India is moving rapidly on the path of energy security and sustainable development. While renewable energy continues to expand, the power transmission and distribution (T&D) sector has emerged as a strong backbone for this growth. The planned heavy capital expenditure in this space is expected to play a crucial role in making the country’s power system more reliable and efficient.
Let us understand the capex boom in India’s power transmission sector in detail and assess whether this theme can turn into a significant investment opportunity for investors.
What’s Happening?
According to a report by Motilal Oswal, India’s transmission and distribution sector is set to witness a capex push of approximately Rs 9 lakh crore (or Rs 9 trillion) by 2032. As per the National Electricity Plan (NEP), an ambitious investment of around Rs 9 lakh crore has been proposed for transmission alone. This capex cycle began in FY22-23 and is already translating into strong order books, revenue growth, and improved margin profiles across the T&D value chain.
The need for large-scale renewable energy integration has led to a structural acceleration in orders over the past few years. Demand has remained strong from both domestic and export markets. However, transformer supply has struggled to keep pace with demand, leading to longer lead times and creating a favourable environment for manufacturers.
Major Reasons for Capex Growth
The primary driver of growth in the transmission sector is the large-scale integration of renewable energy, which has accelerated order flows. On the domestic front, transformer demand remains robust, even as supply-side constraints persist. Manufacturers are operating at high capacity utilisation levels and are increasingly focusing on high-voltage transformers, which have longer manufacturing cycles.
In FY25, 45 schemes were awarded, while in FY26 this number declined to 16. However, this drop was due to temporary execution and bandwidth constraints rather than any structural slowdown in demand. Analysts believe there is ample room for the cycle to continue in the coming years. With ongoing capacity expansion and sustained demand from both domestic and export markets, pricing pressure is expected to remain limited.
HVDC Projects and Global Opportunities
The National Electricity Plan highlights 32.3 gigawatts (GW) of HVDC projects in the pipeline, of which around 14.5 GW have already been tendered and awarded. Going forward, 1–2 HVDC project awards are expected annually. These projects are likely to drive demand for specialised, high-value equipment such as converter transformers and reactors.
Globally, transformer demand has witnessed a sharp surge, particularly in the US and Europe. Factors such as renewable energy integration, data centre expansion, industrial electrification, electric vehicle charging infrastructure, and the replacement of ageing infrastructure have created a demand-supply imbalance. This has resulted in increased imports and higher prices. India is now emerging as a manufacturing hub within global OEM feeder networks, creating strong export opportunities for domestic companies.
What Does This Mean for Investors?
Motilal Oswal Financial Services has initiated coverage on T&D stocks. According to the report, transformer companies are expected to deliver strong earnings growth between FY25 and FY28. While valuations are no longer inexpensive, they may remain supported by future earnings upgrades and growing export opportunities.
The presence of limited players in the HVDC segment, such as Hitachi Energy India, Siemens Energy India, GE Vernova T&D India, and BHEL, could benefit these companies in specialised projects. The sector offers investors the potential for long-term growth, supported by strong order books and opportunities for margin expansion.
What’s Next?
In the coming years, the power transmission sector is unlikely to remain limited to domestic requirements. With continued renewable energy integration, expansion of High Voltage Direct Current (HVDC) projects, and rising global demand, the sector’s scope is set to widen further. Transformer companies are focusing on capacity expansion and high-voltage manufacturing, which is expected to sustain their growth momentum.
The nearly Rs 9 lakh crore capex push is set to provide a strong foundation for India’s energy transition and strengthen the sector’s long-term outlook. As per the report, transformer companies are likely to deliver robust earnings growth between FY25 and FY28. Although valuations are no longer cheap, potential earnings upgrades and increasing export opportunities could continue to support them.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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