, nothing to worry about in terms of the overall impact on the period.
Got it, sir. Got it. Thank you. Thank you so much, and all the very best. Happy Diwali night.
Thank you. Happy Diwali to you.
Operator
Thank you. Next question is from the line of Amit Adwani from PL Capital. Please go ahead.
All right, sir. Thank you, and congrats for the strong performance. So, first question on, again, the gross margins. This quarter, gross margins has been quite resilient. I 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. Yeah, that is my first question, yeah.
Good evening, Amit. So, yes, you are right. We are sticking to our guidance because the investment 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. And in terms of gross margin, see, quarter-on-quarter 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, so 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.
Second, on this RPT order of 1,400, 1,500 crore in the U.S., what does it relate to? Is it a transformer order, data center order, any color on that? And second, also some color on the data center contribution or number in terms of order book related to data centers.
So, Amit, yes, it is related to data centers in the U.S., definitely, and it's 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.
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? So are we also maybe looking for related acquisitions or something like that? Or maybe there would be more investments for localization? And 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 than 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 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 1,100 crores, 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. And what's the utilization levels today?
Sir, put it as pretty high for most of the factories.
Thank you, sir. Thank you. All the best. Thanks.
Operator
Thank you. Next question is from the line of Rahul Gacharya from McQuarrie. Please go ahead.
Yeah. Hi. Good evening, and congratulations on a very strong Q2. So, 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? And, you know, I'm sorry, with the acquisition of Trench, the delivery timeline would shrink. And is there any sense that you can give us in terms of the shrinking of the timeline? And continuing with the same question, as of today, are all the bushings manufactured locally or you are sourcing it from outside? Yeah, that's the first question.
So, thank you, Rahul. First of all, I think what I said was that it's going to give a better control. But it doesn't mean that it is going to shrink, that trends 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. So I don't think that simply they would be ignoring those delivery commitments and start diverting all to internal GE factors. It's 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. So today it is getting imported, but in times to come, it's going to get localized. That's for sure. I think if we really look at 765 kV bushing lead times, that itself is more than 15 to 18 months. So the transformer delivery times, to manufacture a transformer, it will take either what, three to four months only. But then the raw material lead times are pretty high. So, that's what gets defined, the manufacturing timelines.
But any timeline, you know, one and a half years, two years, you know, 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. So, my second question is on the data center side now. I mean, all major global companies are focusing on data center, including GE Varnova. So, 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, 300 megawatt data centers which are there, which is mostly operating at about 220 kV. So, the time is not that great, but once a larger size data centers will be coming, then it will be 450 and 765 kg. So, there, there will be a significant uptick of the time which is going to happen.
Okay. Sir, and my last question is on this HVDC and StatCom. You all are manufacturing walls over here. So, how much of HVDC will be actually localized? Anywhere to put a number, you know, 50% or 70% of HVDC value will be localized.
See, there's a difference in how we think of localization and what the government formula talks about localization. So I'll 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. So, in a way, if you talk in a general sense, then 100% transformer is localized because, but for example, you look at CRGO. So, CRGO is going to be imported. So, the government doesn't count it as a localized part. For example, oil. So, 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. So, 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, that is, we are manufacturing here, controls we are manufacturing here. So, the complete engineering solution, because we have a back-end engineering center for HODC in India. So, it's like mostly an India-dependent or India supply chain story, but then there's a difference how government monitors or captures the information.
Okay, so whatever is possible, you are already doing it.
Yeah, but then what happens is, for example, tomorrow, So, when we will start manufacturing, so our wall factory is going to get commissioned, and then when we will start manufacturing terrestrial walls, then we will go for individual component-wise. So, for example, gas-insulated studio, when we opened the factory in 2009, everything was coming from outside. But then what we did was we took component by component, so certain things we went, we got it developed. So when the supply chain got stabilized in India, so 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. So when we localize, for example, Thyristor wall, 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, it could be an automobile industry, it could be another industry as well. So, we work with those industries. So, it's a journey. It's not something like that. In one shot, you do it at 100% or 0%. It is like a journey.
Okay. So, thank you very much and all the very best for the second half.
Operator
Thank you. Next question is from the line of Aditya Vikram from DB Securities Private Limited. Please go ahead.
