Hitachi Energy India Limited — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

Hitachi Energy India delivered a strong Q3 FY26, marked by robust order inflows and significant revenue and profit growth. The company achieved an all-time high order backlog, supported by strong execution and operational efficiencies. While PBT was partially impacted by new labor code implementation and gross margins saw slight QoQ compression due to product mix, the overall outlook remains positive with strategic focus on data centers, renewables, and exports, alongside continued capacity expansion.

Highlights

  • Order inflows of Rs. 2,477.6 crores, up 73% YoY (excluding HVDC order), and 11.7% QoQ, indicating robust operating momentum.

  • Revenues increased by 29.6% YoY to Rs. 2,168 crores, with a 13.2% QoQ growth.

  • PBT before exceptional items grew by 118.4% YoY to Rs. 402 crores, driven by higher revenues, execution focus, and operational efficiency.

  • Operational EBITDA margin expanded to 15.6% in Q3 FY26, up from 10.1% YoY and comparable to 15.2% QoQ.

  • Order backlog reached an all-time high of Rs. 29,872 crores, providing strong revenue visibility.

  • Over 70% of the order portfolio includes price escalation formulas, protecting against commodity price volatility.

Concerns

  • PBT was impacted by approximately Rs. 54.2 crores due to the implementation of the new labor code.

  • Gross margin slightly decreased QoQ to about 39.5%, attributed to product mix fluctuations.

  • Order intake in transmission, rail & metro segments saw a decline this quarter, though management views this as a market cycle effect expected to improve.

Key financials

  1. Revenue ₹2,168 Cr +29.6%YoY
  2. Order Inflow ₹2,477.6 Cr +73%YoY
  3. PBT Before Exceptional ₹402 Cr +118.4%YoY
  4. PBT ₹347.8 Cr
  5. PAT ₹261 Cr
  6. Operational EBITDA ₹338 Cr
  7. Operational EBITDA Margin 15.6%
  8. PBT Margin Before Exceptional 18.5%
  9. PBT Margin 16%
  10. PAT Margin 12.1%

What they filed

Q1 FY27: revenue up 68.6%, net profit up 122.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,554 1,620 1,884 1,479 1,833 +18%2,082 +29%2,754 +46%2,494 +69%
EBITDA110 167 238 155 299 +172%345 +107%416 +75%364 +135%
Net profit52 137 184 132 264 +408%261 +91%330 +79%294 +123%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹29,872 Cr

as of 2025-12-31 quantified

Inflow this quarter

₹2,477.6 Cr

Composition

Mix 2 client types
  • Utilities 47%
  • Industries 43%

Share of order book by client type· partial disclosure (90% of the book)

The order backlog is at an all-time high, with robust order inflows driven by base orders and strong YoY growth excluding HVDC. Over 70% of the portfolio includes price escalation clauses.

Source: Prepared remarks

Capital allocation

medium confidence
  • Capex ₹700 Cr
    • Capacity expansion for high voltage products
    • Expansion of traction transformer facility
    We have very clearly given in our QIP document how we wanted to utilize CAPEX. In this first year, we said we will do Rs. 700 plus crores and the next year will be an additional Rs. 700 plus crores. So, that what is the thing in that. So, there could be a movement of few hundred crores this way, that way, but otherwise we are on track very much.
  • Liquidity Liquidity disclosed The company reported a consistent and strong Operating Cash Flow (OCF).
    And as you can see here, our order backlog is all time high, Rs. 29,872 crores. And look at nine-month comparison, April to December this year versus last year is also quite strong. Even in the high base of orders we have maintained are slightly growing in that high base orders. Revenue is up 24% on a 9-month period, and profit and other things is a huge amount of improvement. This quarter, our work spanned various segments including utilities, renewables, rail and industry.

Guidance & targets

ESG

  • Operational CO2 Emissions Reduction ESG · by 2025-2026 · High confidence 70%
    For the planet, we continue to operate at 100% renewable electricity and are on track to achieve 70% reduction in operational CO2 emissions compared to the 2019 base level, significantly ahead of the 2025-2026 targets.

    — N. Venu, MD & CEO

Exports

  • Export Revenue Share Exports · going forward · High confidence 25-30%
    And the combination of these three, what we are saying, it will be 25%-30% of our revenues going forward. Excluding, of course, you need to take out the big HVDC project, then it will be 25%-30%.

