Brokerage firm Jefferies has reiterated its positive stance on India's power transmission and distribution (T&D) sector, saying recent media reports on the government's decision to allow select Chinese companies to supply equipment for government projects do little to alter the industry's favourable demand-supply dynamics.
According to media reports, the government has approved four Chinese companies to supply equipment for government projects, but only through their manufacturing facilities located in India. Import restrictions on equipment continue to remain in place.
Jefferies said the move is unlikely to materially ease supply constraints, as manufacturing through Indian facilities alone would not be sufficient to bridge the demand-supply gap.
"Even with supply from these facilities, we believe the demand-supply mismatch remains," the brokerage said.
The brokerage remains constructive on the Indian power T&D sector, arguing that equipment demand is expected to continue outpacing supply as the country ramps up investments in grid infrastructure to support renewable energy integration and rising electricity demand.
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Against this backdrop, Jefferies sees the recent correction in power equipment stocks as an opportunity for long-term investors.
The brokerage said it remains positive on Hitachi Energy India and Siemens Energy India, recommending investors use the recent weakness to accumulate the stocks.
According to Jefferies, both companies are well-positioned to benefit from strong execution and sustained order inflows, supported by healthy visibility in transmission and grid modernisation projects.
The brokerage identified Hitachi Energy and Siemens Energy as its top picks in the sector, citing expectations of more than *40% earnings compound annual growth* driven by operating leverage and robust revenue visibility.
India's power transmission sector has emerged as one of the strongest-performing industrial themes over the past two years, supported by aggressive investments in transmission networks, renewable energy evacuation infrastructure and grid expansion. Jefferies believes these structural drivers remain intact despite the government's calibrated policy allowing select Chinese manufacturers with Indian production facilities to participate in government projects.
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