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

India's power transmission sector is entering a massive multi-year capex upcycle, driven by the urgent need to integrate renewable energy into the national grid. As demand for high-voltage equipment surges, global brokerage Jefferies has identified key players poised to benefit from this structural shift.

GE Vernova vs. Hitachi and Siemens: The Jefferies Verdict

Jefferies has initiated coverage on GE Vernova T&D India with a "Hold" rating and a target price of Rs 6,000 per share. While the brokerage expects GE Vernova to deliver a solid 35–36% EPS CAGR between FY26 and FY29, it views the current valuation—trading at 65 times FY28 estimated earnings—as offering limited immediate upside.

In contrast, the brokerage remains highly bullish on Hitachi Energy India and Siemens Energy India, maintaining "Buy" ratings for both. Jefferies has set target prices of Rs 43,145 for Hitachi Energy and Rs 4,500 for Siemens Energy, implying an approximate 17% upside for each. The rationale for this preference lies in their superior profit compounding potential, with both companies expected to deliver a strong 40%+ earnings CAGR driven by significant operating leverage and high revenue visibility.

A Massive ₹14 Trillion Transmission Opportunity

The primary driver for this optimism is the unprecedented scale of India's power infrastructure spending. Transmission project bids have already skyrocketed from an annual run rate of 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, potentially crossing the Rs 1 trillion mark.

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 plan to integrate 900 GW of non-fossil fuel capacity by FY36 and the Brahmaputra basin HVDC development, the total national transmission opportunity could exceed Rs 14 trillion.

Supply Constraints to Drive Stronger Margins

A critical factor supporting the bullish outlook for Original Equipment Manufacturers (OEMs) 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 lagging behind the projected demand trajectory.

Jefferies notes that with only a handful of qualified high-voltage equipment suppliers, supply shortages are likely to persist. This scarcity should ensure that pricing remains firm, directly benefiting the margins of key players such as GE Vernova, Hitachi Energy, Siemens Energy, and CG Power. Approximately 40% of India's total transmission spend is estimated to be directly addressable by these equipment suppliers, ensuring a long-duration order funnel.

Key Takeaways

  • Top Picks: Jefferies prefers Hitachi Energy and Siemens Energy (Buy) over GE Vernova (Hold) due to higher expected earnings CAGR and better margin upside.
  • Explosive Demand: Annual transmission project bids are expected to stay above Rs 800 billion, with a long-term opportunity valued at over Rs 14 trillion.
  • Margin Support: Persistent supply shortages in high-voltage equipment and limited manufacturing capacity are expected to keep pricing firm and support OEM margins.