Hitachi Energy, GE Vernova T&D and CG Power Stocks Surge on Citi's Bullish Rating for Transmission Sector

Power Transmission Equipment Makers Surge Amid Bullish Sector Outlook

Shares of power transmission equipment makers jumped on Thursday following Citi's initiation of coverage on the sector with a bullish outlook. The brokerage highlighted the emergence of transmission infrastructure as a key bottleneck in the global energy transition.

Hitachi Energy India, GE Vernova T&D India, and CG Power led the charge, with shares surging 5.6%, 2.7%, and 4.1%, respectively. Hitachi Energy India stock rose to Rs 37,175, making it the top gainer on the BSE Midcap index. GE Vernova T&D India and CG Power and Industrial Solutions also gained ground, emerging as top gainers on the index.

Citi initiated coverage on Hitachi Energy India with a Buy rating and a target price of Rs 46,700 per share, implying a 25% upside. The brokerage also started coverage on GE Vernova T&D India with a Buy rating and a target price of Rs 6,200, and on CG Power and Industrial Solutions Ltd with a Buy rating and a target price of Rs 1,100.

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Citi initiated coverage on Siemens Energy India with a Neutral rating and a target price of Rs 4,000. The brokerage ranked its preferred picks, with Hitachi Energy India at the top, followed by GE Vernova T&D India, CG Power, and Siemens Energy India.

The sector's strong one-year performance continues, with Hitachi Energy India gaining nearly 88% and GE Vernova T&D India more than doubling at 116%. CG Power shares have risen 37% during the same period.

According to Citi, power grids are becoming the "missing link" in the energy transition as rising renewable energy penetration, electrification, industrial growth, and expanding data-centre capacity drive a massive increase in transmission and distribution spending globally.

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Citi cited estimates from BloombergNEF that global transmission and distribution capex could reach about $15 trillion between 2025 and 2050. The brokerage noted that India is uniquely positioned to benefit from this trend as the country manufactures around 80% of global transmission and distribution products and is set for a major domestic transmission buildout.

The brokerage highlighted the Central Electricity Authority's transmission plan for integrating 900 GW of renewable energy capacity by FY36, pointing to a multi-year expansion of high-voltage (HV) and high-voltage direct current (HVDC) infrastructure. Citi estimates the HVDC opportunity alone at around Rs 1.6 trillion for equipment manufacturers.

Citi believes that Hitachi Energy remains its preferred play on the transmission buildout due to its leadership in HV and HVDC equipment, while GE Vernova T&D offers strong exposure to HVDC projects and exports. CG Power's diversified presence across transmission, railways, industrials, and semiconductors also positions it to benefit from the capex cycle, although rising competition could weigh on margins.

The brokerage sees incremental opportunities from HVDC projects, exports, and transmission investments driving further upside for the sector, while slower-than-expected capex, project delays, and rising competition remain key risks.