So, hi, sir. Good evening. Just wanted to check quickly upon a few things. First one, even though we have achieved the higher end of the guidance, EBITDA, right, 27 plus percentage, are we going to sustain it at this level for the next two quarters?
So, for the entire year, we will maintain our guidance of mid-20s EBITDA.
Okay, okay. And the second question I have is this, the project which we took from PowerGrid, the Barmer project, right? Will that have any negative impact on our EBITDA margin?
The order is going to be executed mainly in 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 HPTC orders, significant one, in this financial aid.
Okay, and 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?
No, as I said, the order was not booked because we took the approval and customer put the project on hold. It's not a part of our backlog.
Okay. And are we sensing, considering all the, are we sensing some cancellations of order from the data center side or anything? Have we encountered any such queries from our existing customers?
So, we don't have any data center backlog, anything different.
No, we have a data center backlog, but there is no sense of any cancellation or anything. This is the news to me, what you're talking about.
Yeah, okay, okay. That helps, sir. Thanks, thanks very much for clarifying. Appreciate it. That's all from my side.
Operator
Thank you. Next question is from the line of Paisan Bansun from MBJ Investment.
Yeah, my question is around AI. We are hearing nowadays that AI companies are not getting funding and going slow on their expansion. So, are you seeing any kind of impact because of this?
So, Mr. Basant, a large part of our order is basically coming from the transmission utilities or the TBCB segment, which is the TBCB industry and these segments. So, India, for example, if you really look in many years, The installed capacity of data centers close to about 1.5 gigawatts, which is very small. In fact, by 2030 also, it is expected to go up to 8 to 10 gigawatts. So, not very significant as comparison to U.S. market and other places as well. So, at least in India, we don't see a significant challenge in terms of these companies' capacity to raise capital and put data centers for AI.
Mm-hmm. So, you are not seeing any kind of demand pressure from, you know, that side. Am I right?
No. When the large data centers will start coming in, there will definitely be pressures in terms of because 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.
Operator
Thank you. Next question is from the line of Suresh Maluk from Keturaman. Please go ahead.
Hello, sir. Sir, in January 2026, we had taken a RPT approval for 3000 crores, which you mentioned last quarter that it was on hold. So, what is the current status on that project, sir?
So, 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. So, that was on buy side which has been executed. The other order, two orders for which we have taken approval, mainly from the sales side or to get the export order from the customer, we have already given details in the presentation. One of the order is on hold and the other one is active.
Right, right. So, of the 3,000 crores, large portion was for importing components for activity.
Yes, for the January one.
Got it. All right. Thank you. Thank you.
Operator
Next question is from the line of Vijay Bhassan from Incred Capital. Please go ahead.
Hi, I just have two quick questions. One, do you expect gross margins to cool off from the current 55% to 57% levels once the large HPDC projects sort of comes into execution starting, let's see, next year? Assuming that the current revenue mixes more steward towards products than it is for projects.
So, good evening, Vijay. First, a clarification that the gross margin is not around 55%. It's 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's significant part will start coming from FI 28 onwards. Even in the next year's next financial year, we don't expect significant HVDC contribution. We have maintained mid-26 guidance for this financial year. We don't share long-range guidance, which include HVDC execution over the next 3-5-year cycle. We'll communicate in the due course.
Just a follow-up to it, can we say that the current gross margin levels, you know, possibly can hold for the next one to two years despite competition coming up or can it actually get better from here on?
So we don't 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. And also, we have significant operating leverage benefit that we can avail. So, we have already shared guidance for this financial year, and we are actually exhibiting well in the first half. We'll communicate the expectation for the next year in due course of time. As of today, we don't actually share the long-range guidance.
Sure. Just lastly, how much would be, let's say, the data centers mix in your backlog right now?
It's a very small percentage, Vijay. It's mostly a few products and two green TKV and segment and grid automation.
So, fair. Okay. No, thank you.
Operator
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, you know, power transformers and switch gears that are lined up in the next two, three years in the country. Do you think, and this is a question for industry, maybe not particularly for Jeevan Nova's profitability, because it'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 CY27 ordering, will be very, very different vis-a-vis what we have seen in the last two years. That's my first question for the domestic market.
