Power Grid, Hitachi Energy: Goldman Sachs expects up to 25% upside for these 2 power stocks

Power Grid Corporation of India and Hitachi Energy India have seen their share prices gain 62-150% in last one year.

The strong power demand in the country has fueled earnings growth driving prospects for most power sector companies.

The government is supporting the viability of renewable projects with indirect financial support worth $270 billion by maintaining open access to the central grid, which allows the utilization of least-cost renewable generation locations. The highly interconnected system in the country makes this possible.

In the opinion of Goldman Sachs, it makes financial sense to build excess transmission infrastructure and keep it available for renewable energy sources since the benefits of the shift should more than balance the additional network costs. Consequently, they project that India’s power transmission capital expenditure needs will exceed US$500 billion by FY50, or around 30% of the total capital outlay for the energy transition.

The same bodes well for Power Grid Corporation and Hitachi Energy share prices , among others.

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Goldman Sachs remains bullish on Power Grid Corporation and Hitachi Energy Share prices and expects up to 25% upside for the stock. 

As per Goldman Sachs Transition to drive multi-decade rise in transmission

Power Grid Corporation – Power Grid as per Goldman Sachs is the largest beneficiary of their transition-linked grid capex estimate, which the Power Grid share  price is not fully pricing in.  Additionally, they project that Power Grid could cover roughly 30% of India’s grid capital expenditure by FY32 without having to reduce dividend payments due to its sizable balance sheet, cheap cost of debt, and significant annual free cash flow generation. The 12 month target price Of Goldman Sachs for Power Grid at ₹355 indicates about 25% upside for Power Share price trading at ₹282 levels now.

Hitachi Energy India – Hitachi Energy share price has given multibagger returns to investors over last year, having gained around 147%.  For Hitachi Energy India Goldman Sachs says that they like its positioning as a pure upstream manufacturing beneficiary of India’s energy transition, with tech leadership in high voltage equipment and highly indigenized manufacturing capabilities. 

The themes of global supply chain diversification, global transmission equipment scarcity, and grid digitization should also be beneficial for Hitachi Energy share price. The 12 month target price of Goldman Sachs for Hitachi Energy share at ₹8,250 indicates some more upside for the stock trading at ₹7998 levels.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

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Published: 23 Apr 2024, 12:52 PM IST