High-voltage T&D firms show record backlog, robust growth in Q4 FY26

HV T&D players excelled in Q4 FY26 with record backlogs and high growth. A Nuvama report highlights a Rs 7.93 trillion transmission capex plan to boost the sector, meeting India's power demand and non-fossil goals.

High-voltage transmission and distribution (HV T&D) players continued to outpace other segments during the fourth quarter of FY26, even as the broader sector presented a strong cycle but weaker risk-reward balance.

According to a report by Nuvama, high-voltage transmission and distribution players continued to operate with a record-high backlog. "HV T&D players continue to operate with record-high backlog, with inflows growing 51.8%, revenue up 36.5% YoY and EBITDA margin expanding 220bp YoY to 19.9%, aided by favourable pricing and operating leverage", the report stated.

Long-Term Sector Outlook

The report noted that while execution visibility remains strong, the current valuation alters the investment proposition. The domestic power sector is heavily reliant on structural expansions to keep pace with systemic consumption.

The report mentioned that the Central Electricity Authority (CEA) outlined a 900-gigawatt non-fossil roadmap by FY36, which implies Rs 7.93 trillion of transmission capital expenditure. This plan extends the earlier Rs 9.2 trillion transmission roadmap for the financial years 2022 to 2032, enhancing medium-to-long-term visibility for transformers, gas-insulated switchgear, high-voltage direct current equipment, and engineering procurement construction players.

Meeting Immediate Power Demand

The structural demands are further intensified by immediate supply pressures. "India is already facing peak deficit in peak summers and evenings (when solar goes off grid)," the report stated.

To balance this deficit, the report detailed specific generation requirements. "In order to meet 6-7% power demand growth--supply growth from RE has to be 35-40GW yearly and Thermal at 10-15GW yearly," the report said.

Alternatively, the report mentioned that if demand growth slows down to 5 per cent while renewable energy additions remain strong, the deficit shifts past FY35E. "Hence the need to add thermal can be pushed further and tendering may likely plateau in our view but the need for thermal thereof will not be completely eliminated," the report added.

Contrast with Non-Power Industrials

In contrast to the utilities space, non-power industrial companies experienced subdued execution during the quarter. The report highlighted that revenues grew by a modest 10 per cent year-on-year, while margins declined 190 basis points to 10.7 per cent due to commodity inflation, rising freight costs, and the depreciation of the rupee.

However, order inflows for non-power industrials grew 35.7 per cent year-on-year, driven by data centers, electric vehicles, metals, and electronics. (ANI)

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