Shares of prominent Indian power equipment manufacturers, including CG Power and Industrial Solutions Ltd, Hitachi Energy India Ltd, Siemens Energy India Ltd, and GE Vernova T&D India Ltd, saw gains of up to 4% on the stock market. This upward movement comes after foreign brokerage Nomura indicated that a recent sell-off in these stocks was an 'overreaction' to a government decision.
Market Reassessed Chinese Firm Bids
Previously, the market reacted with a 7-8% sell-off in these power equipment stocks after the Indian government allowed four specific China-origin manufacturers to bid for power tenders. However, Nomura's analysis suggests this initial reaction was unwarranted. The brokerage highlighted that the government order explicitly stated this allowance was not to be treated as a precedent, signalling a targeted, temporary measure rather than a broader policy shift.
On the trading day, CG Power shares climbed 2.54% to Rs 915.80. Hitachi Energy India Ltd advanced 4.12% to Rs 31,019.05. Siemens Energy India Ltd added 2.72% to Rs 3,375.95, while GE Vernova T&D India Ltd rose 3.46% to Rs 4,546.25.
Nomura's Perspective on Competition
Nomura's research indicates that between FY2009 and FY2020, only 9% of Power Grid Corporation of India Ltd (PGCIL)'s transmission-related tenders were awarded to the four exempted Chinese manufacturers (TBEA, Northeast Electric, Nanjing, and Taikai). This low share persisted even when bidding was unrestricted and despite a cost advantage in several categories.
The brokerage pointed to significant structural hurdles that limit these firms' market penetration, even with regulatory access. These include stringent technical qualification thresholds, prior-supply-experience (PQR) criteria, demanding after-sales service expectations, rigorous testing and type-approval cycles, and a strong buyer preference for vendors with a proven track record on Indian grid specifications.
“We believe re-opening the door for four specific entities is, therefore, not equivalent to re-opening the door to the 9 per cent share the exempted China-based vendors might theoretically command; it is a re-opening for four names that would still need to clear the same technical/qualification bar tender-by-tender,” Nomura stated.
Temporary Exemption, Not Policy Reversal
The government order itself specifies that the exemption is valid for only two years and explicitly prohibits its treatment as a precedent. Nomura emphasized that such language from the government is not used lightly, suggesting this move is a negotiated, time-boxed relief valve rather than a fundamental policy reversal.
Separately, CG Power was also in the news as its arm, CG Semi's joint venture, announced the commencement of commercial production at its G1 Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand. The JV partners are investing Rs 7,600 crore to develop two OSAT facilities, G1 and G2, with G2 still under development, poised to significantly scale CG Semi’s production capacity once operational.