Hitachi Energy India Q2 FY27 Earnings Call: Backlog Hits Rs. 33,335 Cr, EBITDA Margin Expands To 16.5% (POWERINDIA)

Broad-based growth; EBITDA margin expands despite mix headwinds

• Revenue Rs.2,996.5 Cr in Q2 FY 2026-2027 — up 63.5% YoY and 20.2% QoQ; H1 FY 2026-2027 revenue at Rs.5,490.2 Cr, up 65.8% YoY on robust backlog execution.
• Operational EBITDA Rs.494.4 Cr, up 69.5% YoY — margin of 16.5% vs 16% in Q1 FY 2026-2027 and 15.9% in Q2 FY 2025-2026; H1 FY 2026-2027 margin at 16.3% vs 13.9% in H1 FY 2025-2026.
• PBT Rs.430.4 Cr (14.4% margin) — up 22% YoY and 10.5% QoQ; PAT Rs.318.5 Cr (10.6% margin), up 20.5% YoY. H1 FY 2026-2027 PBT Rs.819.9 Cr (+54.8%); PAT Rs.612 Cr (+54.7%).
• Rs.88 Cr unrealized forex loss — embedded in Q2 FY 2026-2027 PBT/PAT; management characterized it as notional and noted EBITDA gives a clearer view of underlying operational performance.
• Material cost at 61.7% of revenue — vs 59.8% in FY 2025-2026 and 60.7% in H1 FY 2025-2026; movement attributed to product mix. Personnel expenses 6.2%; other operational expenses 16.6%.
• Operating cash flow dipped sharply — net cash from operations fell to Rs.91 Cr in H1 FY 2026-2027 from Rs.874 Cr in H1 FY 2025-2026, driven by large HVDC projects sitting in contract assets; CFO Ajay Singh said cash will be recouped as invoicing happens.

Record backlog; ex-HVDC momentum strong, mix broadens

• Q2 FY 2026-2027 order intake Rs.4,120.8 Cr — ex-HVDC orders grew 85.9% YoY and 21.8% QoQ; H1 FY 2026-2027 intake Rs.9,217 Cr, up 53.1% YoY ex-HVDC (down 32% including the large HVDC order vs H1 FY 2025-2026).
• Backlog closed at Rs.33,335.4 Cr — up double-digit YoY, providing revenue visibility for coming quarters and years.
• Key Q2 wins — 4 TBCB orders from two leading EPC players (including a Statcom order), grid automation orders from two leading utilities, multiple data center orders from global hyperscalers and local colocos, and a service order from a semiconductor customer.
• Order mix shifted — Industries rose from 2% of mix in Q1 FY 2026-2027 to 34% in Q2; transport & infra rose from 2% to 28% (slide 10, cited by Jason Soans, IDBI Capital). Management cautions share shifts should not be read as changes in absolute order value.
• Services and exports scaling — service orders (business launched 1 April 2025) grew 77% YoY in Q2 FY 2026-2027; export orders grew 41% YoY with wins across Asia, Africa, Middle East, Europe and USA.
• Syncons not cannibalizing STATCOMs — CEO N Venu clarified the two are different technologies and recent Syncon orders are not coming at the cost of STATCOM orders.
• Execution milestones — commissioned India's first grid-forming Statcom project (400 kV, 2x550 MVAr) at Fatehgarh; grid automation for a southern India pooling substation designed to evacuate over 10.5 GW; automation project for the country's largest power utility covering more than 180,000 circuit km.

Early-stage HVDC execution; UHV AC readiness ahead of awards

• HVDC revenue booking early — Bhadla–Fatehpur contract has booked ~10% of revenue and Khavda–Nagpur ~4-5%, cumulatively as of Q2 FY 2026-2027; execution (engineering, long-lead items such as semiconductors) starts at award.
• 4-5 HVDC projects expected over the next 12-24 months — per CEO N Venu (i.e., through FY 2028-2029); one project already approved is a first-time new-technology (NCT) 800 kV VSC scheme, with further NCT approvals expected within the next 3-6 months (by Q1 FY 2027-2028).
• NCT-highlighted UHV AC projects enter pipeline — analyst Amit Anwani (PL Capital) cited three projects of 18,000, 18,000 and 32,000 (totaling roughly 75,000-80,000); management confirmed they will form part of the prospective pipeline but did not quantify addressable TAM, as the eventual procurement form (solution-oriented vs product-only) is not yet known.
• Addressable scope — management indicated for HVDC projects 50% of scope represents the addressable market (period unspecified), while for 1200 kV AC the addressable market "will be much higher."
• 1150 kV readiness — the 1150 kV AC transformer design was completed 7 years ago and is the only fully type-tested design in India; management stated the company is "absolutely ready" across engineering, manufacturing and localization.
• 1150 kV fully localized — on the government's recently approved 1150 kV transmission line, management stated Hitachi Energy was first to complete 1150 kV transformer design, manufacture and full testing in India, with the portfolio (transformer, hybrid switchgear, automation) fully localized.

