Power Stocks to Buy: Citi's top 3 picks offer up to 32% upside amid India's transmission boom

Shares of power equipment companies moved higher on Thursday after global brokerage Citi initiated coverage on several sector players, highlighting a long runway for growth driven by India's renewable energy push and a large-scale expansion of transmission infrastructure.

Hitachi Energy India rose more than 5 per cent to Rs 36,975 during the session, while GE Vernova T&D India gained 2.7 per cent to Rs 5,100. CG Power and Industrial Solutions also advanced over 4 per cent to Rs 943.15.

The buying interest followed Citi's positive outlook on the sector, with the brokerage identifying transmission and grid infrastructure as one of the most attractive investment themes in the country's power sector.

Citi starts coverage with 'Buy' ratings

The brokerage initiated coverage on Hitachi Energy India, GE Vernova T&D India and CG Power with 'Buy' ratings.

It assigned target prices of Rs 46,700 for Hitachi Energy, Rs 6,200 for GE Vernova T&D India and Rs 1,100 for CG Power.

For Siemens Energy India, Citi maintained a 'Neutral' rating with a target price of Rs 4,000.

The brokerage said India is entering a phase where investments in transmission infrastructure are likely to accelerate as the country prepares its electricity network for the next wave of renewable energy capacity additions.

Renewable energy target driving investment

According to Citi, the Central Electricity Authority's roadmap to integrate 900 GW of renewable energy capacity by FY36 will require extensive upgrades to the country's transmission network.

The plan involves investments of around Rs 7.9 lakh crore in transmission infrastructure over the coming years.

A significant portion of this spending is expected to be directed towards high-voltage direct current, or HVDC, systems that are used to transmit electricity efficiently across long distances.

Citi estimates that HVDC-related opportunities alone could be worth around Rs 1.6 lakh crore for equipment manufacturers.

Why transmission companies stand to benefit

As solar and wind projects become larger and are developed in remote locations, transmission networks are becoming increasingly important in moving electricity to demand centres.

The brokerage believes this trend will support sustained demand for transformers, switchgear, converters and other grid equipment.

It also noted that India's manufacturers already play a significant role in the global supply chain, accounting for nearly 80 per cent of production across several transmission and distribution product categories.

With many countries investing heavily in power infrastructure and renewable energy, Indian manufacturers could benefit not only from domestic orders but also from export demand.

Local players may have an edge

Citi said stricter localisation requirements and certification standards could work in favour of established domestic companies.

Such norms create barriers for new entrants and strengthen the competitive position of companies with existing manufacturing capabilities, proven technology and long execution track records.

The brokerage expects leading players to be among the biggest beneficiaries of the transmission investment cycle.

Risks remain on the horizon

Despite the positive outlook, Citi cautioned that delays in project execution, slower transmission spending, increased competition or changes in policy could affect growth expectations.

Inflationary pressures and any slowdown in renewable energy investments may also weigh on the sector.