India's transmission and distribution sector is positioned for significant growth with Rs 9 lakh crore in investment planned through 2032, according to a report by Motilal Oswal Financial Services. The current investment cycle, which began in FY22-23, has already demonstrated improved sector performance across the board. As reported by The Times of India, this robust capex outlay is driving sharp growth in order books, revenue, and margin profiles for industry participants. The report emphasizes that "the transmission and distribution (T&D) value chain... continues to benefit from a robust capex outlay of Rs 9 trillion until 2032," with the cycle already driving substantial improvements in sector metrics.
Despite strong fundamentals, the sector faced some headwinds in FY26. According to Motilal Oswal's analysis, sector-level ordering was weaker in FY26 (16 schemes awarded) versus FY25 (45 schemes awarded), primarily due to temporary bandwidth constraints rather than structural demand slowdown. The report noted that local producers are currently operating at high capacity utilization and are increasingly focusing on high-voltage transformers involving longer manufacturing cycles and testing timelines, which is causing delivery delays. However, the brokerage maintains that "there remains room for the cycle to continue over the next couple of years," supported by capacity expansions and strong demand from both domestic and global markets.
India's National Electricity Plan includes an ambitious investment plan of approximately Rs 9 lakh crore in transmission, driven by the need to add more renewable energy capacity. As reported by The Times of India, this has already led to structural acceleration in orders over the past few years, supporting the sector's growth trajectory. The plan's focus on renewable energy integration is creating sustained demand for transmission infrastructure, with the report noting that "demand continues to remain strong from both domestic and export markets while transformer supply has struggled to keep pace," resulting in longer lead times and a favorable environment for manufacturers.
International markets are presenting significant opportunities for Indian companies. According to the report, there is a historic surge in the US and Europe due to renewable energy integration, data center expansion, industrial electrification, and electric vehicle charging infrastructure needs. This has created a demand-supply mismatch, pushing up prices and increasing imports, which is benefiting domestic manufacturers as India grows as a manufacturing base within global OEM feeder factory networks. The report highlights that transformer demand in these regions is witnessing a "historic surge" due to urgent needs to replace aging infrastructure, creating substantial opportunities for Indian companies.
Looking ahead, Motilal Oswal expects transformer players to continue delivering strong earnings growth over FY25-28, though it warned that valuations are no longer cheap. The report noted that one to two HVDC awards annually are expected in the future, with about 14.5 GW out of a 32.3 GW pipeline already tendered and awarded. Despite challenges, the possibility of further earning upgrades and unfolding export opportunities can sustain current valuations, indicating continued investor interest in the sector's growth trajectory. The report emphasizes that "the possibility of further earning upgrades and unfolding export opportunities can sustain these valuations," indicating sustained investor confidence in the sector's growth trajectory.
