Motilal Oswal's research report on Hitachi Energy
Hitachi Energy’s 1QFY25 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 PAT. 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 INR24b. 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 HVDC wins and margin improvement.
Outlook
We thus maintain our Neutral rating on the stock with an unchanged two-year forward TP of INR12,000, based on DCF.
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