I think there's a lot of capacity expansions, what people have announced. So, if you hear them, what they have been saying, so they are putting up capacity mostly for the export market, not for the domestic market. And if they follow what they are saying, then I don't see too much pressure coming on the domestic market prices.
Okay, because qualifications at 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. So, that's why I have that question.
But there's a large capacity expansion happening mostly on the transformer side, but not on so much on the studio side.
Okay, good point. And second question is, when GE, Vanover, T&D, India exports to US, Europe, and the MENA region, you know, you also have a lot of domestic companies, large ones, who are starting to get capacity orders. Which part of, and you can directly give this answer, sir, what part of your business today is vulnerable stroke in direct competition to, say, four or five large exporters, you know, 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, etc.
So, normally I have not seen us fighting too much in the market globally with Indian companies. So, 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 of what impact it can have. But today, that is not the scenario. So 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.
Sure, sure. Third and last question, quick one is, yeah, and it's basically, do you think the capacity expansion, so we've seen Korean companies expanding capacities, you know, a lot of, you know, investors raise questions about the conservative behavior, you know, in expanding. Do you think, you know, even Zeev or Novati in India, in their CAPEX, in your 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, the 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 the US. So, we cannot compare them with G. Varanova T&D India's CapEx. And 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.
And I'll 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 a very significant expansion. So the need of CapEx versus other players is lower to produce or generate similar or higher volume.
Sure, sure. So anyways, I meant Korean companies expanding in Korea for US and Korea. But, yeah, thank you, and good luck. Thank you.
Operator
Thank you. Next question is from the line of Aretra Banerjee from Namura. Please go ahead.
Hi, sir. Kong Yatsuna, very good set of members in this quarter, and thanks for the opportunity. Sir, I just wanted to ask that for the upcoming three ATVC projects, two in Bomb Man, one in Nafadi, what is the kind of timelines you're expecting in terms of, you know, Tendering and awarding, if you could provide some clarity on that, please.
I think the project has not yet been cleared by NCT and all, so it's going to happen in 27 only, next year.
Understood. So my second question is regarding this, you know, discussion regarding the alpha high voltage 1150 kV corridor. So, if that actually practifies, what kind of tailwinds you expect regarding a TAM and demand opportunity going forward?
So, that will also depend upon how many projects come in a year. So, 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'll be able to give concrete numbers on the TAM about the scope, that how many bays are there, how many transformers are required. So, it's still a bit away.
Understood. And any idea on who might be of competitors in this segment, if it comes along?
1150 KV? Yeah. So, for different projects, for different products, it will be different competition. For instrument transformer, it will be different. For transformer, it will be different. It will be different for different products.
And that's it. Thanks for answering my questions, and all the best for the coming quarters, and I'm happy they were in advance. Thank you, Aritra.
Operator
Thank you. Next question is from the line of Shiram Kapoor from Japanese. Please go ahead.
Hi, sir. Thanks for the opportunity. I just had a quick question on the HVDC bit. So, could you, you know, somehow quantify typically of an HVDC project, how much would be, you know, let's say a 20,000-core HVDC project, how much is typically the equipment component or the component that's addressable by you?
So, that changes upon the line length and other factors as well. Because, for example, one HVDC might have 800 kilometers of line, and the second HVDC might have 1,200 kilometers or 1,500 kilometers of line. So, the composition in terms of percentage will change, but you can take it somewhere around, say, probably 40 to 60, 65 percent.
Understood, sir. And just secondly, you mentioned that, you know, obviously in the last three, four months, the TBCP pipeline has picked up substantially. So, I mean, I think by my calculations, close to about $1,000,000 of TBCP projects have been tended out so far. So, you know, how much of this would you say could still be up for ordering on the equipment side? You know, typically once a project is awarded to the developer, how long is it before it's awarded to the equipment supplier? That's one. And just continuing on the TBCB projects is, you know, 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 intrastate. So how do you see the pipeline shaping up in intrastate as well?
So, Shuram, 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 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 the first thing. And second, I think what you asked about, so normally earlier what was happening that TBCV projects, the delivery timelines were like 18 to 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. So even after the developer wins the project, they take some time to decide on that. So, there is a float which has got created, which now rests with developers. So, I will say it is difficult to now make a prediction that whatever a lacrored PPCB 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, could be, you know, given that the timeline has stretched, it could be about six months or more, or could it be less than six months typically after?
