BHEL, CG Power, Hitachi Energy, GE Vernova T&D India: Top CG stock picks

Nuvama Institutional Equities in a fresh note on engineering and capital goods sector said a clear divergence was visible in the September quarter performance between power-equipment makers and the rest of the industrials space. The domestic brokerage noted that T&D and HVDC-focused companies reported a 28 per cent jump in execution, 17 per cent growth in order inflows and a 640 basis points (bps) rise in operating margins, far outpacing non-power industrials, which posted only 9 per cent and 3 per cent growth and a 210-bp margin decline.

HV T&D names such as GE Vernova T&D India, Hitachi Energy and CG Power—and BTG major BHEL benefited from strong thermal and renewable-led T&D ordering. Non-power players such as ABB and Siemens saw a more selective growth, Nuvama said.

The broking firm remained constructive on thermal BTG and T&D capex, even as broader private capex stays uneven and concentrated in sectors such as data centres, EVs and semiconductors. It views order recovery in railways as an important monitorable for ABB and Cummins. On Thermax, Nuvama said the worst phase may be over but prefers to wait for clearer traction. Its preferred picks are BHEL, Hitachi Energy, GE Vernova T&D India and CG Power.

Nuvama said premium valuations in the HV/T&D space remain justified as record order books and improving margins support strong earnings trajectories and healthy RoEs. The brokerage maintained a positive stance on thermal, nuclear and T&D/HVDC, where large order flows could materialise over the next six–18 months, even as it monitors the emergence of a more broad-based, multi-year private-investment cycle.

Nuvama said India’s capex cycle is supported by the planned Rs 9.15 lakh crore power T&D outlay for 2022–32, which included eight–ten HVDC corridors—equipment awards for two are already complete. Export demand remains strong, forming 25–30 per cent of order books for several players.

On the non-power side, order inflows are being driven by newer sectors such as data centres, EVs/battery manufacturing, semiconductors and electronics, while traditional factory capex remains subdued. Nuvama pointed to capacity utilisation at 77.7 per cent, a decadal high, as a potential early indicator of a broader private-investment recovery. Still, it highlights that H1FY26 BSE500 capex grew only 4 per cent, and the durability of the cycle hinges on policy support including tax cuts, GST reforms, PLIs, rate cuts and liquidity measures.

Power-equipment players across the HV value chain continue to operate with multi-year-high order backlogs of Rs 10.8 lakh crore, up 28 per cent year-on-year, ensuring strong revenue visibility. Nuvama reports that HV T&D companies delivered OI growth of 17.1 per cent, sales growth of 28.1 per cent and 640 bps margin expansion, with average operating margins at 19.8 per cent.

In contrast, non-power industrial and railway-exposed companies—ABB, Siemens, CG Power’s industrials segment and Thermax—recorded 3.0 per cent / 8.5 per cent growth in OI and sales and a 210bp margin contraction, with OPM at 11.4 per cent. Extended monsoons delayed site activity and deferred execution into the second half.

Nuvama attributed the sharp margin improvement in HV to better pricing, a richer product mix, rising export share and operational efficiencies. HVDC ordering has picked up pace and is expected to remain strong over the next three–five years. The Khavda–South Olepad corridor has been awarded to the Adani Group, while Barmer–South Kalamb ordering is expected by Q4FY26–Q1FY27. Equipment awards for both are still pending, Nuvama said.