Capital Goods

Electrification & Automation

The grid + data-centre supercycle priced at 80-110x — quality nobody disputes, price everybody should

Medium capitalOligopoly3 listed names covered

ABB, Siemens and CG Power sell into every megatrend at once (grid capex, data centres, rail electrification, automation) with MNC technology and 20-30% ROCE. The debate is purely valuation: 80-110x earnings for 15-25% growth. CG's OSAT semiconductor JV adds a genuine optionality kicker.

TAM: India grid capex ₹9L Cr to 2032; data-centre power infra growing 40%+; industrial automation penetration still 1/3 of China's.

Demand drivers

▸Transmission buildout (765kV + HVDC)
▸Data-centre electrification (ABB/Cummins gensets + switchgear)
▸Railway electrification + Vande Bharat propulsion (Siemens ₹26K Cr loco order)
▸PLI-led factory automation demand

Competitive dynamics

▸Oligopoly with parent-tech moats; Indian challengers (CG, Voltamp, TARIL) win on cost in transformers
▸Siemens energy demerger reshaped the listed exposure — the growth asset separated
▸CG Power's Murugappa turnaround: debt-free, 27% ROCE, now betting the surplus on OSAT

Unit economics

▸ABB India: 30% ROCE, 19% OPM peak — best-in-class conversion
▸Transformers at 15-18% OPM in upcycle (capacity tight globally)
▸OSAT economics unproven in India — CG's ₹7.6K Cr project targets 15%+ ROCE by FY29

Key programs

▸HVDC links (Leh, Khavda corridors)
▸Siemens 1,200 loco order execution
▸CG OSAT Sanand ramp
▸Data-centre switchgear frame contracts

What an expert watches

▸Order inflow growth vs 80-110x multiples
▸CG OSAT yield milestones
▸Transformer price/capacity cycle (global shortage easing?)
▸Siemens India post-demerger margin path

Sector scoreboard — real data

Company	Mkt cap	P/E	OPM	ROCE	Sales 3Y	Fundamental	Tech score	Decision
CG Power	₹1.36 L Cr	110.0x	13%	27.0%	21.2%	71	72	Sell / Avoid
ABB India	₹1.35 L Cr	88.4x	15%	29.9%	—	74	92	Hold
Siemens India	₹1.29 L Cr	78.7x	12%	15.8%	2.5%	40	77	Sell / Avoid