Hitachi Energy, GE Vernova, Siemens rise up to 6% as Nomura calls recent correction an ‘overreaction’. 4 reasons why

Shares of electrical equipment makers such as Hitachi Energy, GE Vernova T&D India, Siemens Energy, Cummins India and CG Power rebounded, rising up to 6% on Monday after global brokerage Nomura termed the recent correction in the sector an "overreaction" following the government's decision to grant a two-year exemption to four Chinese electrical equipment companies to participate in tenders for critical power projects.

On the BSE, Hitachi Energy climbed 5% to Rs 32,448, while GE Vernova T&D India surged 6% to Rs 4,647. CG Power advanced more than 3% to Rs 925, Siemens Energy gained over 4% to Rs 3,434 and Cummins India added more than 2% to Rs 5,590.

“The order explicitly states it creates no precedent. Market players read it as a competitive threat and sold off listed power-equipment stocks,” Nomura analysts said in a note today.


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After speaking with multiple industry experts to assess the impact of the policy, Nomura outlined four key reasons why it believes the market's reaction is overdone.

Barely any threat

Nomura said its analysis of transmission-related tenders between FY09 and FY20 showed that the four Chinese manufacturers exempted from India's procurement restrictions secured only 9% of contracts. These tenders covered equipment such as HVDC systems, substations, transformers, reactors, insulators, SCADA, FACTS and circuit breakers.

According to the brokerage, the relatively low market share despite unrestricted bidding and, in some segments, a cost advantage, suggests that factors beyond security clearances have limited their participation.

Capacity constraints persist

Nomura said the four exempted companies are not equally positioned to benefit from the relaxation in procurement norms, with only one appearing to operate at or near optimal capacity utilisation.

Among them, TBEA Energy (India) has the largest and most established transformer and reactor manufacturing facility, with a capacity of 20,000 MVA at Karjan in Gujarat. The plant is backed by its parent, TBEA Co Ltd, one of China's largest transformer manufacturers.

The brokerage noted that Nanjing Electric India, New Northeast Electric India and Taikai Electric India appear to be operating on a much smaller scale. Their financial and operating indicators, including relatively low paid-up capital, limited workforce and declining revenue and profitability, suggest underutilised operations that may not be able to take on significant additional orders without fresh capital expenditure.

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Exemption, not shift in government policy

Nomura believes the exemption is a time-bound measure rather than a broader shift in government policy. It pointed out that the notification clearly states the exemption will remain valid for two years and cannot be treated as a precedent, indicating that it has been introduced as a targeted and temporary relief measure instead of a policy reversal.

The brokerage noted that power transmission and distribution infrastructure falls under India's critical national infrastructure, while border tensions between India and China continue to remain a key strategic concern. Against this backdrop, Nomura's base case is that the exemption is unlikely to be extended once the two-year period expires.

It also highlighted that in other strategically important sectors, such as telecom network equipment, security-related restrictions have generally become more stringent over time after initial supply constraints were addressed through domestic or allied-country manufacturing, rather than being relaxed further.

Limited scope

Nomura said the two-year validity of the exemption provides limited visibility for the exempted companies and their Chinese parent firms to justify meaningful investments in expanding manufacturing capacity in India.

According to the brokerage, committing fresh capital expenditure under a time-bound and explicitly non-precedential policy would be difficult, as such investments would need to be recovered within a highly uncertain timeframe that could end by CY28.

Instead, Nomura expects these companies to utilise their existing manufacturing capacity to bid for available opportunities rather than undertake large-scale expansion. As a result, even relatively well-positioned players such as TBEA are likely to face constraints in absorbing significant additional order volumes during the exemption period, reducing the likelihood of a lasting shift in market share.

India's exports to China rose 36.66% to $19.47 billion during the last fiscal year, while imports increased 16% to $131.63 billion. The trade deficit swelled to an all-time high of $112.6 billion in 2025-26 as against $99.2 billion in 2024-25.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)