Hitachi Energy India gains on execution, exports and growing HVDC order pipeline

Investment View and Valuation

Motilal Oswal Financial Services upgraded Hitachi Energy India to BUY from Neutral in its November 12, 2026 result update. The broker expects strong revenue growth as HVDC project execution ramps up, while robust base and export orders should offset delays in new HVDC order awards.

Motilal Oswal also expects operating leverage, a rising export mix and the scaling of higher-margin services to partly mitigate the lower gross margin associated with HVDC project execution. The target price is Rs 35,800, revised from Rs 36,000, and is based on 60 times December 2028E earnings.

2QFY27 Financial Performance

Hitachi Energy India reported mixed 2QFY27 results. Revenue rose 64 per cent YoY to Rs 3,000 crore, 12 per cent above Motilal Oswal's estimate, reflecting strong execution. Gross margin contracted 420 basis points YoY to 38.3 per cent, below the broker's 40.6 per cent estimate. EBITDA increased 55 per cent YoY to Rs 462 crore and was broadly in line with estimates, but EBITDA margin at 15.4 per cent trailed the 17.1 per cent estimate. Adjusted PAT rose 49 per cent YoY to Rs 375 crore and was in line with expectations.

In 1HFY27, revenue, EBITDA and PAT increased 66 per cent, 91 per cent and 86 per cent YoY to Rs 5,500 crore, Rs 890 crore and Rs 730 crore respectively. EBITDA margin expanded 210 basis points YoY to 16.1 per cent. However, operating cash flow declined 90 per cent YoY to Rs 91 crore because of elevated working-capital requirements. Free cash flow was an outflow of Rs 280 crore versus an inflow of Rs 800 crore in the prior year.

Order Momentum and Execution

Order momentum remained a central positive. Order inflow excluding HVDC rose 86 per cent YoY and 22 per cent QoQ to Rs 4,120 crore in 2QFY27, taking the order book to Rs 33,300 crore, up 13 per cent YoY.

Management said base-business demand was broad-based across renewable transmission, infrastructure, industries and data centres, supported by EPC players and utilities. Excluding HVDC, products represented 60 per cent of domestic orders, projects 34 per cent and services 7 per cent. The order mix is becoming less utility-heavy, with greater contribution from industries, transport, infrastructure, EPC and OEM customers.

HVDC and Technology Opportunities

Management indicated that execution has commenced on the Bhadla-Fatehpur and Khavda-Nagpur HVDC projects. Revenue recognition was about 10 per cent for Bhadla-Fatehpur and 4 to 5 per cent for Khavda-Nagpur. It expects 4 to 5 HVDC projects over the next 12 to 24 months, including an approved 800 kV VSC-based project for which it is technologically prepared to participate.

Motilal Oswal also highlights Hitachi Energy India's UHVAC position as the only Indian player with type-tested 1,150 kV transformer technology. Additional opportunities include demand from conventional transmission, data centres and battery energy storage systems, as well as new transformer capacity expected by 2028.

Exports, Services and Margin Outlook

Exports grew 41 per cent YoY in 2QFY27 and accounted for around 25 to 30 per cent of order intake, with wins across Asia, Africa, the Middle East, Europe and the US. Services order intake rose 77 per cent YoY as the company expands field presence, productised offerings and digital capabilities to monetise its Indian installed base.

Motilal Oswal expects exports, which carry a 300 to 400 basis point margin premium to domestic orders, and services to improve mix and margins. The key concern is continued pressure from elevated commodity and raw-material costs and lower gross margins on HVDC execution.

Estimates and Growth Forecasts

Motilal Oswal revised FY27E, FY28E and FY29E estimates by positive 3 per cent, positive 2 per cent and negative 1 per cent respectively, reflecting better execution but lower margin assumptions.

The broker forecasts revenue, EBITDA and PAT CAGR of 33 per cent, 42 per cent and 39 per cent over FY26 to FY29E.