Jefferies Bullish on Power Transmission Stocks; Targets Hitachi and Siemens

India's power transmission sector is entering a massive multi-year capex upcycle, creating significant opportunities for original equipment manufacturers (OEMs). While Jefferies has initiated coverage on GE Vernova with a cautious stance, the brokerage remains highly optimistic about Hitachi Energy India and Siemens Energy India.

Jefferies Strategy: Hold on GE Vernova, Buy on Hitachi and Siemens

In a recent research note, Jefferies initiated coverage on GE Vernova T&D India with a "Hold" rating and a target price of Rs 6,000 per share. This valuation implies limited immediate upside, as the stock is priced at 65 times its estimated FY28 earnings. While GE Vernova is expected to deliver a solid 35–36% EPS CAGR over the FY26–29E period, Jefferies finds more compelling growth stories elsewhere.

In contrast, the brokerage has reiterated a "Buy" rating on both Hitachi Energy India and Siemens Energy India. Hitachi Energy carries a target price of Rs 43,145, while Siemens Energy is pegged at Rs 4,500, both suggesting an upside of approximately 17%. The rationale for this preference lies in the projected 40%+ earnings CAGR for Hitachi and Siemens, driven by operating leverage and exceptional revenue visibility.

A Massive Rs 14 Trillion Transmission Opportunity

The primary driver behind this bullishness is the unprecedented surge in India's power transmission and distribution capex. The annual run rate of transmission project bids has already skyrocketed from 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 levels above Rs 800 billion through FY27–28, with the potential to cross the Rs 1 trillion mark sustainably.

Looking further ahead, Jefferies estimates a USD 100 billion-plus transmission capex pipeline between FY27 and FY36. When factoring in the Central Electricity Authority’s (CEA) ambitious plan to integrate 900 GW of non-fossil fuel capacity by FY36 and the development of the Brahmaputra basin HVDC projects, the total national transmission opportunity exceeds Rs 14 trillion.

Supply Shortages to Drive Margin Expansion

A critical factor for investors is the imbalance between demand and domestic manufacturing capacity. Although transformer manufacturing capacity is expected to rise by 80–90% compared to FY25 levels, this growth is still projected to lag behind the actual demand trajectory.

Jefferies highlights that with only a limited number of qualified high-voltage equipment suppliers, supply shortages are likely to persist. This scarcity is expected to keep pricing firm, directly supporting margin expansion for key players like GE Vernova, Hitachi Energy, Siemens Energy, and CG Power. Since roughly 40% of India's total transmission spend is addressable by equipment suppliers, these companies sit at the heart of a long-duration order funnel.

Key Takeaways

  • Growth Leaders: Jefferies prefers Hitachi Energy and Siemens Energy over GE Vernova due to higher projected earnings compounding (40%+) and better risk-reward profiles.
  • Massive Pipeline: India's transmission project bids have doubled from FY24 levels and are expected to eventually cross the Rs 1 trillion annual mark.
  • Pricing Power: Tight domestic manufacturing capacity and rising demand for high-voltage equipment are expected to maintain firm pricing and healthy margins for OEMs.