Goldman Sachs expects that India's power transmission capex requirements will exceed $500 billion by FY50, accounting for 30% of the overall energy transition capital outlay.
Power Grid Corporation of India (PGCIL) will benefit the most from its estimated $500 billion grid total addressable market (TAM) between FY24-50, accounting for one-third of India's overall energy transformation TAM, as per goldman.
“Power transmission is key to India’s energy transition and global new energy cost leadership ambitions. India’s large, highly integrated grid enables the utilisation of least-cost renewable generation sites, and by keeping the central grid access free, the government is assisting the viability of renewable projects via indirect financial support worth $270 billion,” Goldman Sachs added.
“It’s large balance sheet, low cost of debt and strong annual free cash generation position it favourably to capture the bulk of our TAM estimate,” it said. PGCIL also benefits from being qualified for direct nomination to construct large, complex, multi-region projects, which it claims would see a significant increase as India concentrates on cross-border grid interconnections.
“Our analysis of PGCIL’s cash flows implies PGCIL alone will be able to fund 30% of India’s planned grid capex by FY32, while maintaining its current dividend payout,” the report said.
Goldman sees Hitachi Energy India as a pure upstream manufacturing opportunity in India's energy revolution. “Hitachi is a global leader in high voltage equipment manufacturing and has achieved meaningful levels of indigenisation in India. In fact, Hitachi Energy India manufactures 80% of Hitachi Energy’s global equipment portfolio with capability to manufacture 75-80% of HVDC systems (by value) domestically,” it said.