Normally, it would be like three to five months the whole product would get awarded after the developer will win the job.
This as per the latest longer timeline, as you're saying, right? In the current scenario, it could be three to five months, typically.
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.
Operator
Thank you. Next question is from the line of Amitabh Singh from 361 Capital. Please go ahead.
Yes, thank you so much for taking the question. My first question is on the exports. So, I think as of FY26 and our exports, all the books stood at around 1,700 crores. And if I see the first half execution, we have already executed around 1,200 crores of exports. So, is it fair to say that it's 4-5 short cycle orders compared to domestic, any commentary on that?
Most of the flow orders or orders which are spread across multiple geographies, they are short cycle. But in past, we did book certain projects which are long cycle of 3 to 5 years. So, the large projects generally have a longer delivery time period, the material related party orders that we take. And the rest of the flow business is a short-cycle one.
Correct. So roughly the new order that also we have been taking in the first half, they'll also be short-cycle products, I have to say. Yes, absolutely. Got it. Got it. And so the next question is on the IGBT technology. So our South Old Park project is based on the VSC technology and we have a tie-up with Mitsubishi Electric for So, can we say that that HVDC order will have a relatively lower gross margin compared to LCC-HVDC given that we'll be sourcing some other components from Mitsubishi district, the main semiconductor technology?
So, for example, these IGBTs which we source from Mitsubishi or for that matter any other supplier as well. So, that's the standard model which we operate. So, that doesn't decide whether that's a component. For example, when we build a transformer CRG, obviously, we source outside from an outside company. So, similarly, in an HPDC, IGBTs are sourced from outside, but the complete valve assembly is done by us. So, the design and manufacturing of the valve, including that IGBT, is done by us. Yes. So, buying IGBT from Mitsubishi has no role in defining what gross margin the project will operate.
Got it, so got it. And similarly for LCC, like we manufacture the thrifter valves well, but do we also manufacture the thrifters or that is also being sourced from international players or from a parent?
So, we source the thyristors from outside like we source IGBT, But the thyristor valve as a unit is not in fact.
Got it, sir, got it. Just thank you for taking my question, sir. Thank you.
Operator
Thank you. Next question is from the line of Jainam Hora from Saltoro Investments. Please go ahead.
Congratulations on the 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. And particularly right now, given the kind of demand-supply imbalance that is there, is there a sort of a different approach than vis-a-vis what you've seen probably five years or so back? That would be very helpful to me.
So, I will not be able to comment that what was happening five years back, but definitely if you want to export anything to European customers 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 whether you are working for a utility or whether you are working for a data center. If you are If you're 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 requirements. But when you go to utilities, they are pretty strict about following the technical requirements, etc. So 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. And in terms of the biggest bottleneck right now, what is it that the numbers are solid, the inflow is there, the L1 bid is also there. So I'm just trying to understand right now what is the biggest bottleneck that the company is facing as it tends to continue to forge forward with the growth ambitions that it has. Is it supply chain? Is it the skilled workforce? If you can put some color on that, it will be possible.
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. So, yes, supply chain today is one of the things which can have a very severe impact on the operations.
So, that would be the number one risk in your opinion. Okay. And last question is on the GEC-free accrual that recently the government gave. While you did provide some perspective on the intrastate opportunity, from a broader lens, how big the opportunity or time opens up for you? While it may be hard to give color from a yearly perspective, but from a mid-term perspective I think if
you would have seen that recently we did an investor meet in Mumbai and at that point of time we had uploaded the presentation. So our guidance on the market remains the same. So a large part of the GC3 corridor is anyhow covered under the electricity plan which has been issued by CES.
Okay, understood. Thank you. Congratulations. Thank you.
Operator
Thank you. Next question is from the line of Samir Thakur from Ambit Capital. Please go ahead.
Hi, thanks. Thanks for taking my question again. I just have one. So, you mentioned that on pricing there is slight pressure. So, just wanted to check, is that on new orders? Because the copper prices have increased more than 50% in one year. And I thought the order pricing should have, at least, should have improved by at least 15% or so, just to mitigate that impact. So, I just wanted to check on this part.
I was talking, I was talking, taking into account everything, then there is a slight pressure. Okay, okay, got it.
