Multibagger stock: Hitachi Energy zooms 8% as Q4 profit doubles, up 190% in a year

Shares of Hitachi Energy surged 8% to ₹11,700 apiece in early morning trade today following the release of impressive Q4 and full fiscal year (FY24) results. After market hours on Tuesday, the company reported a 123.7% increase in Q4 consolidated net profit, reaching ₹113.7 crore compared to ₹50.8 crore in Q4 FY23.

Sequentially, net profit soared 394.8%, with the previous quarter's profit at ₹23 crore. Revenue from operations for the reporting quarter rose by 27.2% YoY to ₹1,699.2 crore, while EBITDA increased by 96.3% YoY to ₹150.1 crore.

For the full FY24, the company reported a PAT of ₹163.8 crore and a revenue of ₹5536.3 crore, which is an improvement of 74.4% and 14.0% YoY, respectively.

“A strong revenue performance, helped by a favourable external environment, helped to deliver double-digit margins,” said N Venu, MD & CEO of Hitachi Energy India Ltd. “Sustained Economic growth and ongoing investments in the energy transition, especially renewables, transmission infrastructure, data centres, and electrification of transport, are encouraging trends from a market perspective, and we are well positioned to leverage these as we continue to grow the business.” 

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Order Book 

The company has secured several significant orders across various sectors. In renewables, the company has contracts for 220 kV and 400 kV AIS S/S. For Chennai Metro Rail, the company has secured contracts for dry and power Transformers. In the hydropower sector, Hitachi Energy has been awarded contracts for 9 X 400 kV GIS & 400 kV reactors. 

Multiple state utility projects have resulted in orders for 4 X 765 kV transformers and 9 X 400 kV GIS. Additionally, Hitachi Energy has secured contracts for 2 X 220 kV GIS substations for data centre projects. 

Moreover, the company has expanded its reach globally with export orders for renewables and utilities in Africa, the Middle East, and Europe, including contracts for 220kV & 110kV transformers, 330/145kV LTB/IT/DS, and 16 X 66kV GIS, according to the company's Q4 investor presentation. 

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For the quarter ended March 31, 2024, orders totaled ₹1,406.7 crore, marking 13.9% QoQ and 11.5% YoY growth. This growth was driven primarily by industries focusing on the electrification and digitalisation of energy networks, spanning sectors from steel to silicon.

As of March 31, 2024, the company's order backlog stood at ₹7,229.5 crore, providing revenue visibility for the coming quarters. Service and export orders were up 43% YoY each, maintaining their strong contribution to the overall order book. 

Exports of transformers, power quality technologies, and other key products to markets like the Middle East, Southeast Asia, and neighbouring countries in South Asia accounted for around 25% of the order book. 

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"The first two quarters of the year were impacted by supply limitations such as delays in the procurement of semiconductors and other key electronic components. While continually monitoring the situation, the company has also deployed strategic initiatives to mitigate the impact of supply chain turbulence to the extent possible," the company said in its earnings report. 

Multibagger Returns

A year ago, shares of Hitachi Energy India were priced at ₹3,939 each. Today, they are trading at ₹11,412 marking an impressive gain of 189.71%. What's particularly notable is the stock's consistent positive performance, with 10 out of the last 12 months ending with gains, including a substantial 38% increase in April.

Taking a broader view, the stock has soared by 1578% from its March 2020 low of ₹680. Looking at its annual performance, it yielded returns of 90% in CY20, followed by 96% and 32.48% in the subsequent two years. In CY23, the stock saw a healthy return of 57.27%, and so far, this year, it has surged by 69.47%.

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Hitachi Energy India delivers comprehensive energy solutions, ranging from power generation systems to grid stabilisation technologies and energy storage solutions. Hitachi Energy India has emerged as a prominent player in the energy sector through a strategic joint venture between ABB's Power Grids business and Hitachi Ltd. in 2018. 

Outlook 

India's vast size and substantial potential for expansion imply that its energy demand will outpace that of any other nation in the coming decades. According to the International Energy Agency (IEA), India must develop a grid equivalent to the size of the European Union by 2040 to sustain its energy transition efforts. 

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Despite occasional macro-economic challenges, the underlying market drivers remain robust, presenting medium- to long-term opportunities for power technologies. This is particularly evident in high-growth segments such as renewables, HVDC, data centres, and transportation.

Disclaimer: We advise investors to check with certified experts before making any investment decisions.