Hitachi Energy Q3 Results Review - Muted Quarter; Miss On All Fronts: Motilal Oswal

Motilal Oswal Report

Hitachi Energy India Ltd. Q3 FY24 result was weaker than our expectations. The company reported 23%/72%/401% YoY growth in revenue/ Ebitda/ profit after tax on a low base of last year.

Revenue growth was supported by a strong order book, while margin improvement was driven by moderating supply chain issues. Ebitda margin remained flat QoQ.

We expect Hitachi Energy to be a key beneficiary of the uptick in spending across transmission, renewables, data centers, as well as the railways.

We also expect its strategy to grow the share of services and exports to aid margin improvement. We roll forward our valuation to March 2026 and revise our target price to Rs 4,500.

The stock is currently baking in the possibility of potential high-voltage direct current wins as well as margin improvement. At 86 times/54 times price earning on FY25E/FY26E earnings, it is trading at a 20% premium to Siemens and at a 10% discount to ABB India Ltd. on FY26E.

We retain our 'Sell' rating on the stock and would look for better entry points.

The key risk to our recommendation would come from sharper than-expected improvement in margins over the next one-two years.

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