Hitachi Energy India Limited (NSE: POWERINDIA) Q3 2026 Earnings Call dated Feb. 05, 2026
Corporate Participants:
Nuguri Venu — Chief Executive Officer
Ajay Singh — Chief Financial Officer
Analysts:
Umesh Raut — Analyst
Harshit Patel — Analyst
Parikshit Khan Pal — Analyst
Presentation:
operator
Ladies and gentlemen, good evening and welcome to Hitachi Energy India Limited’s Q3, FY26 analyst conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch tone phone. I now hand the conference over to Mr. N. Venu, MD, and CEO Hitachi Energy India Limited. Thank you. And over to you sir.
Nuguri Venu — Chief Executive Officer
Thank you very much. Good evening everyone. I hope you’re all doing very well and thank you for joining us for this third quarter. 25:26 Analyst call. Appreciate very much. Over the next 15:20 minutes I will take you through our performance from October 1st to December 31st quarter. And for your convenience, I’ll refer the slides. We have uploaded this slide deck a while ago on bse. Today I’m joined in the room by our CFO Ajay Singh, the General Counsel and Company Secretary Poorna Amatanda and head of our Communication Government relations Seema Siddiqui. You have seen this week on Sunday the union budget which lays out a very, in our view lays out a strong roadmap for technology led growth with higher public capital expenditure and a clear push for AI data centers and advanced manufacturing.
And as you know, in all of those things, Hitachi Energy is having a major play. And Hitachi Energy, we understand the significance of these evolving dynamics and we are equipped and well positioned to leverage this growth momentum. In addition to that recently concluded EUF India Free Trade Agreement, according to some analyst estimates, there is elimination of tariffs on nearly 97% of EU exports to India and vice versa. So sloshing up to 4 billion euro in annual duties and boosting supply chain integration in renewable like offshore wind. We see this as a key area of opportunity.
Simultaneously, the additional thing which came out just two days back, US India trade deal reduces US tariffs on Indian exports to 18%. This is also promising in enhancing our export opportunities. So I move to the slide number three starts from safety, which is our license to operate. And safety remains fundamental to our license to operate. And we have further strengthened interventions at our factories, our project sites and our offices, etc. As a result, one of the metrics we measure is the total recordable injury frequency rate is improved to 0.09 surpassing our own target of 0.19 down from the previous year.
This demonstrates the positive impact of our proactive safety initiatives. We also reinforce our commitment to health and well being, achieving 90% participation in our annual health check for our employees, conducting multiple awareness sessions and also mental health apps. Our shop floor and site teams received several recognitions from the industry, notably one of our Business World award ranked as in the third in electronics and hardware sector. If I move to the slide number 4 ESG target which is very close to us as you know that our technology, be it a product, system, services, software, decarbonize the customer industries and customer places.
So that’s the reason we have set ourselves the targets on ESG front and sustainability remains central to our strategy. Anchored in Planet people and principle for planet. We continue to operate on 100% renewable electricity and are on track to achieve 70% reduction in operational CO2 emissions compared to 2019 base level, significantly ahead of the 2025-26 targets. Water audits are scheduled in several locations including some of our locations like Halol and Mysore to help us reach our goal of reducing freshwater consumption. Regarding waste, we have reduced landfill disposal by approximately 30% compared to 2425 and now recycle more than 95% of general waste for people.
We remain committed to zero harm. Safety is at the center of all we do here at Hitachi Energy. We are also steadily advancing gender diversity, reflecting progress across our talent pipelines, etc. On the principles we uphold an uncompromising commitment to integrity with a zero incident as our standards and also uphold highest standards of governance in our company and offshoot of various actions and activities at our company. I am pleased to report that our progress continues to be recognized externally. Our crisis sustainability ESG rating improved to 61 strong in 2025 while NSC ESG rating close to 62.
If I move to the slide number slide number five I think this particular thing I’m sure you all know more than me but I still wanted to touch base couple of things on that the macroeconomic environment remains favorable, all growth indicators are upward trend, overall growth is strong and inflation has been maintained steadily. But if you really look at on the right hand side of the slide which talks more about area segments where it’s important for Hitachi Energy as you see that renewable we continue to have a strong growth momentum in this close to 50 gigawatt in 2025 but then it’s quite a lot of things.
