Sell Hitachi Energy; target of Rs 12,500: Motilal Oswal

Motilal Oswal research report on Hitachi Energy

Hitachi Energy’s 4QFY25 revenue came in below our estimates, whereas PAT beat our expectations on the back of better margins and higher other income. Order inflow was healthy for the quarter, while FY25 inflow was boosted by HVDC order wins. We believe Hitachi Energy will continue to be a key beneficiary of green energy initiatives across domestic and international markets.Outlook

However, the execution period of the order book is turning longer due to large-sized HVDC projects where execution contribution will be lower in the initial two years and will ramp up mainly after 1.5-2 years. We increase our FY26/FY27 earnings estimates by 19%/15% to factor in higher margins. Our estimates currently bake in at least one HVDC win for the company every year and consistent improvement in margins. The stock is currently trading at 91.5x/62.2x P/E on FY26E/27E earnings. We reiterate our Sell rating on the stock with a revised two-year forward TP of INR 12,500 based on DCF, as we already bake in 38% revenue CAGR and 80% PAT CAGR over FY25-27.

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