Hitachi Energy Q4 Results Review - Earlier Than Expected Margin Recovery: Motilal Oswal

Motilal Oswal Report

Hitachi Energy Ltd.’s Q4 FY24 result beat our estimates, driven by sharp margin outperformance. The company reported 27%/91%/124% YoY growth in revenue/Ebitda/profit after tax. Revenue growth was driven by a strong order book, while operating leverage benefits resulted in double-digit margins at 10.7%, a year ahead of the company’s guidance.

Hitachi Energy remains a key beneficiary of the uptick in spending across transmission, renewables, data centers, and railways. It is also improving its exports and services.

With upcoming bidding for high voltage direct current projects and improved traction in data center orders, we increase our order inflow estimates.

We also raise our margin estimates to factor in the Q4 performance and prospects of further margin improvements on improved volumes and pricing in the transmission sector. Our revised target price stands at Rs 9,900, based on 60 times March 2026E earnings per share.

This is still at a discount to other players like Siemens and ABB. We upgrade our rating to Neutral from Sell.

Key risks to our estimates and recommendation would come from delays in ordering and lower-than-expected recovery in margins.

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