Shares of transmission and distribution (T&D) companies are likely to remain in focus after brokerage firm Motilal Oswal Financial Services initiated coverage on key players, highlighting a multi-year structural capex cycle driven by India’s energy transition and global supply-demand dynamics.
The brokerage has initiated coverage on CG Power, Atlanta Electricals, and GE Vernova with a ‘buy’ rating, while reiterating its positive stance on Siemens Energy. It has also upgraded Hitachi Energy to ‘neutral’, citing valuation considerations.
According to the report, India’s National Electricity Plan (NEP) outlines nearly ₹9 lakh crore of T&D capex till 2032, creating a massive addressable market for companies across the value chain.
The brokerage noted that increasing renewable energy integration has already accelerated ordering activity since FY22-23, and even partial execution of planned investments can provide multi-year earnings visibility for the sector.
Motilal Oswal flagged that ordering activity saw a decline in FY26, with schemes awarded dropping sharply year-on-year. However, it clarified that the slowdown is due to capacity constraints rather than weak demand.
The brokerage expects order inflows to recover over the next 1–2 years as manufacturing capacities expand, indicating that the long-term growth trajectory remains intact.
A key highlight is the high-voltage direct current (HVDC) segment, which offers significant value addition and limited competition.
The NEP pipeline includes over 32 GW of HVDC capacity, with a substantial portion already tendered. The segment is dominated by a few players, including Hitachi Energy, Siemens Energy, GE Vernova, and BHEL, creating an oligopolistic market with strong pricing power.
The report also highlighted an underappreciated export opportunity. With the US importing nearly 80% of its power transformers and global lead times stretching between 2–4 years, Indian manufacturers are well positioned to tap demand from developed markets.
Rising investments in renewable energy and data centres globally are expected to further boost demand for T&D equipment, benefiting Indian exporters.
Despite capacity additions of around 200–220 GVA over the next 2–3 years, the brokerage expects demand to remain strong enough to absorb incremental supply without putting pressure on pricing.
This supply-demand balance is likely to support margins across the sector, even as companies scale up production.
The report also pointed to battery energy storage systems (BESS) as a key future driver, with India targeting 13.5 GW capacity by FY27 and over 50 GW by FY32. This is expected to create an additional ordering pipeline for equipment manufacturers beyond traditional transformers.
Motilal Oswal acknowledged that valuations across the sector are not cheap but said that earnings upgrades and export optionality justify premium multiples.
The brokerage maintained that the combination of domestic capex and global demand tailwinds creates a “double engine” growth opportunity, making the sector attractive over the long term.