Jefferies Bullish on Power Transmission: Buy Hitachi and Siemens Energy

India is entering a massive, multi-year upcycle in power transmission capital expenditure, creating a windfall for key equipment manufacturers. While Jefferies has initiated coverage on GE Vernova, the brokerage maintains a preferred stance on Hitachi Energy and Siemens Energy due to their superior earnings growth potential.

The Great Indian Transmission Capex Surge

The Indian power sector is witnessing a monumental shift in infrastructure spending. According to Jefferies, 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 from FY25.

Industry leaders such as Power Grid and Adani Energy suggest this pipeline is not a temporary spike; it is expected to stay above the Rs 800 billion mark through FY27–28 and could potentially cross the Rs 1 trillion threshold on a sustainable basis. Looking further ahead, the brokerage estimates a USD 100 billion-plus transmission capex pipeline between FY27 and FY36. This massive opportunity is driven by the Central Electricity Authority’s ambitious plan to integrate 900 GW of non-fossil fuel capacity by FY36, alongside critical developments like the Brahmaputra basin HVDC project.

Stock Picks: Why Hitachi and Siemens Lead the Pack

While the entire sector is poised for growth, Jefferies is distinguishing between players based on earnings compounding and operating leverage.

  • Hitachi Energy India: The brokerage maintains a "Buy" rating with a target price of Rs 43,145, implying an upside of roughly 17%.
  • Siemens Energy India: Also rated as a "Buy" with a target price of Rs 4,500, offering a similar 17% upside potential.
  • GE Vernova T&D: Jefferies initiated coverage with a "Hold" rating and a target price of Rs 6,000. While GE Vernova is expected to deliver a solid 35–36% EPS CAGR over FY26–29E, it lacks the rapid profit compounding visibility seen in Hitachi and Siemens.

The preference for Hitachi and Siemens stems from their projected 40%+ earnings CAGR, fueled by strong revenue visibility and the ability to scale profits faster than revenues through operating leverage.

Supply Shortages to Protect Margins

A critical factor supporting the bullish outlook for Original Equipment Manufacturers (OEMs) like GE Vernova, Hitachi Energy, Siemens Energy, and CG Power is the structural supply-demand mismatch.

Jefferies notes that while transformer manufacturing capacity is expected to rise by 80–90% compared to FY25 levels, this growth is still lagging behind the actual demand trajectory. With only a handful of qualified high-voltage equipment suppliers in the market, the brokerage anticipates that supply shortages will persist. This environment is expected to keep pricing firm, thereby protecting and potentially expanding the margins for key players in the transmission space. Roughly 40% of India's total transmission spend is estimated to be directly addressable by these equipment suppliers.

Key Takeaways

  • Massive Pipeline: India's transmission project bids are expected to jump from ~Rs 400 billion in FY24 to over Rs 800 billion in FY25, with potential to exceed Rs 1 trillion.
  • Preferred Stocks: Jefferies recommends "Buy" on Hitachi Energy (Target: Rs 43,145) and Siemens Energy (Target: Rs 4,500) due to their high 40%+ earnings CAGR.
  • Margin Support: Tight domestic manufacturing capacity and high demand for high-voltage equipment are expected to keep pricing firm and support OEM margins.