Rs 10 trillion transmission supercycle, HVDC project pipeline, data centre boom and grid digitalisation
This company sits at the exact confluence of multiple structural themes simultaneously and build a detailed case for why the next three years will be categorically different from the last three. Nomura initiates Hitachi Energy with a BUY rating and a target price of Rs 40,030 — implying 23% upside from the current market price of Rs 32,600 — expecting revenue, EBITDA and PAT CAGRs of 38%, 48% and 45% respectively over FY26-29. The multiple growth drivers firing simultaneously are what make this thesis compelling.
The Rs 10 Trillion Cycle
The foundational demand driver for Hitachi Energy India is India’s transmission infrastructure investment plan — approximately Rs 10 trillion over FY26-36, driven by the Central Electricity Authority’s 900 gigawatt non-fossil energy target and Brahmaputra basin hydro projects.
Renewable energy at this scale cannot be integrated into the grid without a commensurate expansion of high-voltage transmission infrastructure, and Hitachi Energy India — as a leader in HVDC technology and grid automation — is positioned as one of the primary beneficiaries.
The HVDC opportunity within this supercycle is the highest-value segment. High Voltage Direct Current transmission is the technology of choice for moving large volumes of renewable power over long distances with minimal losses — precisely what India’s geography requires as solar and wind generation is concentrated in specific regions while demand centres are distributed across the country.
Nomura expects Hitachi Energy India to win two domestic HVDC projects over FY26-29 — a specific and quantifiable assumption that drives a significant portion of the order backlog expansion projected in the model.
Five Growth Catalysts Firing Simultaneously
Five istinct tailwinds that are contributing to Hitachi Energy India’s growth trajectory — and the power of the thesis is that these are largely independent of each other, meaning weakness in one does not undermine the others.
Lifecycle service orders for Grid Automation provide a recurring, high-margin revenue stream from the existing installed base of equipment — a base that keeps growing as new infrastructure is commissioned. Transport infrastructure expansion — railways, metro and EV charging infrastructure — creates demand for the company’s power electronics and traction solutions. Data centre growth driven by AI infrastructure investment is emerging as a new and rapidly growing demand source for power management and cooling solutions. Energy storage solutions add another dimension as India builds grid-scale battery capacity alongside renewable generation. And the HVDC ordering programme — one project per year targeted by the government — provides the most visible and largest single-order opportunity in the sector.
“HEIL is positioned to benefit from several key tailwinds: lifecycle service orders for Grid Automation, transport infra expansion, multi-fold growth in data centres, energy storage solutions, and the target of ordering one HVDC project per year,” Nomura states
The Export Strategy
Beyond the domestic opportunity, Hitachi Energy India operates as a global feeder manufacturing facility for several major products for the parent Hitachi Energy Limited — leveraging India’s cost-competitive manufacturing base to supply components and assemblies to global markets. The company plans to maintain its export sales share at approximately 25-30% through greater synergy with the parent and new product launches.
“The cornerstone of the export strategy is to leverage the cost-efficient manufacturing base in India,” Nomura notes.
The parent relationship adds a second strategic dimension. Hitachi Energy Limited is particularly strong in mobility, smart cities, energy storage and data optimisation — capabilities that complement HEIL’s domestic utilities strength.
The combined offering via HEIL’s energy platform and the parent’s digital platform creates an integrated value proposition that can serve customers across the full energy value chain — from generation to transmission to storage to distribution to intelligent grid management. This is a differentiated position that pure-play domestic competitors cannot replicate.
The Profitability Expansion Story
One of the more nuanced aspects is the margin expansion trajectory. HEIL’s operating leverage structure is improving as related party expenses — costs charged by the parent for technology and services — decline as a percentage of sales. As HEIL builds indigenous capabilities and achieves greater scale, the royalty and technology fee burden relative to revenue reduces, allowing a larger proportion of gross margin to flow through to EBITDA. This structural improvement in the cost base is separate from and additive to the operating leverage available from revenue scaling.
Nomura estimates EBITDA CAGR of 48% over FY26-29 — meaningfully ahead of the 38% revenue CAGR — reflecting this margin expansion as the primary additional driver. EBITDA margins are expected to improve significantly as the mix shifts toward higher-margin HVDC and Grid Automation work and as related party expense ratios decline.
The Order Backlog — Set to Expand 1.6x
The financial architecture of the Nomura thesis rests on a specific order backlog projection. HEIL’s order backlog is expected to expand 1.6x from Rs 296 billion in FY26 to Rs 472 billion by FY29. The drivers are clear — utilities segment order inflows growing at 15% CAGR, industries at 32% CAGR and transport at 34% CAGR over FY26-29, complemented by the two HVDC project wins embedded in the model. An expanding backlog at this scale provides exceptional revenue visibility — the FY29 revenue target of Rs 213 billion is largely visible from the order book rather than dependent on orders yet to be won.
Scorecard
| Metric | Value |
|---|---|
| Current Market Price | Rs 32,600 |
| Target Price | Rs 40,030 |
| Upside | 22.8% |
| Rating | BUY (Initiation) |
| Valuation | 65x Sep’28F EPS |
| FY26 Revenue | Rs 81.5 billion |
| FY29F Revenue | Rs 213.1 billion |
| Revenue CAGR FY26-29F | 38% |
| EBITDA CAGR FY26-29F | 48% |
| PAT CAGR FY26-29F | 45% |
| FY29F ROE | 30.1% |
| Order Backlog FY29F | Rs 472 billion (1.6x FY26) |
| FY28F P/E | 62.3x |
| Domestic HVDC Projects Expected | 2 over FY26-29 |
| Export Revenue Share Target | 25-30% |
The 65x September 2028 EPS multiple — within a fair trading band of 60-70x that Nomura ascribes — is demanding in absolute terms. But it reflects the scarcity premium of a technology leader in HVDC sitting at the intersection of India’s most critical infrastructure buildout themes, with a global parent providing technology access and export opportunities that domestic-only competitors cannot match.