Global brokerage firm Citi has turned bullish on India’s power equipment sector, citing a multi-year transmission expansion cycle in the country and growing investment in transmission and distribution networks worldwide.
According to a recent CNBC-TV18 report, Citi has initiated coverage on the sector with a positive outlook and identified Hitachi Energy India, GE Vernova T&D India and CG Power and Industrial Solutions as key beneficiaries.
The brokerage sees upside potential of up to 34% in these stocks.
Why Citi is positive on the sector
India is expected to undertake large investments in transmission infrastructure over the next decade.
According to the Central Electricity Authority (CEA), the country may require nearly Rs. 7.9 lakh crore of transmission investments to integrate around 900 GW of renewable energy capacity by FY36.
Within that, High Voltage Direct Current (HVDC) projects alone could create an opportunity worth about Rs. 1.6 lakh crore for equipment manufacturers.
Citi believes established Indian companies are well placed to benefit because of:
- Technical expertise
- Strong manufacturing capabilities
- High entry barriers
- Growing domestic demand
- Opportunities arising from the global T&D investment cycle extending to 2050
Hitachi Energy India is Citi’s top pick
Among the stocks under coverage, Hitachi Energy India is Citi’s preferred choice.
The brokerage has assigned a “Buy” rating and set a target price of Rs. 46,700 per share. That implies an upside potential of around 34% from current levels.
Growth drivers
According to Citi, the company is likely to emerge as a major beneficiary of upcoming HVDC projects.
The brokerage expects:
- EPS CAGR of about 43% between FY26 and FY30
- Strong visibility on future project wins
- Benefits from grid modernization spending
Hitachi Energy India operates across:
- Power technologies
- Grid automation
- Transformers
- High-voltage equipment
- Renewable energy transmission solutions
GE Vernova T&D India seen benefiting from global opportunities
Citi has also maintained a “Buy” recommendation on GE Vernova T&D India.
The brokerage has fixed a target price of Rs. 6,200 per share, indicating a potential upside of around 30%.
What supports the outlook
Citi expects earnings growth to remain strong.
It forecasts:
- EPS CAGR of nearly 35% between FY26 and FY30
- Benefits from its position in high-voltage transmission equipment
- Access to international opportunities through its parent company’s network
The company provides:
- Substations
- Grid equipment
- Electrification technologies
- Transmission and distribution solutions
It also plays a role in renewable energy integration and strengthening power infrastructure.
CG Power backed by capacity expansion
CG Power and Industrial Solutions is the third stock highlighted by Citi.
The brokerage has a “Buy” rating on the company and a target price of Rs. 1,100 per share, implying upside potential of about 22%.
Earnings growth expected
Citi expects the company to deliver an EPS CAGR of roughly 33% through FY30.
Growth is likely to be supported by capacity additions across various segments.
The brokerage noted that competition in standard industrial motors could limit margin expansion. However, it believes the company’s diversified operations and manufacturing expansion plans support long-term earnings growth.
CG Power manufactures:
- Transformers
- Switchgear
- Industrial motors
- Railway traction systems
- Electrical equipment
The company is also expanding into semiconductor-related manufacturing opportunities.
Long-term theme
Citi sees India’s transmission and distribution ecosystem as a long-duration growth opportunity.
The brokerage believes rising renewable energy capacity, large domestic transmission investments and the global T&D spending cycle could support growth for power equipment companies over the coming years.
Among the three stocks, Hitachi Energy India remains Citi’s top pick because of its exposure to the HVDC opportunity.
Meanwhile, GE Vernova T&D India and CG Power are expected to benefit from grid modernization, export opportunities and ongoing capacity expansion.
TL;DR
Citi has initiated coverage on India’s power equipment sector with a positive outlook. The brokerage has recommended Hitachi Energy India, GE Vernova T&D India and CG Power, with upside potential ranging from 22% to 34%.
AI Summary
- Citi is bullish on India’s power equipment sector.
- CEA estimates Rs. 7.9 lakh crore of transmission investments by FY36.
- Hitachi Energy India is Citi’s top pick with a target price of Rs. 46,700.
- GE Vernova T&D India and CG Power also carry “Buy” ratings.
- The brokerage expects strong earnings growth supported by grid expansion.