    — N. Venu, MD & CEO

Capex

  • FY26 Capex Plan Capex · FY26 · High confidence Rs. 700+ crores
    We have very clearly given in our QIP document how we wanted to utilize CAPEX. In this first year, we said we will do Rs. 700 plus crores and the next year will be an additional Rs. 700 plus crores.

    — N. Venu, MD & CEO

  • FY27 Capex Plan Capex · FY27 · High confidence Additional Rs. 700+ crores

    — N. Venu, MD & CEO

What to watch in Q4 FY26

Mumbai HVDC Project Commissioning

within 2-3 weeks (from Feb 5, 2026)
Current Pre-commissioning test completed
Target Project commissioned

Why it matters

Completion of this significant project will impact revenue recognition and operational milestones.

So, in just another two to three weeks, we will commission the project.

Risks & concerns

  • Impact of New Labor Code Implementation

    medium

    PBT was impacted by approximately Rs. 54.2 crores due to the implementation of the new labor code.

    PBT is Rs. 347 crores and basically here if you see the delta of roughly Rs. 54 crores on account of the implementation of the new labor code that as per the guidance we have taken into this particular quarter and that is why PBT is 16% for the quarter

    Management acknowledged

  • Gross Margin Fluctuation due to Product Mix

    low

    Gross margin was slightly lower QoQ at 39.5% due to variations in the product mix.

    So, actually, this gross margin fluctuation is basically on the product mix that we are operating.

    Management acknowledged

  • Decline in Transmission, Rail & Metro Order Intake

    low

    Order intake in these segments declined this quarter, attributed to project timing and market cycle, with expected improvement in coming quarters.

    But it is important to recognize that this is influenced by project timing and by strong prior performance driven by a large order during the same period of the last financial year. Additionally, there is a YoY decline in the rail and metro segment. However, we believe this is simply a part of the market cycle and timing and we expect it to improve in the coming quarters

    Management downplayed

Q&A highlights

6 direct
Mumbai HVDC Project Commissioning Timeline Direct
As you know, we don't share revenue details on a project specific basis, and when it comes to the Mumbai HVDC, so we have just completed our pre-commissioning test. We and we have just completed the pre-commissioning test. So, in just another two to three weeks, we will commission the project.

Provides a clear timeline for the completion of a significant project, impacting future revenue recognition.

Asked by Umesh Raut, Nomura India

Impact of Product Mix on Gross Margin Direct
So, actually, this gross margin fluctuation is basically on the product mix that we are operating. We have also earlier talked about that in some quarters depending upon the execution of the products, there could be slight changes left and right. So, that is only the outcome of the product mix that you are operating.

Explains the slight QoQ decline in gross margin, attributing it to product mix rather than broader operational issues.

Asked by Umesh Raut, Nomura India

Price Escalation Clauses in Order Backlog Direct
Most of our backlog has price escalation formulas built in. So, we have been also telling you from the beginning that it will not impact great to the large extent because more than I think 70% of our portfolio is having a price escalation.

Highlights the company's strategy to mitigate raw material price volatility, with a significant portion of the backlog protected.

Asked by Umesh Raut, Nomura India

Domestic Market Outlook and Capacity Direct
The market in my view is very strong. It is still stronger and both in terms of transmission and also in terms of electrification is going in a big way. Electrification of data center will come in huge amount in the same. So, the need for more power equipment, whether it is transformer, switchgear, etc., is definitely going to be there in that. So, we have been looking at the capacities coming in. Various companies have announced the capacity expansion. Considering the existing capacities plus capacities to come, we believe that still there is a gap to close on.

Provides a positive long-term outlook for the domestic market, especially for power equipment, despite announced capacity expansions by competitors.

Asked by Umesh Raut, Nomura India

CAPEX Utilization Discrepancy Partial
So, just now, I think we answered the same question. So, we have a slow start for sure, but we have a pipeline in place where in the coming quarters, it will pick up. So, because of the product cycle, our product demands, we cannot do a bulk CAPEX at one go, so we have to go in a sequential approach.

Addresses the slow CAPEX utilization compared to the plan, explaining it as a sequential approach dictated by product cycles, with an expectation of acceleration.

