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What is the story about?
Brokerage firm Elara Capital initiated coverage on three industrial stocks, Ge Vernova T&D Ltd., Siemens Energy India Ltd., and Hitachi Energy India Ltd. on Wednesday, October 14.
It has initiated coverage with a "buy" recommendation on GE Vernova T&D India Ltd. with a target price of ₹5,547 per share (32% upside), an "accumulate" rating on Siemens Energy India Ltd. with a target price of ₹3,699 (18.4% upside) and a "sell" recommendation on Hitachi Energy India Ltd. with a target price of ₹29,190 per share (3.5% downside). GE Vernova T&D India is also Elara's top pick within the space.
Elara Capital in its note on industrials said the transmission and distribution (T&D) equipment sector is entering its mid-cycle, with data centres, battery energy storage system (BESS), renewables and electrification broadening demand beyond conventional transmission.
The note further added that India's ₹15 lakh crore transmission opportunity through the financial year 2026 and $606 billion global grid investment by the calendar year 2029 offer strong visibility for equipment manufacturers. Also, India's cost competitiveness and expanding extra high voltage (EHV) capability create a structural export opportunity.
Easing land/right of way (RoW) and project-readiness concerns with rising equipment capacity should support a recovery in transmission-based competitive bidding (TBCB) ordering and improve conversion from awarded projects into equipment orders and execution, Elara Capital said.
Power demand, renewables to drive next transmission investment cycle
Elara Capital, citing the CEA, said it expects India's power demand compound annual growth rate (CAGR) to be more than 5% over FY27-36, led by industrialisation, electrification and emerging loads such as data centres, EVs and green hydrogen.
The brokerage estimates around ₹2.7 lakh crore data centre investment by FY39, ₹0.8 lakh crore BESS deployment through FY36 and ₹15 lakh crore transmission opportunity by FY36, to drive demand for transformers, switchgear, PCS and grid stability equipment, broading the T&D total addressable market (TAM) and extending the equipment cycle.
HVDC and RE evacuation to underpin TBCB upcycle
Elara Capital said in FY26, the TBCB awards slowed down due to land/RoW constraints, project readiness concerns and shortage in high voltage equipment capacity, compounded by stretched manufacturing and testing timelines.
These bottlenecks are now easing as projects secure clearances and additions in industry capacity improve EHV transformer and critical equipment availability, it said.
With renewable-evacuation, inter-regional and connectivity projects nearing execution, improving project readiness and equipment capacity, TBCB ordering should revive and conversion from awards to equipment orders and execution should accelerate, it added.
Structural export opportunity
Elara Capital said that as per the Kanohar Electricals DRHP, the global grid investment may rise to $606 billion by CY29, led by renewables, ageing, infrastructure, electrification, data centres and grid modernization. This creates a sizeable opportunity for the Indian transformer manufacturers, led by cost competitiveness, an established power equipment and expanding 400-768kV capability, Elara Capital said.
It added that the increasing global qualifications and India's improving manufacturing ecosystem should enable greater penetration across the US, Europe, West Asia, Africa and South East Asia.
Exports should be an added growth driver, with improving capacity utilization, operating leverage and geographic diversification.
T&D - Cycle strong, valuations diverge
Elara Capital said it sees a multi-year growth runway for T&D, led by expansion in the domestic grid, EHV/high voltage direct current (HVDC) investments, capacity additions and rising export opportunities.
However, with valuations already reflecting a meaningful part of the growth, it said it sees greater divergence at the stock level and favours companies where earnings can surprise via capacity ramp up, better execution and margin expansion.
What Are The Risks
Elara Capital said its initiation on the three industrial stocks reflect its assessment of relative earnings potential and valuation comfort.
The risks are delays in HVDC ordering, weaker global export demand and parent order flows and slower capacity expansion or localization, which could hinder order visibility, execution, margin and earnings growth, it added.
Stock reactions
Shares of GE Vernova T&D are trading little changed on Wednesday at ₹4,195.3, as are shares of Hitachi Energy India at ₹30,260. Siemens Energy India shares are down 0.3% on Wednesday at ₹3,115.
