BHEL Most At Risk, L&T Relatively Insulated If Curbs On Chinese Power Equipment Suppliers Ease, Say Brokerages

Brokerages are turning cautious on India’s power capital goods space as reports suggest the government may scrap the five-year-old curbs on Chinese companies bidding for government contracts. Stocks such as BHEL, L&T and Siemens are seen at the centre of this debate, as easing restrictions could reshape competition, pricing and execution timelines across power generation and transmission projects.

Projects awarded to Chinese bidders had already fallen sharply after 2020, declining 27% year-on-year in 2021. However, with ministries flagging shortages, rising costs and project delays, the government appears more open to easing curbs to support infrastructure build-out.

For investors, brokerages agree that while easing restrictions could pressure certain domestic equipment players like BHEL, it could also lower costs, accelerate execution and support India’s long-term power capacity goals.

According to CLSA, the potential rollback of the Chinese import ban stems from India’s attempt to revive commercial ties amid easing diplomatic and border tensions. The brokerage notes that tariff and non-tariff barriers imposed by the Modi government have led to supply shortages in critical infrastructure segments like power generation.

Limited competition has resulted in double-digit inflation in equipment prices, squeezing developers and hurting India’s growth ambitions and capacity addition plans.

CLSA believes this backdrop explains why policymakers are considering easing restrictions.

It flags BHEL as the biggest risk, particularly in thermal power, where Chinese suppliers such as Dong Fang, Shanghai Electric and Harbin have historically competed aggressively in state and private genco tenders.

In contrast, CLSA advises investors to view any correction in L&T stock as a buying opportunity, highlighting that L&T is globally competitive and often wins against Chinese suppliers in markets like the Middle East. The brokerage adds that L&T typically bids only for NTPC tenders where Chinese firms are not qualified and largely avoids state genco projects, limiting the downside impact.

CLSA also warns that if the ban is lifted fully, the impact could extend beyond thermal power. The solar ecosystem, including module and cell manufacturers such as Waaree and Premier, could face renewed competitive pressure.

In power transmission, players like Siemens Energy, Hitachi Energy, GE Vernova, CG Power, BHEL and TRIL, along with several transformer and reactor manufacturers, may see pricing pressure if Chinese competition returns, though the extent would vary by segment.

Jefferies echoes the view that restrictions imposed since 2020 may be relaxed, but it sees the impact differing sharply across sectors. The brokerage believes defence will see the least impact, followed by Cummins, while L&T, Afcons and BHEL are likely to face the highest exposure.

It adds that ABB and CG Power could also see some pressure. However, Jefferies expects transmission and distribution players such as Siemens Energy and Hitachi Energy to see limited impact, as national security considerations keep the transmission grid a priority area where competition may still be tightly managed.

From Bernstein’s perspective, industry checks suggest that some form of relaxation is increasingly likely, especially in areas where shortages are acute. It highlights thermal power equipment and high-voltage transmission as segments facing the most supply constraints, making them ideal candidates for selective easing.

Bernstein believes equipment manufacturers will be more impacted than construction-heavy players, and while the move could be marginally negative for L&T, the impact is expected to be small. On the other hand, state-owned companies such as NTPC and Power Grid could emerge as beneficiaries through lower equipment costs and faster project execution.

Adding nuance to the debate, IIFL points out that any easing may be calibrated rather than broad-based. Citing clarification from a senior industry expert, IIFL notes that Chinese player TBEA is likely to be allowed to participate in Power Grid tenders, particularly for reactors, for supplies starting April–May 2026.

The brokerage stresses that restrictions are being lifted on a case-to-case basis and for specific products, and does not expect bulk imports from China in the near term.