Buy Hitachi Energy India; target of Rs 13,825: Geojit Financial Services

Geojit Financial Services research report on Hitachi Energy India

Incorporated in 2019, Hitachi Energy India Ltd operates in power technologies and makes a range of products across the grid’s value chain. Revenue from operations increased 27.2% YoY to Rs. 1,620cr, supported by a favourable execution mix and enhanced operational efficiencies. Revenues of key segments delivered impressive growth. Transmission (without HVDC) increased 28% YoY, while industries soared 60% YoY. Data centres jumped 615% YoY. However, the renewable-energy segment witnessed a 68% decline (management said the decline was seasonal). The company achieved its highest-ever order backlog of Rs. 18,994cr, ensuring strong revenue visibility for the upcoming quarters. The execution rate declined to 8.2% from 14.5% in Q3FY24. Exports (excluding the HVDC order) contributed over 40% of total orders, with key projects in Indonesia, Canada, Croatia and Azerbaijan. At the operating level, EBITDA rose 145.5% YoY to Rs. 167cr, resulting in a robust double-digit EBITDA margin of 10.3%. PAT rose 498.1% YoY to Rs. 137cr, driven by favorable execution mix and notional forex gains on export order deliveries.

Outlook

Therefore, we upgrade our rating on the stock to BUY, with a rolled forward target price of Rs. 13,825, based on a target multiple of 55x P/E on FY27E adjusted EPS.

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