In upcoming years, India’s transmission and distribution (T&D) sector is expected to see steady growth, lifted by investment of almost Rs 9 trillion or Rs 9 lakh crore through 2032. According to a report by Motilal Oswal Financial Services, the current investment cycle, which began in FY22-23, has already improved performance across the sector.It noted that “the transmission and distribution (T&D) value chain… continues to benefit from a robust capex outlay of INR9t until 2032,” leading to “sharp growth in order books, revenue, and the margin profiles for industry participants.”However, the brokerage house flagged that new project orders have slowed down in FY26. The report said “sector-level ordering was weaker in FY26 (16 schemes awarded) versus FY25 (45 schemes awarded), primarily due to temporary bandwidth constraints rather than any structural demand slowdown.” It added that currently, local producers are focusing more on high-voltage transformers that “involve longer manufacturing cycles and testing timelines,” causing delays in deliveries.Even with this, the report remains positive about the sector. It stated “there remains room for the cycle to continue over the next couple of years,” helped by capacity expansion and strong demand from both India and overseas markets.It also highlighted India’s National Electricity Plan, which includes an “ambitious investment plan of ~INR9t in transmission.” This is mainly driven by the need to add more renewable energy and has already led to a “structural acceleration in orders over the past few years.”Meanwhile, the demand continues to stay strong. The report noted that “demand continues to remain strong from both domestic and export markets while transformer supply has struggled to keep pace,” leading to longer waiting times and better conditions for manufacturers.Globally, demand is also rising fast. The report described a “historic surge” in the US and Europe due to “renewable energy integration, data center expansion, industrial electrification, electric vehicle (EV) charging infrastructure, and the urgent need to replace aging infrastructure.” This has created a “demand-supply mismatch,” pushing up prices and increasing imports.This situation is benefiting Indian companies, as “domestic manufacturers… are benefiting from India’s growing role as a manufacturing base within global OEM feeder factory networks.”The report also pointed to opportunities in high-voltage direct current (HVDC) projects. Out of a 32.3 GW pipeline, “about 14.5 GW has already been tendered and awarded,” and “one to two HVDC awards annually” are expected in the future.Looking ahead, the report said it expects “transformer players to continue delivering strong earnings growth over FY25-28,” though it warned that valuations are no longer cheap. Still, it added that “possibility of further earning upgrades and unfolding of export opportunities can sustain these valuations,” showing continued interest in the sector.
