Hitachi Energy India Limited

Hitachi Energy India delivered robust financial results in Q2 FY26, with total orders growing 13.6% year-on-year to INR 2,217 crore. Revenues increased by 23.3% year-on-year to INR 1,915.2 crore. This strong top-line performance, coupled with operational efficiencies and a favorable product mix, led to a significant surge in profitability, with Profit Before Tax (PBT) and Profit After Tax (PAT) growing by 399.8% and 405.6% year-on-year, respectively. Operational EBITDA stood at a healthy 15.2% of revenue, demonstrating effective cost management and execution of better margin orders.

The company achieved its highest-ever order backlog of INR 29,412.6 crore as of September 30, 2025, providing substantial revenue visibility for several quarters. Management highlighted a base order backlog of at least INR 10,000 crore excluding HVDC projects. While exports saw a 59% year-on-year growth and contributed 30% to this quarter's order inflow, the primary strategic focus remains on the domestic market. This is supported by ongoing factory expansions and increased localization efforts, aiming to meet the growing demand from India's energy transition and infrastructure development.

Hitachi Energy India has outlined a significant CAPEX plan, targeting approximately INR 750 crore for FY26 and INR 720 crore for FY27, with an overall INR 2000 crore CAPEX planned to address future requirements. Despite a relatively slow CAPEX deployment of INR 67 crore in H1 FY26, management expects a significant ramp-up in the second half. The company currently benefits from a large cash balance post-QIP, generating INR 120 crore in interest income in H1, which is expected to reduce as CAPEX funds are deployed for capacity expansion and technological upgrades.

Management expressed a strong, long-term bullish view on the data center market in India, projecting it as a significant opportunity that many stakeholders are currently underestimating. Hitachi Energy's addressable market for data center CAPEX is estimated at 15-20%, covering grid connections, substations, and various transformers. The HVDC project pipeline remains robust, with one tariff-based bidding project and another 6 GW LCC project expected to finalize in FY26, and a consistent requirement for 2-3 new HVDC projects annually in the coming years, reflecting the growing complexity of India's energy network.

The company's improved gross margins and double-digit operational EBITDA margins (15.2% this quarter) are attributed to a long-term strategy focusing on better margin orders, a favorable product mix, increased exports, pricing excellence, and a dedicated service business unit. Management is confident in sustaining and further improving these margins, emphasizing that the current performance is a result of deliberate strategic execution rather than short-term fluctuations. Cost containment efforts also played a role, with other expenses reducing to 16.9% from 22.7% in the previous quarter, contributing to bottom-line growth.