Same is the case with the transmission, same is the case with industry and the data center is the one big area where we are really hoping this will really come out in a big way. As you may be knowing 90% of AI ready data centers today located in the two countries which is US and China and India is definitely going to have a big growth in the data center. And the data center is very very growth segment for Hitachi Energy in that. And then if I move to slide number six as you can see our performance, solid performance, driving growth and building profit margins, our operating momentum remains strong with a strong order inflows in this quarter with most of them are base orders of 2477.6 crores which shows if I remove the HVDC order in the previous quarter so 73% growth and if you take a quarter on quarter, 11% growth in that revenues are up by 29.6%, 2,168 crores up by 29.6%.
And then profit before exceptional item is also quite, quite roughly almost 400 crores, 118.4% and ppt after exclusive items which we talk about more basically it is a labor code related thing in that 347.8 crores and we have a consistent and strong OCF. And as you can see here our order backlog is all time high 29,872 crores. And look at a nine month comparison April to December this year versus last year is also quite strong. All even in the high base of orders we have maintained are slightly growing. In that high base orders revenue is up 24% on a nine month period and profit and other things is huge amount of improvement in that.
This quarter our work spanned various segments including utilities, renewables, rail and industry. Notable project execution include 765kV reactors, ICT for solar and some of the wind substations in Gujarat and Karnataka, 130kV GIS installation, 400kV CRP and substation automation etc. In that so orders came from multiple segments, multiple industries and notable worth of order to be mentioning is that our modular concept is also gaining traction. As you can see here, he could get a compact mobile 400kV substations enabling rapid deployment for a reliable power quality management in Khachgar for one of India’s leading conglomerate. So if I move to the next Slide, slide number 7, we continue to commission the projects almost in line with our customers and wherever possible.
And as a technology leader we are committed to enhancing grid reliability through timely commissioning and high quality execution. This quarter has featured some exciting projects again across the cross segments I would like to highlight some of them is that 130kv 33kv substations in Bhutan for a leading oil and gas company and then the commissioning of a 220kV GIS substation for a data center in Pune in Maharashtra and another 130kV GIS pay extension for a major chemical company Nodisa and then 220kV 33kV substation for a 300 megawatt solar project in Fall in Karnataka. In that in all these things our scope including comprehensive scope including design, engineering, manufacturing, supply, erection, testing and commissioning move to the slide 8.
Hitachi Energy you have been seeing this. We are committed to leading with purpose and creating a positive impact on the industry, society and the various stakeholders with whom we interact with them on Energy and Digital World which is our flagship customer engagement initiative and which we have been doing in tier one cities. Now we have taken to the tier two cities so we organized in Guwahati where we connected nearly 150 industry leaders to discuss power automation, digital service solutions, consulting, sustainable grid technology and transformer technology etc. These discussions help us and our customers collaboratively address emerging system needs and accelerate transition to a more digital and sustainable energy ecosystems in that and we have completed 25 years in India of power innovation in transformers as a commemorating 25 years of power Transformers India in October this year.
So we had a. You know this includes our celebrations of 25 years of our transformers and if you go to the next one is that we are very passionate about our engagement and collaboration with academia. We are accelerating this across the across on India basis deepening academia industry collaboration through partnership with NIT Warangal which we have extended for another five years through platform such as the Transtec Shell Changemaker and CIESG Summit. We continue to shape conversations around infrastructure readiness especially in the energy security and sustainability and affordability, reinforcing our role as the role of Hitachi Energy as a trusted partner in powering India’s energy transition system.
If I move to the slide number nine, let me give you a little bit more color on the order intake from which segments came in in this quarter. As you can see here, renewable wind and solar data center and industries have a strong growth. Transmission and rail and Metro seen a bit of decline on this quarter but it is important to recognize that this is influenced by a project timing and by strong prior performance driven by a large order during the same period of the last financial year. So additionally there is a year on decline in the rail and Metro segment.
However, we believe this is simply a part of the market cycle and timing and we expect it to improve in the coming quarter. The order mix is also illustrated on the right hand Side as you can see here, our products that’s where we have been driving it for several years. And our contribution through the products is much higher compared to the projects and projects utilities has been one of our major segment. But as you can see here, in this particular quarter both utilities and the industries came almost equal. Equal in that. 47% in utilities, 43% in that.
