India’s power spending cycle is opening opportunities beyond the usual utility names, with demand reaching equipment, transmission, cables and industrial systems. Jefferies sees this cycle favouring a select group of companies, with its ‘Buy’ calls spanning power and T&D equipment, engineering, energy solutions and industrial applications.
Siemens Energy India and Hitachi Energy India have direct exposure to the power T&D build-out, while L&T, KEI Industries, Thermax, Cummins India and Kirloskar Oil Engines offer different ways to play the wider capex push.
Jefferies’ broader assessment is that power has stronger capex visibility. The brokerage said, “Defence and power standout on capex visibility”, while its report estimates power capex will grow at more than 20% CAGR over FY25-30E.
Jefferies on KEI Industries: ‘Buy’
KEI Industries Ltd. has a ‘Buy’ rating with a target price of Rs 6,920, implying 18% upside. Jefferies raised the target from Rs 6,150 and increased the target multiple to 45x September 2028 PE from 40x earlier as its confidence in the power outlook improved.
KEI is among the top four organised players in India’s cables industry and also operates as an EPC player in power T&D. The company therefore has exposure to cables, power infrastructure, retail demand and exports rather than being a pure power equipment manufacturer.
Jefferies’ investment thesis states, “Rise in retail and exports shares in revenue, which have 100-200 bps better margin profile.”
The brokerage expects the company to benefit from higher power and infrastructure spending. At the same time, cable pricing remains a concern. Jefferies lists “sharp pricing competition in cables” among the downside risks.
Jefferies on L&T: ‘Buy’
L&T carries a ‘Buy’ rating with a target price of Rs 5,000, implying 23% upside. Jefferies expects the engineering and construction major to benefit from the revival in India’s capex cycle.
L&T’s June-quarter order flow rose 14% YoY, while international orders increased 25% YoY. Its E&C margin remained stable at 7.6%, and FY27 guidance for flat margins was retained.
Jefferies said L&T has “strong visibility with conservative guidance should drive upside.” The company’s wider infrastructure and industrial exposure gives it participation across several parts of the capex cycle rather than only the power equipment segment.
The key risks include slower government capex and prolonged geopolitical tensions, according to Jefferies.
Jefferies on Thermax: ‘Buy’
Thermax Ltd. has a ‘Buy’ rating with a target price of Rs 5,200, implying 25% upside. The company provides engineering solutions to the energy and environment sectors and operates across several international markets.
Thermax’s June-quarter order flow rose 2% YoY. ABB, Siemens and Thermax together recorded 22% YoY growth in order flow during the quarter. Commodity inflation, however, affected margins across the industrial group.
Jefferies expects the wider energy and industrial capex cycle to support demand. Thermax also gives exposure to industrial energy solutions beyond the transmission and distribution equipment segment.
Jefferies on Kirloskar Oil Engines: ‘Buy’
Kirloskar Oil Engines has a ‘Buy’ rating with a target price of Rs 2,655, implying 27% upside. The company manufactures engines for gensets and industrial applications, with additional exposure to construction, railways, marine, defence and agriculture.
Its exposure to distributed power generation gives it a different position from Siemens Energy and Hitachi Energy, which are more closely tied to grid and transmission investment.
Kirloskar Oil Engines therefore offers exposure to the power theme through gensets and industrial engines, while its other end markets provide additional sources of demand.
Jefferies on Cummins India: ‘Buy’
Cummins India Ltd. carries a ‘Buy’ rating with a target price of Rs 6,700, implying 23% upside. The company is exposed to power generation as well as industrial and automotive demand.
Commodity costs affected margins during the June quarter. Jefferies said ABB, Thermax, Cummins and Siemens saw margins decline by 108-352 basis points YoY, mainly because higher commodity costs could not be fully passed through. Cummins has taken price hikes in the September quarter, which should support margins.
Pricing competition and a decline in exports remain the key risks. Its exposure to power generation and industrial applications nevertheless keeps the company linked to the broader capex cycle.
