Jefferies’ Chris Wood calls energy India’s best structural growth story; names Hitachi Energy as picks-and-shovels play

Long-term India bull Christopher Wood, Global Head of Equity Strategy at Jefferies, said the more he looks at India, the more convinced he is that energy remains the country’s best structural growth story from a top-down perspective. He sees the private sector build-out of electrification through the expansion of renewable energy, primarily solar, as the key driver.

In his GREED & Fear report, he said energy was also a key theme at last week's Jefferies India Forum, where Hitachi Energy India presented its outlook for the country's power demand. The company's CEO, Venu Nuguri, projected total final energy demand to rise 50% and electricity demand to double to 3,365 TWh by 2035.

As a result, the share of electricity in total final energy demand is expected to increase from 19% in 2023 to 25% in 2035, driven by a surge in renewables and improved "storage and smart demand management", according to the presentation.


Wood identified Hitachi Energy India as a picks-and-shovels play on the theme, given its expertise in transmission. The stock is trading at 71 times 12-month forward earnings after gaining 68% year to date, according to the report.

In his latest GREED & fear report, Wood said China has led the way, helped by the economies of scale created through its grid build-out and advances in battery storage technology. This, he said, gives India a clear template to follow, although it remains unclear how much India will be able to benefit from China’s battery storage technology.

Bloomberg reported in May that Reliance Industries was in talks with Chinese battery manufacturer CATL to procure parts for battery energy storage systems (BESS). However, GREED & fear said Reliance has not succeeded in procuring technology from CATL or other Chinese battery makers.

Indian battery makers Exide Industries, Amara Raja and Waaree Energies have reportedly secured Chinese battery technology. Energy In Motion (EIM), an associate company of Ravindra Energy, has also partnered with CATL. The Chinese company will supply EIM with 500 MWh of advanced lithium iron phosphate (LFP) batteries for electric heavy-duty trucks in India.

Wood said solar is already cheaper than coal in China because of battery storage technology. If the same happens in India, the resulting decline in the cost of power could be a major positive for the country's growing manufacturing ambitions.

India is already second only to China globally in several traditional manufacturing areas, including crude steel, cement, ammonia, mobile phones and solar modules. However, the gap with China remains wide. China produced 960.8 million tonnes (Mt) of crude steel and 1,700 Mt of cement last year, compared with 164.9 Mt of crude steel and 470 Mt of cement in India.

Wood also said that, at a time when India has been out of favour amid the reverse AI perception, it is worth remembering that the country continues to have its own structural growth story. He said this should prove resilient as the current focus on AI diminishes.

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