The brokerage also underscored that transformer manufacturers in India are benefiting from the rising share of HVDC projects, which require specialised, high-value converter transformers and reactors.(Pixabay)AI Quick ReadDomestic brokerage firm Motilal Oswal, in its latest report, has initiated coverage on select transmission and distribution (T&D) stocks, citing expanding capital expenditure, growing order books, and an increasing share of high-voltage direct current (HVDC) projects.
Apart from rising domestic demand, the brokerage highlighted a sharp increase in transformer demand in international markets, driven by renewable energy integration, data centre expansion, industrial electrification, electric vehicle (EV) charging infrastructure, and the urgent need to replace ageing infrastructure.
This has led to increased reliance on imports and higher transformer prices, with domestic manufacturers expected to capitalise on the opportunity.
Against this backdrop, the brokerage has identified companies that are benefiting from incremental capex, revenue growth, and margin improvement and expects them to continue delivering strong earnings growth over FY25–28.
It has assigned a ‘Buy’ rating to CG Power, Atlanta Electricals, and GE Vernova T&D India, with price targets of ₹900, ₹650, and ₹4,750 per share, respectively. The brokerage has also reiterated its ‘Buy’ rating on Siemens Energy with a price target of ₹3,700 per share and upgraded Hitachi Energy to 'Neutral.'
While the stocks are trading at rich valuations, the brokerage noted that the possibility of further earnings upgrades and the emergence of export opportunities could help sustain these valuations.
The transmission and distribution (T&D) value chain, particularly segments focused on high-voltage transformers, continues to benefit from a robust capex pipeline extending to 2032, alongside a significantly stronger opportunity emerging from global markets for quality players.
India’s National Electricity Plan has outlined an ambitious investment of ₹9 trillion in transmission, leading to a structural acceleration in order inflows in recent years, driven by large-scale renewable energy integration.
“We have already witnessed the initial phase of this capex upcycle in transformers, and based on our discussions with industry stakeholders, there remains room for the cycle to continue over the next couple of years,” Motilal Oswal said.
With most players announcing capacity expansions, the industry is positioning itself to cater to sustained demand from both domestic and export markets. The demand is strong enough to absorb the increased capacity without exerting downward pressure on prices in the near term.
The brokerage also underscored that transformer manufacturers in India are benefiting from the rising share of HVDC projects, which require specialised, high-value converter transformers and reactors.
These are supplied by a limited pool of players such as Hitachi Energy India, Siemens Energy India, GE Vernova T&D India, and BHEL. Of the 32.3 GW HVDC pipeline outlined in the NEP, around 14.5 GW has already been tendered and awarded. The brokerage expects the sector to witness one to two HVDC project awards annually going forward.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Ksheera Sagar has been working as a Market Research Analyst at LiveMint for the past four years, covering stocks, commodities, and broader financial markets. In this role, he closely tracks daily market movements, corporate earnings, sector trends, and macroeconomic developments.
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