Hitachi Energy India shares surged over 10 percent . |
Mumbai: Hitachi Energy India shares jumped 10.24 percent to Rs 35,915 by 12.13 pm on Monday, August 10, after investors welcomed the company’s strong June-quarter results. The stock moved closer to its 52-week high of Rs 38,800. Its market value reached about Rs 1.60 lakh crore. However, the share remains expensive on traditional measures, trading at a price-to-earnings ratio of 134.Its return on capital employed stands at 29.4 percent, while return on equity is 21.9 percent, according to available figures.What Were The Results?
Revenue rose 69 percent year-on-year to Rs 2,493 crore. Earnings before interest, tax, depreciation and amortisation, or EBITDA, more than doubled to Rs 363 crore, rising 135 percent.
The EBITDA margin improved to 14.5 percent from 10.4 percent a year earlier. A higher margin means the company kept more operating profit from every rupee of revenue.Hitachi Energy also reported its highest-ever order backlog of Rs 32,222 crore, up 10 percent from last year. This large backlog provides better visibility on future revenue.What Supported Orders?Excluding a Rs 1,700-crore high-voltage direct current, or HVDC, order, new orders increased 26 percent to Rs 5,096 crore. Demand came from industrial companies, data centres and renewable energy projects.The company also won its first battery energy storage system order for a 165 MW/330 MWh project. Such projects store electricity and help balance the power grid when renewable generation changes. What Do Analysts Expect?Several brokerages raised their ratings or price targets. ICICI Securities upgraded the stock to ‘buy’ and raised its target to Rs 40,000. Nomura began coverage with a ‘buy’ rating and a Rs 40,030 target.Macquarie maintained an ‘outperform’ rating with a Rs 38,500 target, while Citi’s target of Rs 46,700 is among the highest cited.Analysts believe Hitachi Energy can benefit from spending on power grids, data centres, transport infrastructure, renewable energy, storage systems and HVDC projects. What Should Investors Watch?Future gains will depend on order growth, timely project execution, margins and new capacity. Investors should also consider the rich valuation. Of 20 analysts covering the company, 12 recommend buying, five suggest holding and three advise selling.