Power Stock Shifting from EPC Projects to a High-Margin Power Services Business to Keep on Your Radar

Synopsis: A power equipment manufacturer has quietly walked away from low-margin EPC contracts to bet everything on services. With third-party order growth nearly doubling, overall service bookings up sharply, and a major balance sheet cleanup underway, the company is chasing profitability and cash flow rather than order-book size, a shift that could reshape its earnings profile in the coming years.

For decades, power equipment manufacturers built their reputation on winning large EPC contract projects that came with long execution timelines, thin margins, and heavy working capital requirements. One such company has now taken a decisive step away from that model, freezing its commercial EPC strategy altogether to focus purely on high-margin services. The move signals a broader shift in how the business wants to be valued: not by order-book size, but by profitability and cash generation.

With a market capitalization of  Rs. 5,536 crore, the shares of GE Power India Limited were trading at around Rs. 824 per share, with a 52-week range of Rs. 1,084 to Rs. 270.90. It is trading at a P/E of approximately 16x.

A Complete Pivot Toward High-Margin Services

The company’s commercial strategy has been restructured to concentrate exclusively on its core services business. Unlike EPC contracts, which tie up capital for years before yielding returns, service contracts typically carry higher margins, shorter execution cycles, and faster cash conversion. This structural shift is central to the company’s turnaround story, and the numbers back it up. EBITDA swung from a loss of Rs. 251 crore in FY23 to a positive Rs. 277 crore in FY26, while net worth rose from Rs. 227 crore to Rs. 483 crore over the same period. 

Market capitalization has climbed even more sharply, growing from Rs. 699 crore in March 2023 to roughly Rs.6,250 crore by June 2026, reflecting how the market has re-rated the business as its financial profile has improved.

Expanding Beyond Its Own Installed Base

Historically, the company’s services business was largely confined to maintaining equipment it had originally supplied. As part of its updated strategy. A key pillar of the new strategy is penetrating the third-party fleet servicing power plants running on equipment from other original equipment manufacturers (referred to as oOEM). This effectively multiplies the size of the market the company can address, since it’s no longer restricted to plants carrying its own legacy installations.

Third-Party Orders Are Growing Fast

The results are already visible. Orders from third-party power plants grew from around Rs.162 crore to Rs.320 crore in FY26, a jump of nearly 1.9x year-on-year. This is a meaningful signal; it shows that customers running non-GE-origin equipment are willing to trust the company’s service capabilities, validating the strategic pivot beyond its traditional installed base.

Core Services Momentum Continues to Build

Zooming out, the broader Core Services business, combining both OEM and third-party orders, grew 34% year-on-year, with total order bookings reaching Rs. 734 crore in FY26, up from Rs.299 crore just five years earlier in FY22. That works out to a compound annual growth rate of roughly 25% over the period. Management has flagged continued focus on emergency repair services and faster part availability as levers to sustain this growth, positioning services as the primary engine for future profitability and cash flow.

Cash Generation Over Revenue Chasing

Perhaps the more telling part of this transformation is the company’s explicit prioritization of cash-accretive deals over large order books. This isn’t just messaging; the balance sheet reflects it. Bank balance jumped from a negative Rs. 66 crore in FY23 to Rs. 880 crore in FY26, while outstanding bonds were more than halved, falling from Rs. 1,956 crore to Rs. 764 crore over the same window. 

A one-time gain from the Hydro & Gas slump sale in FY25 added Rs.295 crore to EBITDA, and a settlement with BHEL contributed Rs. 116 crore to the P&L and Rs.343 crore in cash inflow, along with the release of Rs.423 crore in bank guarantee exposure,  collectively strengthening liquidity and reducing contingent risk. Over the past two years, total bank guarantee exposure has come down by Rs.1,364 crore, and the company has also announced a dividend for the year.

The credit rating trajectory tells a similar story. ICRA upgraded the company’s long-term rating from BBB(Negative) in FY25 to BBB+(Stable) in FY26, reflecting the market’s growing confidence in the turnaround.

Exiting the Underutilised Manufacturing Asset

As part of its portfolio simplification strategy, the company is demerging its Durgapur manufacturing facility, a 661-acre unit in West Bengal that manufactures power boiler components, pressure vessels, piping, and coal mills into JSW Energy Ltd. The facility had been operating significantly below capacity, reporting average annual losses of around Rs.27 crore between 2023 and 2025.

Under the approved scheme, shareholders will receive 10 fully paid-up equity shares of JSW Energy for every 139 shares held in the company, while their existing shareholding in the parent company will remain unchanged, allowing investors to participate in both entities without any dilution. Management has also assured uninterrupted manufacturing support for its core services business through a five-year manufacturing services agreement with JSW Energy, while simultaneously developing an independent supply chain to ensure long-term operational resilience.

International Markets Add Another Layer

Beyond domestic third-party expansion, the company has also broadened its geographic footprint, establishing a presence in Saudi Arabia, Turkey, Australia, the UAE, Malaysia, Indonesia, and Morocco. These international service contracts provide an additional growth avenue that isn’t dependent solely on the health of the domestic thermal power sector.

Why This Matters For Investors

Taken together, these moves suggest the company is deliberately reshaping itself into a leaner, services-led, asset-light business rather than a traditional heavy-EPC contractor. Exiting the underutilized Durgapur asset while doubling down on services removes a persistent drag on earnings and sharpens management’s focus. 

The underlying thesis is straightforward: services businesses tend to command better margins, require less capital, and generate steadier cash flows than project-based EPC or manufacturing-heavy work. If the current trajectory holds, this could translate into a structurally different and potentially more resilient earnings profile going forward.

Investor Verdict

The shift toward a services-first model, backed by a strengthening balance sheet, falling debt, and an improving credit profile, suggests the company is positioning for steadier, higher-quality earnings ahead. That said, execution on third-party penetration, successful completion of the demerger, and international expansion will all be key to sustaining this momentum. Investors would do well to track order-book quality alongside cash flow trends in the coming quarters.

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