So the next two slides I would like to hand over to my colleague Ajay Singh to take us through the performance on the financial front. Over to you Ajay.
Ajay Singh — Chief Financial Officer
Thank you. Good evening everyone. I hope all of you are doing well at your end. So let me take you to the quarter 3 results for our company. So if you see order in quarter three was 24. 77 crore and if I compare Y and Y it is negative 78%. But yeah, if I remove the HBDC order then we are growing by 73%. And even if I compare with the last quarter we see there is a growth of 11.7%. So overall a very good development. On the orders revenues we clicked 2168 crore 29.6% growth Y&Y and 13.2% growth quarter on quarter. If you talk about the PBT before The excessional items 402 crores is what we achieved. And this is basically based on the higher revenues, focus on execution, product mix, operational efficiency and export momentum has really contributed a good growth on the bottom line. And we are 118% more compared to. The last Y on basis. And even if I compare with the last quarter the growth is 13.9%. And when I talk about the percentage term EBT percentage before exceptional item 18.5% compared to why on 11% and then the last quarter it was 18.4%. PBT is 347 crores. And basically here if you see the Delta of roughly 54 crores on account of the implementation of the new labor code that we have been as per the guidance we have taken into this particular quarter. And that is why PBT is is 16% for the quarter compared to the previous YU and Y 11% and last quarter 18.4% packed 12.1% and quarter Y O NY basis we are 8.2% operational EBITDA we have reached 338 crores and basically we have doubled received on Y1Y basis.
And we are currently in this quarter 15.6% compared to on Y1Y basis is 10.1%. Even if I compare with the previous quarter where we showed 15.2% we are at more or less at the same level. If I go to the next slide. Little bit more details. If I give more reflection on the numbers. If you see the revenues are in the revenues, the other income is 61 crores. That is basically coming. That is basically coming, you know, from the qip that is deposit the interest. That we are getting. So that is what it has contributed. We have added a commodity exchange gain of 24 crore. And personal expenses, metal cost if you see is around 58% compared to the last quarter. You know 59% and Yu and Y if I see it is around 55%. And then if you see personal expenses in this quarter, 7.7% other expenses, 14% depreciation and finance in a 1.2 and 0.1 respectively. And that is how we are able to close operational ebitda before exceptional items 4 and 2 crores. 18.5% and the impact of labor code which I was discussing earlier, 54.2 is contributing roughly 2.5% for this particular quarter.
And the profit after tax is at 261 crores. That is 12.1%. So overall I will summarize that fairly good quarter in my view as far as this quarter three was done. Thank you. Venu, over to you.
Nuguri Venu — Chief Executive Officer
Thank you Ajay. And if I move to my last slide before we open up for Q and A, I think as we wrap up this quarter we are happy about the progress we are making towards our two key objectives. That is sustaining our growth momentum and enhancing our efficiency across all of our operations and also improving our margins and cash etc. So we take great pride in maintaining our leadership in core sectors like utilities, HVDC industries and infrastructure. And we are eager to explore and see the new opportunities in exciting fields such as the data center and BES and energy storage etc.
In that is it very important. We are working towards shifting center of gravity to include more export service and digital. But that you have seen how we are already trending in the right directions in that and also working on our strategy of expanding at the edge of the grid that is the E Mobility Energy storage data center. Our commitment to strengthening service business in India is unwavering. So we created the separate global BU service including in India. And we hope that the efforts of this particular team would start fetching over a period of time. Start fetching the results over a period of time in that services also help us keep continuity which is critical to robust energy ecosystems.
Many of our new age customers such as data centers are looking not only supplying of our technology, be it a product, system, services, but also life cycle partners. So we are dedicated to driving productivity and operational excellence under this, thereby improving our quality and expiring opportunities. We are also focused on capitalizing on our substantial order backlog to drive revenue growth and maximize the potential of capital raise for further expansion plans on the safety you all know is deeply rooted in our culture and we are wholeheartedly committed to maintaining a robust safety first environment not only.
