Hitachi Energy India has been downgraded to Neutral from Buy by analysts, citing rich valuations despite strong operational performance and a robust long-term outlook.
The company, a key player in India’s power transmission and capital goods sector, delivered a solid FY26. Revenue rose 28% year-on-year to Rs 81.5 billion, while operational EBITDA margins expanded significantly by 610 basis points to 15.4%.
The firm ended the year with a record order backlog of Rs 295.5 billion, up 54% from the previous year, providing strong revenue visibility for multiple years ahead.Fourth-quarter revenue grew a robust 46% year-on-year. Management indicated that earlier delays in transmission projects have largely been resolved.
The only notable softening was a sequential dip in Q4 EBITDA margin to 16.4%, attributed entirely to product mix rather than any pricing pressures, competitive issues, or execution problems. Gross margins for the full year improved by around 200 basis points to approximately 40%.Demand remains broad-based and resilient across transmission, renewable energy integration, transformers, data centres, battery storage, and semiconductor-related investments.
HVDC (High Voltage Direct Current) projects are seen as a major growth driver, with three to four large orders expected over the next two years. The company recently announced a Rs 20 billion capex plan — taking total committed investment to Rs 40 billion — which will double transformer manufacturing capacity to meet both domestic and export demand.Exports and services are also scaling up, supported by deeper integration into the global Hitachi Energy network.
Analysts maintain that the structural investment thesis remains intact, highlighting the company’s technology leadership in HVDC, proprietary know-how, and strong parent backing. However, with the stock trading at around 73 times FY28 estimated earnings, the market is seen as pricing in near-perfect execution over an extended period.
The target price has been revised to Rs 33,000, based on 65x FY28E earnings. Investors are advised to await a more attractive entry point despite the positive long-term fundamentals in India’s energy transition story
