T&D enters multi-year growth phase; Siemens Energy, CG Power top picks

India’s transmission and distribution (T&D) sector is emerging as one of the most compelling industrial growth themes, supported by a large domestic investment pipeline and rising global demand for power equipment. At the center of this cycle is the transformer value chain, particularly high-voltage equipment, which continues to benefit from capacity expansion, healthy pricing, and strong order visibility. 

The domestic opportunity is anchored by the National Electricity Plan, which envisages nearly ₹9 trillion of transmission investments through FY32. The broader roadmap includes transmission infrastructure to support 500 GW of renewable energy capacity by 2030 and more than 600 GW of installed power capacity by 2032. Planned additions include over 191,000 circuit kilometers of transmission lines, 1,270 GVA of transformation capacity, and 33 GW of HVDC bi-pole links. 

 

While sector-level ordering moderated in FY26, with 16 schemes awarded versus 45 in FY25, the slowdown appears linked to temporary execution constraints rather than weak demand. Manufacturers are currently operating at high utilization levels and increasingly focusing on higher-voltage transformers such as 400 kV and 765 kV systems, which require longer production and testing cycles. 

As new capacities come online over the next one to two years, ordering activity is expected to recover. Another major growth lever is the rapid adoption of storage infrastructure. India’s plan includes 47 GW of battery energy storage systems and 31 GW of pumped storage capacity, which should create incremental demand for grid equipment, substations, and balancing infrastructure.  READ | Analyst shares Nifty strategy; bets on Jubilant FoodWorks, Pidilite 

High-voltage direct current (HVDC) projects are also becoming a meaningful opportunity. Of the 32.3 GW HVDC pipeline identified under the national plan, nearly 14.5 GW has already been tendered and awarded. These projects require specialized, high-value converter transformers and reactors supplied by a limited set of qualified players, supporting margins and technological entry barriers. 

Beyond India, export prospects are strengthening. Transformer demand in the US and Europe is witnessing a sharp upcycle, driven by renewable integration, electric vehicle charging networks, industrial electrification, AI-led data center expansion, and replacement of aging grids. Persistent supply shortages have stretched lead times to two to four years, creating opportunities for Indian manufacturers to integrate into global supply chains. Although valuations across the sector have rerated, earnings visibility remains strong. With domestic capex, export demand, and technology-led segments such as HVDC and storage gaining traction, the T&D sector appears positioned for sustained medium-term growth, even as risks from supply chains, commodity prices, and tendering delays remain relevant. 

Motilal Oswal sector of the week: Top stocks to watch

Siemens Energy: TP – ₹3,600

Siemens Energy India is well-positioned to benefit from the structural upcycle in power transmission and energy transition, driven by rising investments in grid infrastructure, renewable integration, and electrification. Its strong capabilities in transformers and high-voltage solutions, along with ongoing capacity expansion, support long-term growth visibility across domestic and export markets.  

The company continues to witness strong demand momentum, particularly in the power transmission segment, supported by a robust order backlog and improving execution. Profitability trends remain strong on better cost control, although gross margins saw some pressure. Capacity expansion plans, especially in transformers, reflect management’s confidence in sustained demand, while commodity price movement remains a key monitorable. We expect revenue/ EBITDA/ PAT CAGR of ~27 per cent/ 31per cent/ 32 per cent over FY25–28E, driven by strong transmission demand, capacity expansion to ~60,000 MVA, and operating leverage benefits.

CG Power: TP – ₹900

CG Power and Industrial Solutions (CG Power) is ideally positioned to benefit from the strong addressable market in the transmission sector with its existing as well as upcoming capacity expansion. The company is a leader in the LT motor market. CG Power is ramping up the portfolio of HT motors, and we expect the company to gain from demand recovery in the industrial segment, too, after a few quarters. To capitalize on the strong demand potential across T&D and other segments, CG Power is expanding its capacity in transformers from the current 40,000MVA to 85,000MVA by FY27/28 at an estimated capex of ₹7.1 billion. It is also one of the early movers in the OSAT market and will witness revenue ramp-up once its second phase of capex for 14.5 million chips per day commences from FY27. 

We believe that with current capex, over the next two years, CG will emerge as a leading player in the transformer market and will also see full commissioning of the OSAT facility, both providing a strong uptick to growth. With a strong order book of ₹158 billion as on December 2025, we expect revenue/ EBITDA/ PAT CAGR of 26 per cent/ 32 per cent/ 28 per cent over FY25-28. 

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