In our factories but also in our project sites. As we look ahead, we will continue investing in our capabilities for sustainable growth, whether through upskilling our talented workforce or expanding our operational footprint. Together we are paving the way for a brighter, more sustainable energy future in that. So all in all we are super excited about this market growth, market environment and we are super impressed with the way in which we are driving sustainable energy future. So thank you and over to you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take a first question from the line of Umesh Raut from Nomura India. Please go ahead.
Umesh Raut
Yeah, hi team and congrats for very good set of results. My first question is pertaining to execution. So I just want to understand how much of execution pertaining to Mumbai HODC project is remaining now and roughly how much of total turnover was contributed by Mumbai HODC project for third quarter.
Nuguri Venu
Yeah, so thank you. As you know that we don’t give a you know, revenue on a project specific revenues in the quarter and when it comes to the Mumbai hvdc. So we are, we have just completed our pre commissioning test. We completed our work and we just completed the pre commissioning test. So in a just another two to three weeks we will commission the project.
Umesh Raut
Understood sir. So my question was largely because of our gross margin performance which was slightly lower on a quarter on quarter basis from last quarter. It was down to now about closer to 39.5%. So apart from say probably increased contribution from Adani HVDC project, was there is any particular other reason for this drop in gross margin on quarter on quarter basis?
Nuguri Venu
This. So actually this gross margin fluctuation is basically on the product mix that you are operating. We have also earlier you know, talked. About that in some quarters depending upon the execution of the Products there could be slight changes left and right. So that is the only the outcome of the product mix that you operating.
Umesh Raut
Understood, Understood. And second question is pertaining to recent inflationary pressure from commodity prices. So how you are managing these pressures? What percentage of our current existing backlog is on the account of price passed on to the customer?
Nuguri Venu
We talked about also this Umesh previously most of our order backlog having, you know, price escalation formulas built in. So we have been also telling you from the beginning that it will not have impact great to the large extent because more than I think 70% of our portfolio is having price escalation. There will be small amount of portfolio where they need immediately within one or two months turnaround for the revenue. So those things may not be there but otherwise, you know, portfolio.
Umesh Raut
Understood. Sir, My last question is on the outlook for domestic market. How do you see in terms of FY27 demand especially coming in for transformers, especially in the domestic market in terms of capacity which is kind of also coming into the market whether we will have same kind of pricing power in upcoming tenders. So any insight about these things?
Nuguri Venu
Yeah, I think we can give a market trend. The market is in my view is very strong. It is still stronger and both in terms of transmission and also in terms of electrication is going in a big way. Electrification data center will come in a huge amount of things in that. So the need for more power equipment whether it is the transformer, switch, gear etc is it is definitely going to. Be there in that. So we have been looking at that capacity is coming in. Various companies have announced the capacity expansion. Considering the existing capacities plus capacities to come. We believe that still there is a gap to close. Gap to close on that. So this is the way the energy transition story in our view purely in my view is a multi year growth story. Thank you.
Umesh Raut
Thank you. Thank you so much. All the very best.
Nuguri Venu
Thank you.
operator
Thank you. Ladies and gentlemen. In order to ensure that management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow up questions. We’ll take our next question from the line of Harshit Patel from Ecuris Securities. Please go ahead ahead.
Harshit Patel
Thank you very much for the opportunity. Sir, my first question is on our HVDC localization. I know you have highlighted in the past about we are making HVDC transformers, converter valves and doing the entire engineering of those projects in India. I want to understand whether we are increasing our HVDC localization further or we have already Reached a stage wherein further value addition is not possible at the moment in India.
Nuguri Venu
We won’t say that a further value addition is not come. We are continuously taking a lot of actions to further increase our value addition. Right? So we have been doing that. We are also executing the HVDC project in MRNAS link for example in Australia. So all these things will help us to further localize localized supply supply chains here.
Harshit Patel
Secondly, could you please provide an update on the budgeted capex for FY26?
Nuguri Venu
I’m sorry Harishad. Sorry to interrupt. Can you use your handset mode please? Your audio is not very clear.
Harshit Patel
Is this better?
Nuguri Venu
Yes, please go ahead.
Harshit Patel
Thank you. Sir, could you please provide an update on the budgeted capex for FY26 and how much of that we have already incurred. As well as if you can highlight your K6 plan for FY27 and FY28 that will be very helpful.
