Connecting Renewables to the Grid

This surge in HVDC capacity and the associated market demand is set to provide a strong, multi-year boost for companies involved in transforming India's energy grid. The National Electricity Plan aims to more than double HVDC capacity to 67 GW by 2030, up from around 33 GW in 2022. This expansion is vital for efficiently integrating renewable energy sources, which are often located in remote areas, into the national power grid.

A $15 Billion Market Opportunity

JP Morgan forecasts a $14-15 billion opportunity in the HVDC sector over the next five to six years, driven by robust demand for high-capacity transmission corridors. Limited competition and operating leverage should help boost margins for key players. The Indian infrastructure sector, projected to grow from $190.51 billion in 2025 to $205.96 billion in 2026, is ideal for this expansion, with the government actively channeling capital into energy and transmission projects. The power transmission and distribution market alone is expected to reach $37.6 billion by 2030, growing at a 5.2% compound annual growth rate.

BHEL: Diversified Giant Faces Margin Pressures

Bharat Heavy Electricals Limited (BHEL) is a foundational player, backed by over 40 years in HVDC technology and a significant domestic manufacturing base for critical components. The company recently secured major orders for HVDC terminal stations linking Gujarat to Maharashtra and Rajasthan to Uttar Pradesh, reinforcing its market position. BHEL's order book of approximately ₹2.4 lakh crore as of FY26 provides substantial revenue visibility, estimated at seven years based on FY25 revenue. Beyond HVDC, BHEL's unique role as India's only domestic manufacturer of nuclear turbine generator sets, along with its presence in sectors like e-mobility and defense, offers strategic diversification. Financially, BHEL reported an 18% revenue increase to ₹32,350 crore for FY26, with nine-month revenue growth of 11% to ₹21,472 crore in 9MFY26. However, operating margins have remained modest, around 2.7% in 9MFY26, and historical return ratios have been poor. Despite a recent operational turnaround and improved profitability, evident in its Q3FY25 net profit tripling to ₹382 crore, BHEL's P/E ratio shows a wide range in market assessments, indicating significant debate over its valuation and future earnings.

Apar Industries: Niche Specialist Commands a Premium

Apar Industries has carved a crucial niche as the world's largest manufacturer of aluminum and alloy conductors and India's leading producer of renewable cables. Its transformer oil business is uniquely positioned, being the sole Indian supplier to all major 800 kV HVDC projects. The company's fast-growing cables division and its global manufacturing expansion in Saudi Arabia highlight its strategic intent. Financially, Apar reported a 22% year-on-year revenue increase to ₹16,299 crore in 9MFY26, with operating margins at a healthier 9.1%. Its order book of ₹9,064 crore provides about six months of visibility. However, its premium valuation, with a P/E ratio trading at nearly double its historical valuation, reflects market confidence in its specialized role.

GE Vernova T&D India: Tech Leader with Sky-High Valuations

GE Vernova T&D India, the listed Indian arm of GE Vernova, is recognized as a pioneer in 800 kV HVDC technology and a critical enabler of renewable energy integration. Its comprehensive portfolio spans medium- to ultra-high voltage equipment and digital solutions. The company secured a significant Voltage Source Converter (VSC) HVDC order from the Adani Group and a key refurbishment contract from Power Grid, showing potential for recurring revenue and strong execution. GE Vernova T&D India has achieved remarkable financial performance, with revenue growth of 46% YoY to ₹4,569 crore and operating profit margins reaching 27.1%. Its order book stands at ₹14,380 crore, providing around three years of visibility. The company's debt-free status and capacity expansion plans further bolster its position. However, its P/E ratio is consistently high, around 97-99x, making it expensive compared to the Indian electrical industry average. The stock has seen an extraordinary surge, gaining over 2,800% in three years, prompting questions about whether future growth is already priced in.

Investor Risks in the HVDC Sector

While the HVDC opportunity is substantial, each company faces distinct challenges. BHEL, despite its experience and order book, faces challenges with historically lower returns on capital and equity, plus ongoing concerns about its operating margins and past project execution. The significant number of loss-making projects set to conclude by H2 FY26 could mask underlying operational efficiencies required for future growth. Apar Industries, while possessing a vital niche, exhibits lower order book visibility compared to its larger peers, limiting its revenue visibility beyond the short term. Its premium valuation also presents a risk if its specialized component supply role is disrupted by new entrants or technological shifts. GE Vernova T&D India, though a technology leader with impressive margins and growth, trades at an exceptionally high valuation. Its aggressive stock price appreciation over the past three years, driven by operational turnaround and market optimism, means any slowdown in growth or execution issues could lead to a significant stock price drop. Its P/E ratio of 97-99x is much higher than the Indian Electrical industry median of 28.1x, showing exceptionally high market expectations. Furthermore, while its balance sheet is debt-free, its reliance on securing large, complex HVDC projects means project award delays or execution complexities could impact its ability to sustain current profitability levels and investor sentiment.

Future Outlook for HVDC Companies

Analyst sentiment remains cautiously optimistic for the sector. BHEL is garnering a 'Strong Buy' technical signal, though the consensus rating is 'Hold'. GE Vernova T&D India is seen as a key beneficiary of India's 'Grid 2.0' initiatives and government capex push, with an order book offering 3-4 years of visibility. However, its premium valuation necessitates sustained strong performance. Apar Industries' specialized focus suggests continued demand for its products, though its valuation requires careful monitoring against its order book's shorter visibility horizon. Overall, India's commitment to energy transition and grid modernization will continue to drive demand for HVDC technology, albeit with differing risk-reward profiles for the companies involved.