Why Genus Power Share Price is Falling

Recently, on a call with Equitymaster's editors, valuations guru Rahul Shah rightly said that Mr Market needed a trigger point to decide its next course of action and it found that in the form of quarterly results.

Indeed, a correction was expected in stocks that saw a boom.

The post results volatility has come as a shock to many traders and investors.

Even a minor missed estimate or delay in a project, is resulting in a sharp fall in stock prices.

Adding to the list of stocks that crashed after declaring their Q3 results is one of the largest players in the smart metering solutions industry.

Genus Power share price fell 10% to Rs 264 and was locked in the lower circuit band.

In the past five days, the stock price has fallen around 20%.

Weak Q3 Results

The primary reason why shares have come under pressure is because the company posted weak results for the quarter ended December 2023.

Despite a surge in revenue to Rs 2.6 bn, Genus Power posted a net loss of Rs 99 million.

This compares with a profit of Rs 492 million in the September 2023 quarter and Rs 218 million in the year ago period.

This loss could be attributed to the company creating a new special purpose vehicle (SPV).

Here's what we believe could be happening... you see, when the company started receiving orders on top of orders on top of orders, even win was awarded with an upper circuit. The stock rallied in no time and delivered multibagger returns.

Similarly, what's happening now is even a minor missed estimate is resulting in a sharp fall in stock price.

We could even see this happening with few other stocks like MTAR Technologies.

What Next?

All eyes would now be on the management commentary (earnings call on 15 Feb), which could give investors clues about what they could expect in the coming quarters.

As per last earnings call, the management did say they're expecting major smart meter revenue to contribute from the last quarter of financial year 2024.

The full year guidance for the ongoing fiscal is at Rs 12 billion (bn).

In its latest earnings presentation, the company has shown a detailed breakup of its 1st expansion in smart meter segment.

The capacity will be at 39 lakh smart meters and meet the demand for Northeast segment.

Note that Genus Power shares have seen a massive breakout on charts after a languishing performance over the years.

And one probable trigger for this is the smart metering theme picking up.

Genus Power is among the largest players in the metering solutions industry, capturing approximately 27% of the market share. And it claims to be the largest player in smart metering space with over 70% market share.

It has an order book of over Rs 202 bn as of 31 December 2023.

As several State Electricity Boards (SEBs) initiate the process of inviting bids for smart meter deployment, the company could see more orders in the coming months.

How Genus Power Share Price has Performed Recently

In the past 5 days, Genus Power share price has fallen 20%.

Genus Power crashed 10% in early trade today following the results announcement post market hours yesterday.

Genus Power has a 52-week high of Rs 344 touched on 8 February 2024 and a 52-week low of Rs 79 touched on 28 March 2023.

In the past one year, Genus Power share price has rallied over 200%.

Here's a table comparing Genus Power with its peers -

Comparative Analysis

Company	Genus Power	KPI Green	Advait Infratech	Jyoti CNC
ROE (%)	3.1	53.3	19.9	24.4
ROCE (%)	5.8	29.7	27.1	13.5
Latest EPS (Rs)	2.7	33.4	7.9	0.7
TTM PE (x)	107.9	57.4	164.6	876.9
TTM Price to book (x)	5.3	10.3	22.2	11.3
Dividend yield (%)	0.3	0.2	0.0	0.0
Industry PE	48.9
Industry PB	5.5

Data Source: Ace Equity

About Genus Power

Genus Power Infrastructures is a part of the Kailash Group. It is engaged in manufacturing and providing metering and metering solutions.

The company is currently undergoing major restructuring through the amalgamation of Sansar Infrastructure, Star Vanijya and Sunima Trading (100% subsidiary of Genus Prime) with Genus Prime Infra.

Further, Genus Power's investment business undertaking was demerged into two listed entities Genus Power and Genus Prime Infra.

To know more, check out Genus Power's financial factsheet and its latest quarterly results.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...