Nuguri Venu
We have very clearly given in our QIP document how we wanted to utilize that. You know, in the. In this year, first year we said we’ll do 700 plus crores and the next year will be an additional 700 plus crore. So that’s what is the thing in that. So there could be, you know, movement of few hundred crores this way, that way. But otherwise we are on track very much.
Harshit Patel
Understood. Thank you very much for answering my question. I’ll come back.
operator
Thank you. We’ll take our next question from the line of Parikshit Khan Pal from HDFC Securities. Please go ahead.
Parikshit Khan Pal
Congratulations on a great quarter, sir. So my first question is on the capex. If I see the utilization of the proceeds, we have only used 155 crores till now versus 700 crores which was in massage for FY26. So why is there a big disconnect between what the CAPEX incurred and what we have outlined in the document.
Nuguri Venu
Just now? I think we answered the same question. So we have a slow start for sure. But we have a pipeline in place where you know, in the coming quarters it will pick up. So because the product cycle our product demands we cannot do a bulk capex at one go. So we have to go in a sequential approach. So we have a plan around that and we are hopeful that we’ll pick. Up, you know, all of. So it might happen that right now. Your utilization is a lower side.
Parikshit Khan Pal
Maybe the next quarter. In the coming quarter you’ll see there is a huge spike also. So that is how the cycle will operate. But we are very much on to that. And we’re very closely monitoring the usage of that capex.
Nuguri Venu
So another question is on the order backlog. We have almost 30,000 crores of the order backlog and if I guess in it or remove the GDC parts our base orders will be somewhere around 10 to 11,000 crores. And now the damage order is over. So in the coming quarters before the HDC starts getting executed from FY27 so there could be slowdown in execution in the coming quarter at least for two, three quarters.
Parikshit Khan Pal
No, I think we told also it is not that HVDC will slow down because HVDC for example we are already working on the existing two projects, right? Manufacturing is going on and also various other simulations are going on. So there is also those are the projects we recognize the revenue based on the PoC. So revenues all keep coming in that we don’t see any, any slowdown in our revenue growth.
Nuguri Venu
Okay, one question on the other expenses. So we have been seeing the reduction in other expenses despite increase in the turnover. So just wanted to understand is there impact or any impact have we reduced any royalties? So how is this that the expenses have been going down for the last three quarters.
Parikshit Khan Pal
So we have been discussing earlier also that our other expenses normally hovers in the range of let’s say 15 to 19, 19% right? So depending upon a the revenue growth.
Nuguri Venu
And also on the operational efficiency that. We have been focusing so there we. Are able to get the leverage out. Of that and this operational efficiency we are talking about some of the expenses also on the group expenses there we are working and that is how the outcome is there. So it will be in that corridor. If you ask me ballpark number, it will be in that corridor only. But has this ADB sharing of IT expenses is not totally. I mean are we migrated to our own IT system? Because earlier we were paying them some royalty for that. So is it because of that that we have seen some reduction dash we. Have closed this chapter, you know a year before. So right now we are totally operating on a standalone basis. We are not relying on the ABV basis very much. It is our Hitachi Energy operating system and we are working on SAP 4. Hana our the system is there so. We are on our own. Thank you.
operator
Thank you. Ladies and gentlemen, we request you to restrict to two questions at a time please. The next question is from the line of Sumit Kishore from Access Capital. Please go ahead.
Harshit Patel
Good evening and my compliments on a very strong set of numbers. My first question is a couple of large HPDC LCC Projects are there in the pipeline, you know, which could mature over the next, you know, 12 to 18 months. Could you speak about them and capacity wise how are you geared to address the opportunity and if you could spell out what opportunity these two projects present roughly in terms of size as well. That’s my first question.
Nuguri Venu
Thank you Sumit for your question. I think as you know there are quite a lot of HVDC pipeline but one of them has definitely come for bidding for our customers that is QBCP customers is the Barber project which is a 6,000 megawatt LCC project as you said in fact in the last con call also I’ve been saying consistently that we have been creating the capacities in anticipation of all that. So we do not have any limitation on taking any particular order but every order we look into based on the risk reward profile and also our exposure etc.
Any particular customer, those are very other, you know like any other organization looking to that. So we do those kind of things. But on the pure play capacity standpoint we do have a capacity. We will be bidding these projects.