And that's clear. And just, just one, if I can speak to you. You had mentioned in Arielle calls that the base order is like 70 to 80 billion for the year. So, is that in that or do you want to increase the target for the performance or experience? So, we would like to keep it. Okay, okay. Thank you. Thank you. That was awesome.
Operator
Thank you. Next question is from the line of Parekhshit Kanpaar from HTSC Securities. Please go ahead.
Thanks for the follow-up. Just to draw attention in the past, I think Shishi used to earlier tell that export orders have almost 500 basis points better margins. So, a few quarters have passed by. So, any change in the spread? Are the export orders more profitable now versus domestic orders? Any color on that?
So, prediction, broadly, the trend remains the same. Export orders do remain at the higher margin than the domestic ones.
And is it right to assume that the current order book of $20,000 plus will be carrying the $20,000 margin, excluding HVDCs right now, everyone?
I think there have been few questions in the past in this call as well regarding gross margin EBITDA and so on. And now 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 the last three, four years. And if you look at our backlog, 214 billion and plus HVDC L1 position, we have a very strong order book already with us. With this, going forward in the next three, four years, we can continue to similarly grow at more than 30%. With that kind of revenue execution, while, you know, we are expending at our factories, it's only $10 billion of capex. So 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 takes in, and the absolute earning per share will grow significantly with the same amount of capital. So the return on equity remains high for the future period, and the EPS growth will continue with the increase in the revenue. So 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, etc.
Understood. So, just one bookkeeping question, is this what have you seen employee cost going up? Any one-off there, or is it more of a trend now? Is there any height, any one-off there?
Employee cost has been growing, but it is less than the revenue rate. So, we, in order to execute our backlog and grow revenue at 30% plus year on year, We have been adding people and also you would appreciate there is inflation. So, obviously, there are increments only. So, those are the two normal business operations sectors. Nothing exceptional in this number.
Last question to see some research. Earlier, we used to see bulk ordering from power. There are existing couple of packages. We have one, large ones like I think upwards of 600 to 1000 per hour. So, any future pipeline there which you see building out? That will be the last question.
Yeah, the power grid normally regularly comes out with tenders, but that's based on the TBCP pipeline only.
Okay. Okay, sir. Thank you and happy festivities. Looking forward to coming to you. Thank you. Same to you.
Operator
Thank you. Next question is from the line of Aditya Vikram from DB Securities. Please go ahead.
Hi, sir. One last question. So, 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?
So, thank you for your question. And as I mentioned earlier that quarter-on-quarter gross margins do vary. Overall, H1 performance and that variation is because of multiple factors could be the operational execution, could be the mix optimistic 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 cross margin in the last financial year as well. So it's in line with the last financial year. And 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 industry-leading company in terms of the performance of the P&L and profitability.
And just, I completely understand what you're 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're sticking to your mid-20s EBITDA margin, right?
So, again, the mid-20s, Ibera, that we normally guide, is going to sustain, but not commenting on the gross margin, because as a fact, different components within that keep changing.
No, no, 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.
Operator
Next question is from the line of Mohit Kumar from ICSA Securities. Please go ahead.
Yeah, thanks for the opportunity. Again, my question I have on the push-off in the ACC expansion. If you are correctly, the NCT has approved this 30 million, 3,000 core project. Have you heard anything on the, I think that the significant part was done by the GE? Have you heard anything on the power grid about this project?
No, I have not. Actually, your voice was cracking, so I was not able to.
No, my question was on the Puswali expansion. Puswali HVDC expansion. I think the order has been given to Power Grid, and we already implemented the phase one. So phase two, I think we are the, we will have substantial role to play. My question is, have we heard anything about Power Grid? And the sort of project cost size was 3,000 crores, yeah.
So, I think Fasali 1 was executed by us somewhere in the year 2000, if I'm not mistaken, 2003. It's like about more than 25 years, and it has outlived its life. So, the refurbishment of that project order has been given to PowerGrid. So, PowerGrid has launched certain discussions with us, but there is nothing concrete on that.
Understood. Understood. Thank you.
Operator
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.
Operator
Thank you very much. On behalf of G.E. Vernova, T.M.D. Indian Olympics, that concludes this conference. Thank you all for joining us today, and you may now disconnect your line.