Grid-to-rack launch; India/APAC focus, no US data center exposure

• Rs.4,000 Cr is total Q2 order inflow, not data-center-specific — CEO N Venu clarified this figure referenced by the analyst covers all order inflow for Q2 FY 2026-2027.
• No US data center orders in backlog — management does not disclose backlog by segment but confirmed zero US data center orders; US sales are limited to power quality products for grids, with data center supplies going to India, Southeast Asia and broader APAC.
• Grid-to-rack solution launched — a pre-engineered offering designed to dramatically reduce commissioning time for powering data centers; will be manufactured in India once orders are received, with discussions ongoing with multiple data center players (period unspecified).
• Current data center bookings are multi-product — a combination of transformers, GIS, automation, substations and network studies rather than grid-to-rack alone.
• Third-party demand context — analyst cited an industry projection that "India data center demand is projected to reach 17 GW by 2031-32" (third-party context, not a company commitment); management also cited projections of 5-8 GW operational capacity by 2030 and 15-17 GW of data center electricity demand by 2032.
• No slowdown seen in target geographies — N Venu attended a data center conference in Singapore in October 2026 and said every stakeholder he met has solid plans with defined commissioning schedules; management did not outline specific mitigation measures for data center risk.
• BESS scope split — batteries account for roughly 60% of every BESS, with the remaining 40% (everything other than batteries) constituting Hitachi Energy's scope (period unspecified); the first energy storage order was secured in Q2 FY 2026-2027.

Notional MTM loss dissected; mix-driven material cost rise

• Rs.88 Cr loss is a mark-to-market accounting entry — CFO Ajay Singh explained open sales and purchase orders are fair-valued at each period close per accounting policy, reflecting forward currency fluctuations on hedges; the actual plus/minus delta will be known only once contracts are fully executed.
• Net exchange and commodity impact of Rs.56 Cr in Q2 FY 2026-2027 — combines realized gains with unrealized losses; because the Rs.88 Cr loss is notional, operational EBITDA runs higher than the PBT line indicates.
• Hedging discipline maintained — management stated the company follows a formal hedging policy, does not speculate on currency markets, and hedges every contract as soon as it is won via established SOPs, addressing analyst concern that export growth could make currency volatility a structural P&L risk.
• Material cost rise is mix-driven — 61% in Q2 FY 2026-2027 vs 60% in some other quarters; CFO said it is difficult to explain the mix at this stage, with more clarity only as execution progresses; he did not confirm a specific HVDC-driven gross-margin impact.
• Mix normalization expected — management expects the mix to normalize back toward FY26 material-cost levels as exports, services and other revenue streams come in (timeline unspecified).
• Export margin premium intact — N Venu confirmed a 300-400 bps export-over-domestic differential on an overall basis as of Q2 FY 2026-2027 (vs 300-500 bps cited on a prior call), noting some product-level variation.
• No gross margin guidance — management declined to give figures but said directionally that volume leverage, exports and services converting to revenue over time should allow fixed costs to even out and support a favorable margin mix (no timeframe provided).

Visibility to 2035; FY27 priorities and capacity build-out

• Demand visibility "right up to 2035" — MD & CEO N Venu cited CA guidelines and interactions with customers, authorities and industry as the basis for strong visibility in the Indian market; strong base order growth is expected, conditional on the market remaining the same.
• FY 2026-2027 priorities — strengthen core utilities and HVDC businesses, build momentum in mobility, enhance services, focus on industries and transport, and pursue battery energy storage and data center opportunities while expanding exports and digital businesses.
• Capex program — spanning transformers, high voltage, grid automation, HVDC and transformer components; majority of projects targeted for completion by end of FY 2027-2028, with a new large power transfer facility targeted for 2028. Order booking for the new factory has not yet started (no timeline specified).
• ESG targets ahead of plan — management expects to achieve most of its 2030 sustainability targets by end of FY 2026-2027 (two years ahead of plan); CRISIL ESG score improved from 61 (2025) to 69 (2026).
• Third-party market context (not company guidance) — management cited CEA and other reports: India's renewable capacity reached 299.25 GW at end-September 2026 vs the government's "900 GW ambition for 2035-36"; recent cabinet approvals (PM Dhara, Green Energy Corridor Phase 3) move ~Rs.1.86 lakh crore of investments forward, including 50 GWh of battery energy storage; India approved its first-ever 1150 kV AC system.
• Closing stance — management stated it continues to see robust market demand and a strong pipeline while maintaining disciplined execution, investing in capabilities, skills and infrastructure "much ahead of the curve" for India's energy transition; priorities of sustainable, profitable growth and long-term value creation remain unchanged.