Asked by Parikshit Kandpal, HDFC Securities

HVDC Project Execution and Revenue Growth Direct
No. I think we told also it is not that HVDC will slow down because HVDC, for example, we are already working on the existing two projects, manufacturing is going on and also various other simulations are going on. So, those are the projects we recognize the revenue based on the POC. So, revenues all will keep coming in that. We don't see any slowdown in our revenue growth.

Reassures investors that HVDC projects will not cause a slowdown in revenue growth, as work is ongoing and revenue is recognized based on Percentage of Completion (POC).

Asked by Parikshit Kandpal, HDFC Securities

Data Center Market Opportunity and Export Contribution Partial
Yes. I think, as I said, our exports, we are creating, again, capacities, etc., for domestic market, but we are flexible enough to address those exports in the data centers and also in industries, etc., in the nearby, our region, Southeast Asia, and other aspects of that. So, to answer your question, yes, data centers is also one of the things we are looking at. We have already received part of the orders from the data centers as exports.

Confirms the company's participation in the growing data center market, including export orders, but indicates difficulty in quantifying the exact addressable market due to global collaboration.

Asked by Amit Anwani, PL Capital

Adani HVDC Project and Margin Impact Direct
We don't have any delay in the HVDC on account of us or LD or anything like that. So, that is very clear, and we don't see that as a challenge. As I said, we have been building on a long-term basis and you have seen in the last, not three quarters, but several quarters, what we are saying and what we are doing it. And very consistently, we are making the margins up.

Clarifies that there are no delay-related penalties or liquidated damages expected for the Adani HVDC project, reinforcing confidence in margin maintenance and improvement.

Asked by Subhadip Mitra, Nuvama

2 min read 6 chapters

Detailed narrative

Strong Financial Performance Driven by Robust Order Inflows

Hitachi Energy India reported a solid Q3 FY26 with order inflows reaching Rs. 2,477.6 crores, marking a 73% YoY growth (excluding a large HVDC order from the prior year) and an 11.7% QoQ increase. Revenues for the quarter stood at Rs. 2,168 crores, up 29.6% YoY and 13.2% QoQ. Profit Before Exceptional Items (PBT) surged by 118.4% YoY to Rs. 402 crores, translating to an 18.5% margin, while Operational EBITDA margin improved to 15.6% from 10.1% YoY, reflecting enhanced operational efficiency and favorable product mix.

All-Time High Order Backlog and Execution Focus

The company achieved an all-time high order backlog of Rs. 29,872 crores, providing strong revenue visibility for future quarters. Management emphasized its focus on execution, with notable project commissions including a 130 kV, 33 kV substation in Bhutan and a 220 kV GIS substation for a data center in Pune. The Mumbai HVDC project's pre-commissioning tests are complete, with full commissioning expected within 2-3 weeks, and management confirmed no delays or penalties are anticipated.

Strategic Growth Areas: Data Centers, Renewables, and Exports

Hitachi Energy is strategically positioned to capitalize on technology-led growth, particularly in AI data centers, advanced manufacturing, and renewables. While data center contribution is currently in the high single digits, it is expected to grow significantly. The company is also expanding its export footprint, with current bidding in the 29-30% range against a target of 25%, aiming for exports to constitute 25-30% of future revenues (excluding large HVDC projects).

Capacity Expansion and Localization Initiatives

To support future growth, Hitachi Energy is undertaking significant capacity expansion. The company has a planned CAPEX of Rs. 700+ crores for FY26, with an additional Rs. 700+ crores for FY27, although only Rs. 155 crores has been utilized so far in FY26 due to a sequential approach. Initiatives include expanding the traction transformer facility and establishing a high voltage product facility in Savli, Gujarat, which will also aid in further HVDC localization efforts.

ESG Commitment and Operational Efficiency

The company continues its strong commitment to ESG, operating on 100% renewable electricity and being on track to achieve a 70% reduction in operational CO2 emissions by 2025-2026 compared to 2019 levels. Operational efficiency measures, including the migration to an independent IT system (SAP4 HANA) from ABB, have contributed to a reduction in other expenses and overall margin improvement.

Favorable Macroeconomic Environment and Policy Support

Management noted a favorable macroeconomic environment with upward-trending growth indicators and stable inflation. The Union Budget's focus on public capital expenditure and AI data centers, along with recent trade agreements like the EU-India Free Trade Agreement and the US-India trade deal, are expected to create significant opportunities for Hitachi Energy by reducing tariffs and boosting supply chain integration in key sectors like offshore wind.

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