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T&D demand outlook remains strong

Hitachi Energy in its analyst day highlighted strong opportunities in the transmission space, driven by continued additions to increase renewable power capacity, data center, and electrification driven by mobility segment, BESS, STATCOM and another 10- 15 projects on HVDC to be executed by FY35. The company has been doing capex ahead of demand and has so far announced capex of INR40b, which will take its capacity to 60- 70GVA in the next 2-3 years. It aims to increase the share of exports and services, which will further be a margin driver. The company has a strong product portfolio to cater to technologically advanced requirements. We believe that domestic ordering will start ramping up after few quarters once incremental capacities from various players are commissioned, while the new pipeline of HVDC projects of 66GW will take 2-3 years to materialize. The stock is currently trading at 110x/75x/54x P/E on FY27/28/29E. We maintain Neutral rating on the stock and would look for better price points to enter.

Demand environment to stay strong for long term

Hitachi Energy highlighted a strong domestic opportunity for power transformers over the next couple of years, driven by demand coming from 1) increase in non-fossil power to 900GW by FY26 and BESS and PSP capacity of 174GW by 2035, along with incremental thermal and nuclear power capacity addition; 2) corresponding investments of INR8t for setting up required transmission network; 3) increase in data centre capacity to 14GW by 2030 driving investments worth INR8t; 4) electrification from mobility segment such as railways, metros, EV charging network; 5) increase in BESS capacity to 80GW by FY36; and 6) shift toward incremental HVDC links, UHVDC and 1200kV lines by 2035.

More projects on the anvil on HVDC, UHVDC and 1200kV lines by 2035

As per CEA’s revised pipeline, 66GW of HVDC links are under planning and are to be executed by FY25. We expect pipeline of these projects to start framing up after 2-3 years. It talked about maintaining market share similar to the recent HVDC project bidding in these new links. Along with this, the recent CEA amendment to existing pipeline of projects to include 1,150kV transmission lines is also positive for Hitachi Energy. It has developed, manufactured and tested 1200kV power transformer and has capabilities for UHVDC too.

Strong product portfolio

The company’s product portfolio reflects its positioning as a diversified power technology player with capabilities spanning equipment, system integration, automation, and lifecycle services, allowing it to address a wider share of customer requirements across transmission and grid infrastructure projects. The company is increasingly focusing on solutions linked to grid modernization, renewable energy integration, and digital monitoring, which are becoming key investment areas globally as utilities upgrade aging networks and improve grid stability. In addition, its strong services and asset management offerings enhance customer stickiness and provide a relatively stable stream of recurring business through maintenance, upgrades, and efficiency improvement projects.

Capex to increase the capacity to nearly 60-70GVA

Hitachi Energy has invested in capex ahead of demand and has so far announced capex of INR40b (INR20b announced in Oct,24 and INR20b accelerated capex announced in May’26). This capex is directed toward increasing HVDC control and valve, expanding HVDC facility in Chennai, adding greenfield transformer capacity of up to 30-40GVA and putting up lines for power quality. Entire capex will take its overall capacity to nearly 60-70GVA and the company has confirmed pipeline of projects, which are driving this capex. This incremental capex can potentially add INR250-280b of incremental revenue at peak utilization, which can be achieved by FY30/31.

Diversifying growth through exports and services

The company continues to strengthen its international presence through its threepronged export strategy while selectively participating in HVDC-related bids across overseas markets where it already has an established footprint and execution capabilities. In parallel, the company is scaling up its services business, with servicerelated order inflows reaching ~INR10b in FY26 and a medium-term target to expand this to ~INR20b. We expect the increase in exports and services to boost margins.

Building capabilities across advanced grid technologies

The company has built technological capabilities across grid stability solutions, HVDC transmission and advanced power management systems for next-generation energy networks. Its enhanced STATCOM solutions integrate power electronics and storage technologies to support reactive power compensation, inertia support and grid strength in renewable-heavy systems. In HVDC, capabilities span both LCC and VSC technologies, supported by expertise in in-house semiconductors, capacitors, control algorithms and compact station design for complex transmission applications. The company is also positioned to address emerging AI data center requirements, where highly dynamic and unpredictable load behavior is increasing the need for advanced power quality management and energy storage solutions.

Financial outlook and valuation

We expect revenue/EBITDA/PAT CAGR of 32%/47%/43% over FY26-28E. The stock is currently trading at 110x/75x/54x P/E on FY27/28/29 earnings. We reiterate our Neutral rating with a TP of INR32,000 based on 60x Jun’28E earnings.

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