HITACHI ENERGY INDIA

Strong revenue outlook for next 2 years

Hitachi Energy India, the Indian outfit of Japanese energy technology giant Hitachi Energy (which holds a 75% stake in the Indian company), serves utility and industry consumers with a complete range of engineering, products, solutions and services in areas of power technology. It provides products and solutions, including asset and work management, cable accessories, capacitors and filters, communication networks, cooling systems, disconnectors, energy storage, generators, circuit breakers, semi-conductors, substation automation, protection & control, surge arresters, and transformer insulation & components. It also provides services and consulting such as install & commission, assess & secure, train & develop parts & maintain upgrade, repair & extend, sustain & decarbonize, and replace & decommission. Its transportation solutions include railways, e-mobility, aviation and marine.

However, the company’s financial performance is not so encouraging. During the last six years, its sales turnover has increased from Rs 336 crore in fiscal 2019 to Rs 5,237 crore in fiscal 2024, but its operating profit has fractionally improved from Rs 337 crore to Rs 359 crore and its net profit is at Rs 165 crore. However, prospects for the company going ahead are quite promising. Consider:

• The company has started getting big orders since the beginning of the last fiscal. Till last month, it has secured orders worth Rs 8,910 crore, ensuring strong revenue visibility over the next 24-26 months and with an Adani HVDC (high voltage direct current) order worth Rs 2.000-2,200 crore under its belt.
• In the last week of November 2024, Power Grid Corporation of India awarded the consortium of Hitachi Energy India and BHEL the contract to design and execute the HVDC link to transmit renewable energy from Khavda in Gujarat to the industrial centre of Nagpur in Maharashtra.

CAPACITY CAPEX

• Hitachi has planned to invest around $ 250 million (Rs 2,000 crore) to expand capacity, portfolio and talent base in order to support accelerating global demand for clean energy solutions (both domestic as well as exports).
• Hitachi has won the first of many HVDCs to be ordered out over the next 3-4 years to feed the country’s ambitious 500 GW renewable energy evacuation goal by 2030, in a consortium with BHEL.
• India’s ambitious plan to increase power transmission capacity by 35% by 2032 necessitates a robust energy ecosystem. This expansion is crucial to support the country’s aim of providing sustainable and equitable power distribution to the entire population. This will drive social and economic development and contribute to the nation’s bigger goal of becoming a $5 trillion economy. The growing demand will create significant investment opportunities in the energy sector, particularly in areas such as renewables, HVDC, data centres and electric transportation.

E.P.S. GROWTH

In FY 2025 and FY 2026, we expect the company to register an EPS of Rs 80.2 and Rs 195.8 respectively. In FY 2027, it can register an EPS of Rs 281.3. The scrip trades at Rs 13,306. P/E on the FY 2027 EPS works out to 47.3.

PERFORMANCE INDICATORS (Rs. in crore)