Why Hitachi Energy Share Price is Rising

Sone Mein Sugandh - This Hindi proverb signifies an enhancement to something already valuable or excellent, making it even better. This aptly describes the current trajectory of Hitachi Energy India's share price.

Allow us to explain...

In April 2024, we informed you that Hitachi Energy's share price was poised to reach Rs 10,000, and it indeed hit that mark This milestone was fueled by strong market confidence in the company's strategic direction and India's growing demand for advanced transformer technologies.

The robust rally in share price reflected investors' optimism about the company's role in the country's infrastructural growth and energy transformation.

In the past five days, this rally has intensified, following a significant announcement. Shares of the company rallied 13% and touched a new 52-week high of Rs 13,045.

Let's delve into the new announcement propelling Hitachi Energy's share price.

#1 Big Order Win

Earlier this week Hitachi Energy secured an order valued at approximately Rs 7.9 billion (bn) from Hitachi Energy Australia, a fellow subsidiary.

This order pertains to the Marinus Link project, which involves voltage source converter (VSC) high voltage direct current (HVDC) links between Tasmania and Victoria. The company will supply equipment for the Burnie Converter Station and the Latrobe Valley Converter Station, with the order scheduled to be executed over a period of four years.

Marinus Link has selected Hitachi Energy to supply the HVDC project in Australia. Hitachi Energy will provide its HVDC Light VSC stations for the project, with certain equipment being manufactured at the company's factory in India.

The Marinus Link project holds national significance for Australia and will play a fundamental role in the country's energy ecosystem. Hitachi Energy India will play a crucial role in supporting this project.

This significant order has boosted Hitachi Energy India's share price, driving it to new heights.

#2 Financial Performance of Hitachi Energy

For the March 2024 quarter, Hitachi Energy reported a 123.7% YoY increase in net profit at Rs 1.1 billion (bn), driven primarily by higher revenues. This is a significant rise from the Rs 0.5 bn net profit recorded in the same quarter last year.

The company's revenue rose 28% YoY to Rs 16.6 bn from Rs 12.9 bn in the corresponding period a year ago. This revenue growth was driven by solid order execution, a diverse revenue mix, and a focus on continuous operational improvement.

The board of directors has recommended a final dividend of Rs 4 per share, with a face value of Rs 2 each.

For the full financial year 2024, Hitachi Energy India's net profit increased by 74.4% YoY to Rs 1.6 bn from Rs 0.9 bn in FY23. Revenue from operations for the year stood at Rs 51 bn, up 17.6% compared to the previous year.

Strong financial results have significantly boosted investor confidence in the company.

Bright Demand Outlook

Lastly, shares of the company have been in focus owing to Hitachi's continued work towards three major growth sectors:

• Renewable energy
• Electrification of Indian Railways
• Metro expansion and improving connectivity

The push towards renewable energy sources like solar and wind power requires efficient energy transmission systems. Transformers play a vital role in this sector by stepping up the voltage for long-distance transmission from renewable energy plants to the grid and stepping it down for safe usage.

The company's advanced transformers ensure minimal energy loss and high efficiency, making them essential for the burgeoning renewable energy market in India.

The Indian Railways' ongoing electrification initiative aims to reduce reliance on diesel and cut down carbon emissions. Transformers are crucial in this transformation as they ensure the proper voltage levels needed to power electric trains efficiently.

Its reliable and high-performance transformers support the electrification process, enhancing the railway network's operational efficiency and sustainability.

The expansion of metro networks across India's cities demands robust and efficient electrical infrastructure. Transformers are integral to the metro systems, providing the necessary voltage conversion for safe and efficient operation of trains and stations.

As cities grow and connectivity improves, the demand for transformers will continue to rise. The company's expertise in providing advanced transformer solutions positions the company to capitalise on this expanding market.

Hitachi Energy India's focus on these critical sectors underscores a bright demand outlook. The company's advanced transformer technology not only supports the growth of renewable energy and the electrification of railways but also aids in the expansion of metro networks, thereby driving overall infrastructure development.

This strategic positioning has bolstered investor confidence, reflected in the rising share price, as the company stands at the forefront of India's transformative energy and transportation projects.

How Hitachi Energy Share Price has Performed Recently

In the past five days, Hitachi Energy share price has rallied 13%. In the last month, it is up 16.7%.

In 2024, so far its share price is up 130.7% and it surged 205.4% in the last year.

The stock touched its 52-week high of Rs 13,0445 on 26 June 2024 and a 52-week low of Rs 3,900 on 9 October 2023.

About Hitachi Energy

Following the demerger of ABB India's power grid business unit, Hitachi Energy India was formed to provides product, system, software, and service solutions across the entire power value chain.

At present, the company's portfolio includes an extensive range of high-voltage transformers, grid automation products, and power quality products and systems.

The company has a strong market position in the power grid equipment and automation solutions segments. As part of ABB India, it has completed several major orders in the past.

The company was instrumental in bringing the Hitachi patented HVDC technology to India.

The parent company acquired majority stake in Hitachi Energy a couple of years ago. This solidified its position in India.

To know more about the company, check out its financial factsheet and latest quarterly results.

For a sector overview, read our power sector report.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...