Emkay Global has downgraded Hitachi Energy India's rating from 'Hold' to 'Reduce' with a significantly lower target price of ₹30,768, down from Jefferies' ₹43,145 target. The brokerage cited the sharp rally in stock price valuing the stock at P/E of 65x Mar'28E (60x Mar'28E earlier), as the primary concern. Despite revising EPS estimates upward by +4.6%/+8.8% for FY27E/FY28E factoring in strong execution momentum and improving margin profile, the downgrade reflects valuation concerns at current levels.
Hitachi Energy India reported robust Q4FY26 performance with revenue growth of 46.2% YoY driven by strong execution across transmission, renewables, exports and grid infrastructure projects. The company's EBITDA margin expanded by 363bps YoY to 16.3%, supported by operating leverage and disciplined cost management. The export business (~25% of ex-HVDC revenue) continued to witness healthy traction supported by allocated overseas markets, globally exclusive product manufacturing and feeder-factory opportunities. Services contribution is expected to increase to ~10-12% of sales in the medium term, likely to aid margin expansion.
The company maintains a robust order pipeline across transmission, renewables, exports and data centres, with management highlighting a strong HVDC pipeline with 3-4 large VSC/LCC projects expected over the next 2 years. According to Emkay Global, two high-growth areas stand out: data centres represent an emerging demand driver while exports add an international dimension. The brokerage has witnessed strong industry trends, particularly with regard to HVDC - High Voltage Direct Current - projects, which are margin accretive and could contribute meaningfully to the company's growth trajectory.
The stock is currently trading at P/E of 109.1x/76.0x on the earnings of FY27/28E, which Emkay Global considers expensive given the current market conditions. Despite the downgrade, the stock has continued to outperform significantly, with gained 7.79% in one week and 11.73% over one month, while delivering a sharp 94.69% YTD return. However, analysts note that the primary challenge for a prospective investor is the demanding valuation, which leaves little room for execution errors. While the long-term growth story remains powerful, a disciplined, staggered approach or waiting for a market-driven pullback may be more prudent than initiating a full position at current levels.