Also Read: Largecap Indian stocks look attractive after correction, says Kotak Institutional Equities
It has initiated coverage with a "buy" recommendation on GE Vernova T&D India Ltd. with a target price of ₹5,547 per share (32% upside), an "accumulate" rating on Siemens Energy India Ltd. with a target price of ₹3,699 (18.4% upside) and a "sell" recommendation on Hitachi Energy India Ltd. with a target price of ₹29,190 per share (3.5% downside). GE Vernova T&D India is also Elara's top pick within the space.
Elara Capital in its note on industrials said the transmission and distribution (T&D) equipment sector is entering its mid-cycle, with data centres, battery energy storage system (BESS), renewables and electrification broadening demand beyond conventional transmission.
The note further added that India's ₹15 lakh crore transmission opportunity through the financial year 2026 and $606 billion global grid investment by the calendar year 2029 offer strong visibility for equipment manufacturers. Also, India's cost competitiveness and expanding extra high voltage (EHV) capability create a structural export opportunity.
Easing land/right of way (RoW) and project-readiness concerns with rising equipment capacity should support a recovery in transmission-based competitive bidding (TBCB) ordering and improve conversion from awarded projects into equipment orders and execution, Elara Capital said.
Power demand, renewables to drive next transmission investment cycle
Elara Capital, citing the CEA, said it expects India's power demand compound annual growth rate (CAGR) to be more than 5% over FY27-36, led by industrialisation, electrification and emerging loads such as data centres, EVs and green hydrogen.
The brokerage estimates around ₹2.7 lakh crore data centre investment by FY39, ₹0.8 lakh crore BESS deployment through FY36 and ₹15 lakh crore transmission opportunity by FY36, to drive demand for transformers, switchgear, PCS and grid stability equipment, broading the T&D total addressable market (TAM) and extending the equipment cycle.
HVDC and RE evacuation to underpin TBCB upcycle
Elara Capital said in FY26, the TBCB awards slowed down due to land/RoW constraints, project readiness concerns and shortage in high voltage equipment capacity, compounded by stretched manufacturing and testing timelines.
These bottlenecks are now easing as projects secure clearances and additions in industry capacity improve EHV transformer and critical equipment availability, it said.
With renewable-evacuation, inter-regional and connectivity projects nearing execution, improving project readiness and equipment capacity, TBCB ordering should revive and conversion from awards to equipment orders and execution should accelerate, it added.
Structural export opportunity
Elara Capital said that as per the Kanohar Electricals DRHP, the global grid investment may rise to $606 billion by CY29, led by renewables, ageing, infrastructure, electrification, data centres and grid modernization. This creates a sizeable opportunity for the Indian transformer manufacturers, led by cost competitiveness, an established power equipment and expanding 400-768kV capability, Elara Capital said.
It added that the increasing global qualifications and India's improving manufacturing ecosystem should enable greater penetration across the US, Europe, West Asia, Africa and South East Asia.
Exports should be an added growth driver, with improving capacity utilization, operating leverage and geographic diversification.
T&D - Cycle strong, valuations diverge
Elara Capital said it sees a multi-year growth runway for T&D, led by expansion in the domestic grid, EHV/high voltage direct current (HVDC) investments, capacity additions and rising export opportunities.
However, with valuations already reflecting a meaningful part of the growth, it said it sees greater divergence at the stock level and favours companies where earnings can surprise via capacity ramp up, better execution and margin expansion.
What Are The Risks
Elara Capital said its initiation on the three industrial stocks reflect its assessment of relative earnings potential and valuation comfort.
The risks are delays in HVDC ordering, weaker global export demand and parent order flows and slower capacity expansion or localization, which could hinder order visibility, execution, margin and earnings growth, it added.
Stock reactions
Stock |
Buy |
Hold |
Sell |
|---|---|---|---|
GE Vernova T&D India |
20 |
3 |
1 |
Hitachi Energy India |
14 |
6 |
3 |
Siemens Energy India |
12 |
2 |
4 |
| Bloomberg | |||
Shares of GE Vernova T&D are trading little changed on Wednesday at ₹4,195.3, as are shares of Hitachi Energy India at ₹30,260. Siemens Energy India shares are down 0.3% on Wednesday at ₹3,115.
Also Read: Largecap Indian stocks look attractive after correction, says Kotak Institutional Equities
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