GE T&D India Shares Plunge: Promoter Group Intends to Sell Minority Stake to Simplify Its Holding Structure

Introduction

Shares of GE T&D India Ltd. experienced a sharp decline on Wednesday, August 21, 2024, as the stock was locked in a 5% lower circuit at Rs 1,717.5. This sudden drop follows the company’s announcement that its promoters are contemplating the sale of a minority stake to streamline their holding structure. The development has sparked concern among investors, leading to a sell-off in the stock after three consecutive days of gains.

Promoter Group’s Reassessment

On August 20, 2024, GE T&D India Ltd. made a filing announcing that its promoter group, comprising GE Grid Alliance B.V., which holds a 6.46% stake, and Grid Equipment Private Ltd., which holds a significant 68.54% stake, is reassessing its shareholding structure. The company clarified that while the promoters are evaluating the possibility of a minority stake sale, they have expressed a strong intention to continue as the majority shareholder block.

The filing emphasized that this announcement is an expression of intent and not a binding commitment, indicating that the final decision on the stake sale is yet to be made. Investors and market participants are eagerly awaiting further details, which are expected once the promoters complete their assessment.

Impact on Stock Performance

The news of a potential minority stake sale has triggered a sell-off, leading to a 5% decline in the stock price. This comes after the stock had been on a remarkable upward trajectory, tripling in value so far in 2024 with a gain of 224%. Over the past six months, GE T&D India shares have surged by over 116%, reflecting strong investor confidence in the company’s growth prospects.

However, the uncertainty surrounding the promoter group’s intentions has introduced volatility, causing the stock to reverse its recent gains.

Strong Financial Performance in Q1 FY25

Despite the current stock decline, GE T&D India reported robust financial results for the June quarter of 2024. The company posted a nearly five-fold increase in net profit, which soared to Rs 134.5 crore compared to Rs 28.2 crore in the same period last year. This impressive growth in profitability was driven by a 34% year-on-year increase in revenue, which reached Rs 958 crore, up from Rs 717.5 crore in the previous year.

Moreover, the company’s Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) surged over threefold to Rs 182.2 crore, reflecting a significant improvement in operational efficiency. The EBITDA margin also expanded substantially, climbing to 19% from 7.1% in the corresponding quarter last year.