Hitachi Energy is the best play on transmission tailwinds for Target price of ₹24500

[Pee Vee]

Hitachi Energy (Hitachi) reported an EBITDA of INR 1.5bn, thrice its base quarter last year. Gross margin expanded by 650bps YoY to 43% in Q1FY26 while EBITDA margin expanded 700bps YoY to 10.5% (-200 bps QoQ). As a result, profit came in at INR 1.3bn, + 62% YoY. Order inflow (OI) surged to INR 113bn, as the company booked an HVDC project in the quarter (on expected lines), pushing the order backlog (OB) to a record INR 291bn (+3.4x YoY). Notably, ex-HVDC orders grew ~20% YoY, reflecting strong demand. Hitachi is investing INR 20bn to expand capacity and cater to rising demand for transmission equipment. It remains the best play on transmission tailwinds, in our opinion. We maintain BUY with a revised TP of INR 24,500 (earlier INR 18,000) rolling forward to FY28E.

A strong quarter

Hitachi reported a steady Q1 with revenue up 11% YoY at INR 14.2bn. EBITDA more than trebled YoY with margins at 10.5% (+690bps YoY; -220bps QoQ). PAT grew 62% YoY to INR 1.3bn. We expect margins to sustain in the 11–12% range through FY26E.

Strong OB; base orders wholesome

The company booked fresh orders worth INR 113bn (+4.6x YoY) led by a large HVDC win that was booked during the quarter. This takes its OB to an all-time high of INR 291bn (+3.4x YoY). Even excluding the HVDC, OI grew ~20% YoY, indicating strong demand.

Undertaking the highest capex among transmission players

Hitachi is undertaking the highest capex among peers (INR 20bn) to build capacity across transformers, HV equipment, and automation. With estimated transmission ordering of INR 500–600bn in FY26 (incl. INR 250–300bn HVDC a three-player market). We expect strong ordering to continue in FY27–28E, supporting medium-term earnings visibility.

Maintain BUY with revised TP of INR 24,500

We maintain BUY, revising our TP to INR 24,500 (from INR 18,000), rolling forward to FY28E – factoring in robust ordering pipeline, capex plans and sustained margin improvement.