Jefferies Initiates Buy On Hitachi Energy, Siemens Energy — 'Power Capex To Double In Five Years'

Jefferies on Monday has initiated coverage on India's diversified industrials with a bullish outlook on the power transmission and distribution (T&D) segment as the country's power capital expenditure (capex) is set to rise more than twofold over the next five years.

The brokerage has started coverage with a ‘Buy' rating on Hitachi Energy India Ltd. and Siemens Energy India Ltd. It has however assigned a ‘Hold' rating to CG Power and Industrial Solutions Ltd. with a target price of Rs 745.

According to Jefferies, India's power capex is expected to surge 2.2 times to over $280 billion between fiscal 2025 and financial year 2030, compared with financial year 2019–2024 levels. This, it said, will be driven by major transmission projects, strong government policy support, and increasing investment in grid infrastructure.

The firm expects the power segment to be a key driver of infrastructure growth, expanding at a 21% CAGR, even as overall infrastructure and industrial capex moderates to 11% CAGR over fiscal 2024–2027 from 22% in the preceding period. Transmission bids worth Rs 1.6 trillion have already been awarded in fiscal 2025, compared with Rs 39,500 crore in fiscal 2024.

Jefferies believes India's push for energy security and grid modernisation will sustain multi-year growth for power equipment manufacturers. The brokerage expects strong execution, rising order inflows, and margin tailwinds to continue benefiting the sector's leading players.

“Power transmission and distribution remains one of the most attractive industrial segments in India's current capex cycle,” Jefferies said, adding that Hitachi Energy and Siemens Energy are best positioned to capitalise on the expanding investment pipeline.

Hitachi Energy: Strong Order Book, Robust Margin Visibility

Hitachi Energy is Jefferies' top pick in the sector, supported by its record order book and structural margin improvement. Jefferies' target price of Rs 25,000 implies a 24% potential upside, underpinned by an estimated 81% EPS CAGR over financial year 2025–2027.

The company's order book surged 3.3 times year-on-year to Rs 29,400 crore as of September 2025, driven largely by HVDC orders worth over Rs 19,000 crore in India, including the Khavda–Nagpur and Bhadla–Fatehpur projects.

Jefferies noted that Hitachi's strategic shift away from full EPC (Engineering, Procurement and Construction) projects to focus on product design, engineering, installation, and commissioning has improved profitability visibility. The brokerage expects gross margins in the range of 38–40% over financial year 2026–2028, leaving further upside potential.

Siemens Energy: Strong Order Pipeline, Margin Expansion Ahead

Jefferies has also initiated a ‘Buy' on Siemens Energy India with a target price of Rs 4,000, driven by its large order backlog and improving profitability. As of September 2024, Siemens Energy's order book stood at Rs 18,200 crore, up 83% year-on-year, and equivalent to 3 times its financial year 2024 sales.

The company saw a 66% rise in order inflows over the first nine months of fiscal 2024, positioning it for 43% revenue CAGR over FY25–27. Jefferies expects margin expansion of 331 basis points during the same period, supported by higher operating leverage as facility utilisation improves from below 60%.

CG Power: Moderate Growth, Mixed Outlook

Jefferies on the other hand initiated a ‘Hold' rating on CG Power, citing strong visibility in the power division but limited upside from the industrial systems segment.

The company's order book stands at 1.5 times financial year 2025 sales, with the power division alone accounting for 3 times its fiscal 2025 sales and contributing 48% of EBIT.

However, the industrial division, which forms a significant portion of the business, faces headwinds — its order book is only 0.7 times financial year 2025 sales, and EBIT margins have fallen to 11.6% from a fiscal 2023 peak of 16%.

The company's semiconductor venture could be a long-term positive, but Jefferies believes it will contribute meaningfully to earnings only from FY28 onwards.