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Motilal Oswal Report
Hitachi Energy India Ltd. Q1 FY25 result came in significantly below our estimates due to a steep decline in margin. The company reported 28%YoY growth in revenue, whereas a contraction in Ebitda margin led to a sharp miss in profit after tax.
The weak margin performance was due to higher other expenses, which will come down in the coming quarters. Revenue growth was driven by a strong order book and order inflows, which jumped 112% YoY to Rs 24 billion. Order inflows were led by strong growth in transmission, industries and renewables.
We believe that Hitachi Energy will continue to benefit from energy transition initiatives across domestic and international markets. However, current valuations factor in potential high voltage direct current wins and margin improvement.
We thus maintain our 'Neutral' rating on the stock with an unchanged two-year forward target price of Rs 12,000, based on discounted cash flow.
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