Multibagger Stock:Hitachi Energy India Stock Soars 235% in 9 Months, 1540% in 4 Years – Is It Time to Buy?

Companies in the Transmission and Distribution (T&D) sector have seen their stock prices rise sharply recently, driven by consistent order inflows during India’s energy transition.

Hitachi Energy’s Performance: Hitachi Energy India has been a standout performer. Since October 2023, the stock has surged 235%. Every month, the stock has closed positively, with April 2024 seeing the largest monthly gain of 40%. Over the past four years, the stock has climbed an impressive 1540%, reaching an all-time high of ₹14,382 per share on June 3, surpassing the ₹14,000 mark for the first time.

India’s Power Demand: India has seen strong power consumption in FY24 due to increased economic activity and household use. The government is boosting power generation, including renewable energy sources, to meet high growth expectations for the economy and manufacturing sector.

Transmission System Growth: The transmission system, crucial for delivering power from generating stations to the distribution network, is experiencing significant growth. This ensures efficient power delivery to consumers.

Analysts’ Insights: Analysts highlight several factors driving Hitachi Energy’s growth, including grid digitalisation, a global shortage of transmission equipment, and supply chain diversification. India excels in manufacturing transmission equipment, supported by a strong ancillary supply chain and minimal dependence on China.

Hitachi Energy’s Capabilities: Over the past three years, Hitachi Energy has expanded its capacities in HVDC, power quality, and global technology services. Many of its product lines are now operating above 70% capacity utilisation, and ongoing demand may require further expansion.

Company Background: Hitachi Energy offers a range of energy solutions, from power generation systems to grid stabilisation and energy storage solutions. Formed through a joint venture between ABB’s Power Grids business and Hitachi Ltd. in 2018, it has become a key player in the energy sector.

Future Prospects: Hitachi Energy is well-positioned to benefit from the government’s push for renewable energy. This includes transformers, HV products, STATCOM, HVDC, and grid automation. There is a focus on enhancing and expanding the T&D network to facilitate renewable energy distribution, driving investments in grid stability, automation solutions, substations, switch gears, transformers, and conductors.

Industry Outlook: Industry sources expect at least 1-2 HVDC projects to be finalised in FY25, aligning with Hitachi Energy’s strengths. The National Electricity Plan (NEP) anticipates an investment of ₹2.4 trillion to enhance the T&D network by 2027, providing significant opportunities for Hitachi Energy across its product range.

Market Growth: The company saw a 737% year-over-year increase in inflows during the quarter. It projects a total addressable market (TAM) of 10-15% for typical data centre projects and up to 18% for hyper-scale data centres. Key offerings in this sector include HV products, transformers, and grid stability solutions, according to a recent note from domestic brokerage firm Motilal Oswal.