Hitachi Energy shares surge 9%, post biggest single-day gain in over six months; here is why

Hitachi Energy shares rose as much as 8.8%, its biggest single day move since February 6, to hit an intraday high of ₹35,475 on the National Stock Exchange (NSE) on Monday, August 10. On the BSE, Hitachi Energy shares advanced as much as 8.9% after the company post market hours on Friday reported its June quarter earnings.

Hitachi Energy's net profit in April-June period surged 123% to ₹294 crore from ₹132 crore in the same period last year on the back of a surge in electrification in the country.

Its revenue from operations rose 69% to ₹2,494 crore in first quarter of current financial year from ₹1,479 crore a year earlier.

The Bengaluru-based company reported strong operational performance as its earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 135% to ₹364 crore and its EBITDA margin improved by 4.1 percentage points to 14.58% at the end of June quarter.

"Hitachi Energy India Limited started the new financial year (FY) on a strong note, building on the growth momentum of the preceding FY. The country has seen a surge in electrification driven by transport, manufacturing, digital infrastructure, and the clean energy industry. India’s growing domestic power demand and structural advantages provide a significant opportunity for the energy sector," the company said in a press release.

The company's orders in the first quarter rose by 26% annually to ₹5,096.5 crore. Quarter’s orderbook was led by orders for HVDC, grid connection solutions, power quality equipment, and transformers. Whereas data centres contributed significantly, followed by industries and renewables, in terms of segment-wise order breakup, Hitcahi Energy said.

The company’s first Battery Energy Storage System (BESS) order of 165 MW / 330 MWh BESS project in Andhra Pradesh is a major milestone.

"It reinforces customer trust and unlocks significant growth opportunities in the energy storage segment. With the government focused on capacity expansion and optimization for assimilation of power into the grid, we expect the growth momentum in the energy storage segment to continue," Hitachi Energy added.

Following the earnings announcement, global investment firm Nomura in a note said that the company is positioned to benefit from several key tailwinds like lifecycle service orders for grid automation, transport infra expansion, multi-fold growth in data centres, energy storage solutions, the target of ordering one high voltage direct current (HVDC) project per year to enable grid integration.

As a leader in HVDC technology, company is well positioned to benefit from opportunities arising from upgrades to maturing HVDC stations over longer term, Nomura added.

Jefferies said that Hitachi Energy's EBITDA was 41% higher than its estimates led by a 25% sales beat and 160 basis points (bps) better than expected margins.

Management highlighted that India is making unprecedented investments in transmission infra, renewable energy deployment and integration and grid modernization, driving a large multi-year growth opportunity for Hitachi, Jefferies added.

As of 10:26 am, Hitachi Energy shares traded 8.5% higher at ₹35,375, outperforming the NIFTY Largmidcap 250 index which was up 0.2%.