Jefferies on Hitachi Energy India: ‘Buy’
Hitachi Energy India Ltd. has a ‘Buy’ rating with a target price of Rs 45,790, implying 29% upside. The company is one of the most direct power T&D plays among the seven stocks.
Its order book is equivalent to 4 times FY26 sales, including two large domestic HVDC orders. Jefferies expects the existing order book to provide strong revenue visibility and operating leverage as projects are executed.
The June-quarter order flow declined 55% YoY, but the previous-year period included a sizeable HVDC order. Excluding HVDC orders, order flow increased 26% YoY.
Jefferies expects revenue and PAT CAGR of 36% and 54%, respectively, over FY26-29E. The main risk is execution of large HVDC projects, with the brokerage warning that “cost overruns from HVDC execution delays impact margin accretion.”
Jefferies on Siemens Energy India: ‘Buy’
Siemens Energy India Ltd. is Jefferies’ top pick among the seven on normal target-price upside. It has a ‘Buy’ rating and a target price of Rs 4,800, implying 33% upside. Jefferies expects a 43% EPS CAGR over FY25-28E, driven by operating leverage and the power capex pipeline.
The company has exposure across power transmission, generation and industrial applications. Its transmission business includes transformers, AIS/GIS and HVDC, while its generation business includes turbine and generator services.
Jefferies’ investment thesis states, “Robust power capex pipeline and 2.5x order book to FY25 sales provide strong revenue visibility.” The brokerage also expects “Operating leverage on fixed costs to play out as revenue scales up.”
The June-quarter order flow rose 3% YoY, while Transmission segment orders increased 36% YoY. Jefferies expects power capex growth of more than 20% CAGR over FY25-30E to support the company.
Weak power demand and faster growth in fixed costs remain the key risks identified by the brokerage.
Power demand and capex support outlook
The seven stocks provide exposure to different parts of the power and industrial spending cycle. Siemens Energy and Hitachi Energy are the most direct power equipment and T&D plays. KEI participates through cables and T&D, while L&T provides engineering and infrastructure exposure.
Cummins India and Kirloskar Oil Engines are linked to power generation and industrial engines, while Thermax operates across energy and environment engineering solutions.
Jefferies expects India’s infrastructure and industrial capex to rise to Rs 19.52 lakh crore by FY30 from Rs 13.92 lakh crore in FY26. Power capex is estimated to increase to Rs 6.77 lakh crore by FY30 from Rs 3.74 lakh crore in FY26.
India’s power demand is projected to rise at a 6% CAGR over FY26-FY30, while renewable capacity is expected to increase to 368,273 MW by FY30 from 223,273 MW in FY26. This creates demand across generation, transmission, distribution, cables and related engineering services.
Order flow shows where the spending is reaching
The June-quarter data showed that the capex cycle is already producing orders, although the pace differs across companies. L&T’s order flow rose 14% YoY, Siemens Energy’s Transmission segment orders increased 36% YoY, and Hitachi Energy’s order flow excluding HVDC orders rose 26% YoY.
Thermax recorded 2% YoY growth in order flow, while Cummins was affected by commodity-cost pressure. KEI’s earnings are also sensitive to cable pricing, making the margin outlook dependent on both demand and competitive intensity.
The 7 companies therefore offer different ways to participate in the same broad spending cycle. The direct transmission names have stronger exposure to grid investment, while L&T has broader infrastructure participation, and the engine and energy companies have wider industrial exposure.
Conclusion
Jefferies’ seven ‘Buy’ calls thus cover different parts of the spending chain, with the brokerage favouring companies that have either sizeable order books, direct exposure to power capex or a wider industrial demand base.
Disclaimer: The ratings, target prices, earnings estimates, order-book figures, capex estimates and other financial information in this article are based solely on Jefferies’ report. The article uses the target-price upside shown in Jefferies’ valuation summary and does not use separate scenario-based return figures. The information is for informational purposes only and should not be treated as investment advice or a recommendation to buy or sell any security. Jefferies states that past performance is not an indication or guarantee of future results and that financial instruments can rise or fall because of economic, financial and political factors. Jefferies also discloses potential conflicts of interest arising from its business relationships with companies covered in its research.