India’s Power Transmission is Multi-Decade Growth Story: Nomura

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Global Frenzy to Invest in Power Transmission Infrastructure: Report

By S Jha

New Delhi, December 1: Nomura in a report has said that India’s power transmission sector is a multi-decade growth story. The investment advisory giant said in a report that the sector presents a $110 billion investment opportunity in FY22 and FY33.

“India’s power transmission sector is poised for significant growth, driven by surging electricity demand and ambitious renewable energy capacity addition targets,” said Nomura in a report, which was released last month.

The report quoted CEA (Chief Economic Advisor) expecting $ 110 bn in investments over FY22-32E. “Globally, regions such as Europe, North America, and MENA are also investing heavily in transmission infra. Europe is focusing on renewable energy integration, while North America is prioritizing grid modernization. MENA is driven by increasing demand and a shift towards sustainability,” added Nomura in the report.

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The investment advisory made recommendations for “product manufacturers with strong technological capabilities and a significant domestic manufacturing presence”.

It argued that “to meet national energy and climate targets, global electricity consumption must grow significantly faster in the coming decade”. “This growth is especially crucial to limit global average temperature rise to within 1.5°C. Expanded grids are essential to support this increased demand, particularly as we adopt electric vehicles, enhance heating and cooling systems, data centers, AI, IoT and scale hydrogen production,” added the Nomura in its report.

It further stated that “significant investment in grid infrastructure will be required”. “By 2040, over 80mn km of new or refurbished grid infrastructure will need to be added worldwide (as per IEA) — an immense undertaking equivalent to the entire existing global grid. Decarbonizing electricity supply and integrating renewable energy (RE) sources are key objectives,” said Nomura in the report.

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The report also argued that “in a scenario where countries meet their energy and climate targets, wind and solar power will account for a substantial portion of the increase in global power capacity”. “Modern, digital grids are crucial for ensuring electricity security throughout this transition. As variable renewables like solar and wind become more prevalent, power systems must be more flexible to accommodate fluctuations in output,” said the report.

Nomura in the report-initiated coverage of the product manufacturers listed on the stock market. Nomura’s recommendations are as follows:

CG Power and Industrial Solutions (CGPOWER IN, Buy; TP of INR970): We expect an earnings CAGR of 32% over FY24-27F as we believe it is strategically positioned to leverage industry tailwinds.

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GE Vernova T&D India (GVTD IN, Buy; TP of INR2,500): We expect an earnings CAGR of 76% over FY24-27F driven by robust ordering prospects, market share gains, and healthy pricing power.

Apar Industries (APR IN, Buy; TP of INR11,700): It is a proxy play on grid electrification as it specializes in highly technology-oriented products (HTLS and HeC conductors, 800kV transformer oil, and E-beam cables).

Disclaimer: This article makes no recommendation for buy or sell of shares of any company. Stock market investment requires high degree of discipline, patience, and knowledge.

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