Jefferies Picks Winners in India's Massive Power Transmission Capex Cycle

The Indian power transmission sector is entering a historic upcycle, driven by aggressive infrastructure spending and a shift toward renewable energy integration. As the nation scales its grid capacity, global brokerage Jefferies has identified key players poised to benefit from this multi-trillion rupee opportunity.

The Verdict: Buy Hitachi and Siemens; Hold GE Vernova

In its latest sectoral analysis, Jefferies has differentiated its stance on the major players in the Transmission & Distribution (T&D) space. While the brokerage initiated coverage on GE Vernova T&D India with a "Hold" rating and a target price of Rs 6,000, it remains highly optimistic about its competitors.

Jefferies has reiterated a "Buy" rating on Hitachi Energy India and Siemens Energy India, setting target prices of Rs 43,145 and Rs 4,500, respectively. Both stocks imply an upside of approximately 17%. The rationale behind this preference is the superior earnings visibility for Hitachi and Siemens, which are expected to deliver a robust 40%+ earnings CAGR. While GE Vernova is projected to see a solid 35–36% EPS CAGR from FY26–29E, the brokerage believes the faster profit compounding and operating leverage in Hitachi and Siemens justify a more constructive rating.

A Massive Rs 14 Trillion Opportunity Ahead

The bullish sentiment is anchored in a massive expansion of India's power infrastructure. Transmission project bids have already seen a dramatic surge, jumping 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 will remain above the Rs 800 billion mark through FY27–28, with the potential to cross Rs 1 trillion sustainably. When factoring in the Central Electricity Authority’s plan to integrate 900 GW of non-fossil capacity by FY36 and major developments like the Brahmaputra basin HVDC project, Jefferies estimates a total transmission capex pipeline exceeding USD 100 billion (over Rs 14 trillion) for the period of FY27–36.

Supply Shortages to Drive Margin Expansion

A critical factor supporting the long-term outlook for Original Equipment Manufacturers (OEMs) is the widening gap between demand and domestic supply. Jefferies notes that transformer manufacturing capacity is expected to rise by only 80–90% compared to FY25 levels—a growth rate that still lags significantly behind the projected demand trajectory.

With only a handful of qualified suppliers for high-voltage equipment and a tight domestic manufacturing landscape, the brokerage anticipates that supply shortages will persist. This scarcity is expected to keep pricing firm, directly supporting margin expansion for key players such as GE Vernova, Hitachi Energy, Siemens Energy, and CG Power. Approximately 40% of India's total transmission spend is considered addressable by these equipment suppliers, creating a long-duration order funnel for the sector.

Key Takeaways

  • Strategic Picks: Jefferies prefers Hitachi Energy and Siemens Energy (Buy) over GE Vernova (Hold) due to higher projected earnings CAGR and operating leverage.
  • Explosive Demand: Transmission project bids have doubled from FY24 levels and are expected to potentially cross the Rs 1 trillion mark in the coming years.
  • Margin Tailwinds: A significant lag in manufacturing capacity growth relative to demand is expected to maintain firm pricing and healthy margins for major OEMs.