Jefferies Bullish on India's Power Transmission Sector: Top Stock Picks

India's power transmission and distribution segment is entering a massive multi-year capex upcycle, creating significant opportunities for original equipment manufacturers (OEMs). As the nation pushes toward aggressive renewable energy integration, global brokerage Jefferies has identified specific winners in the transmission space.

Jefferies Picks: Hitachi and Siemens Lead the Charge

While initiating coverage on GE Vernova T&D, Jefferies has maintained a "Hold" rating on the company with a target price of Rs 6,000 per share. The brokerage noted that while GE Vernova is expected to deliver a solid 35–36% EPS CAGR over FY26–29E, its valuation at 65 times FY28 estimated earnings implies limited immediate upside.

In contrast, Jefferies remains highly bullish on Hitachi Energy India and Siemens Energy India, reiterating "Buy" ratings for both. The brokerage has set target prices of Rs 43,145 for Hitachi Energy and Rs 4,500 for Siemens Energy, implying a potential upside of approximately 17% for both stocks. The rationale behind this preference is the outsized earnings growth visibility for these two players, with an expected earnings CAGR of over 40% driven by significant operating leverage.

The Rs 14 Trillion Transmission Opportunity

The bullish stance is anchored in a massive surge in India's transmission project awards. Annual transmission project bids have already skyrocketed from an annual run rate of approximately Rs 390–400 billion in FY24 to over Rs 800 billion starting in FY25. Industry leaders like Power Grid and Adani Energy suggest this pipeline could sustain at these levels through FY27–28 and eventually cross the Rs 1 trillion mark.

Looking further ahead, Jefferies estimates a USD 100 billion-plus transmission capex pipeline over the decade from FY27 to FY36. When combining the Central Electricity Authority’s (CEA) ambitious plan to integrate 900 GW of non-fossil fuel capacity by FY36 with the Brahmaputra basin HVDC development, the total national transmission opportunity is estimated to exceed Rs 14 trillion.

Supply Shortages to Support Firm Margins

A critical factor driving the profitability of equipment suppliers is the widening gap between demand and domestic manufacturing capacity. While transformer manufacturing capacity is expected to rise by 80–90% compared to FY25 levels, this growth is still expected to lag behind the actual demand trajectory.

With only a handful of qualified high-voltage equipment suppliers in the market, Jefferies anticipates that supply shortages will persist. This scarcity is expected to keep pricing firm, which in turn will support healthy margins for key OEMs. The brokerage estimates that roughly 40% of India's total transmission spend is directly addressable by equipment suppliers, providing a long-duration order funnel for major players including GE Vernova, Hitachi Energy, Siemens Energy, and CG Power.

Key Takeaways

  • Top Picks: Jefferies prefers Hitachi Energy India and Siemens Energy India (Buy) over GE Vernova T&D (Hold) due to superior earnings compounding and operating leverage.
  • Massive Market Size: India’s transmission capex is expected to enter a super-cycle, with a potential Rs 14 trillion opportunity driven by the integration of 900 GW of renewable energy by FY36.
  • Pricing Power: Persistent supply shortages in high-voltage equipment and transformer manufacturing are expected to keep pricing firm and support manufacturer margins.