Detailed Narrative
Strong Q1 FY26 Performance Driven by Record Order Intake
Hitachi Energy reported an exceptional Q1 FY26, with order intake soaring by 365% year-on-year to an all-time high of ₹11,339.2 crores. This surge was primarily fueled by a large HVDC project. Revenue also demonstrated robust growth, increasing by 15.3% year-on-year to ₹1,529.8 crores, reflecting effective execution. The company achieved an operational EBITDA margin of 11.1%, leading to a PBT of ₹176.9 crores and PAT of ₹131.6 crores, marking a significant improvement in profitability.
Record Order Backlog and Revenue Visibility
The strong order intake propelled the total order backlog to a record ₹29,135 crores as of June 30, 2025, providing substantial revenue visibility for several quarters. While HVDC projects constitute 55-60% of this backlog and have longer execution cycles (48-54 months), non-HVDC orders also showed healthy double-digit growth exceeding 20%. Short-cycle projects in segments like data centers and metro are expected to be executed within 6-18 months, contributing to near-term revenue.
Strategic Investments and Capacity Expansion
The company is committed to a ₹2,000 crores CAPEX plan to expand capacity across key business units, including transformers, high-voltage products, grid automation, and HVDC. This investment is primarily aimed at meeting robust domestic demand, with capacities expected to come online over the next 18 months. Management anticipates an asset turnover in the range of 3-5x once these expansions are complete, supporting higher revenue generation.
Market Outlook and Segment Performance
Hitachi Energy sees a strong market pipeline, particularly in transmission, rail and metro, data centers, and industries, with these segments showing significant order growth (625% for transmission, 845% for rail/metro, ~100% for data centers). Although the renewable, wind, and solar segment experienced a 25% decline in Q1 FY26 orders, management considers this a temporary timing issue. The company also noted a 90% year-on-year growth in service orders, contributing to the overall order book.
Technology Leadership and Cost Structure Management
Management defended its cost structure, including royalty payments and other expenses, as essential for accessing global technology and maintaining leadership. They emphasized that these costs, while appearing high (e.g., 4%+ royalty, 22.7% other expenses), enable technological advantage and will become more efficient as revenue volumes increase. The company highlighted its focus on operational excellence and sustainability, aiming for zero incidents in safety and integrity.