India’s transmission sector is supposed to be in a multi-year upcycle driven by renewables and NEP targets, but many transmission/EPC names like Transrail, Skipper and Techno Electric are under pressure despite healthy order books. What are the key reasons for this divergence between order-book growth and stock performance, and how should one think about the sector over the next few years?
My (evolving) understanding so far – request corrections / additions:
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Structural demand looks strong on paper, at least medium term
- The National Electricity Plan (NEP – Transmission) and recent government communications point to over ₹9–9.2 lakh crore of planned investment in inter- and intra-state transmission during 2022–32.
- Network length (220 kV and above) is expected to rise from about 4.85–4.9 lakh ckm in 2024 to roughly 6.48–6.5 lakh ckm by 2032, with transformation capacity moving from ~1,251 GVA to ~2,342 GVA.
- This is closely tied to the aggressive RE and green hydrogen roadmap, so demand visibility for transmission infrastructure seems robust over the decade, at least in policy documents.
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Execution appears to be lagging NEP / annual targets quite meaningfully
- In FY25, around 8,830 ckm of new transmission lines were commissioned versus a target of ~15,000–15,253 ckm, implying a shortfall of nearly 40–42%.
- Additions to the inter-state transmission system were reportedly among the lowest in the last decade, even though ISTS capacity is planned to ramp from roughly 119–120 GW to 168 GW by 2032.
- From what can be gathered, delays are driven by right-of-way issues, land/forest clearances, and some planning mismatches between declared RE potential and actual connectivity applications, leading to either under-utilised or congested corridors in specific pockets.
Specific questions to the community:
- Is it reasonable to think of this as a structurally attractive sector (backed by NEP / RE targets) that is currently facing a cyclical phase of execution delays, RoW issues and WC stress, leading to subdued stock performance? Can it not turnout to be positive if the demand is not met with supply, then this can pickup the pace better than before in coming quarters?
- Among Transrail / Skipper / Techno Electric and peers, which companies (if any) stand out in terms of:
- Converting order book into execution reliably,
- Maintaining working capital discipline and FCF generation
- Focusing on higher RoCE, relatively asset-light segments vs pure EPC?
Views from members who track this space more closely would be very valuable. Happy to be corrected if any of the above interpretations are off the mark.
Just a Note This is my first ever post (joined community recently, apologies if I have missed any guidelines)