Harshit Patel
And just to follow up on this, is it fair to say that the size of the HVDC opportunity addressable by. You would be roughly 50% of the project cost?
Nuguri Venu
We don’t know Sumit to tell you differently depending upon how the line size and other things it will be different but it is definitely sizable. If you could speak about the share of exports and services in your nine month inflows and backlog and the outlook for the next one to two years. For exports and services. He said you know exports will be in the range of around 25% is what we set ourselves target. But now we have reached almost close to, you know anywhere between 29, 30% range in that. So it is. And we also said our main thing would be to you know, to address the domestic market and that’s the reason we are expanding, we are creating the new facilities because we have seen a clear, we have a clear visibility of the domestic market where it is going to go so good. At the same time our exports also are growing but exports are not at the cost of the domestic market.
And services. Thank you.
operator
Thank you. We’ll take our next question from the line of Balchandra Vasant Shinde from Motilal Oswal. Please go ahead.
Parikshit Khan Pal
Hi sir, if you can provide some insights on recent budget also there has been potentially given for seven high speed rail and on the export opportunity also. Again one point to address is like currency has depreciated so far we Will be more competitive, advantage wise. Also on the better manufacturing cost. So don’t you think that relatively export opportunities should increase for us further?
Nuguri Venu
No. Thank you Bala for these questions. I think on the budget, I think in addition to what you talked about there are many other positive things out there. But if I only stick to the seven corridors of high speed rail is definitely a big opportunity for Hitachi Energy and not sure what kind of funding etc. If it happens to be Japanese funding then we are going to be in a much more sweet spot on that. But leave alone the funding. I think this is the opportunity. In fact, again considering these opportunities, we already started expanding our traction transformer facility.
So we are expanding our traction transformer and this will and a lot of other equipment which go into that are also being expanded. Yesterday we did our groundbreaking ceremony for high voltage products facility in Saabli in Gujarat. So this also a lot of this equipment will go into. Not only into the transmission but also into the. Into this high speed rails, etc. In that. So you are absolutely right. You know, export right now because of the currency we can definitely take advantage of it. But you know we are building a very solid and sustainable strategy.
So we don’t want to create a strategy around the, you know, temporary phenomena of this thing. If it is a. It is going to be remain like that probably we will definitely do that. But on a short term basis, yes, we are reaching out to some of our global companies wherever they need so they can procure from us. It will be competitiveness for those things. We do it. But as I said we are looking at a company at a longer term, longer strategy and basis which we are working on things. And as you have seen our margin evolution over the last five years is only one direction improvement.
Thank you.
Parikshit Khan Pal
One last point on the exports. Yeah, go ahead. Can I continue? Yeah, go ahead. Yeah. Just one last point on exports, sir. As per our global analyst made and takeaways wise there also our capacities are tied up till FY30, FY32 and we are adding capacities in India and I think in other regions also. How is the scenario according to you on the global scale for us in that perspective that on the demand supply.
Nuguri Venu
Gap it’s a global scale globally also it is the same situation factor globally. In fact they are adding the capacities in fact based on the. Based on the, you know, the frame agreements etc. In that. So it is quite tight and quite challenging in those things. Whatever the capacities we have added. In fact the need is to further addition is what we feel. So those things are getting evolved as we see the demand. See there are a lot of things are evolving. You must understand that it’s not a traditional power system. Traditional power system, we know the load growth, etc.
In that the AI data centers, the demand is so huge and the need, you know, yesterday basis. And that’s what is the urgency of building up those kind of infrastructure. And that needs not only the equipment but AI ready data centers. And there you know the variation in the load from 100 megawatt to 250 megawatts in seconds. Seconds, not even minutes, seconds. So you have to have the power systems flexible enough to manage that kind of load center. Right. So not only the equipment, your whole system needs to be geared up. And that’s what is happening in North America, that’s what we see in Europe, etc.
In that. And I am very confident personally that we see that mirroring in India as well.
Parikshit Khan Pal
Thanks very much.
operator
Before we take the next question, would like to remind participants to ask a question. Please press RN1 on your phone. The next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Umesh Raut
Hi. So thank you for the opportunity. Again on data center you did highlighted. About the strong prospects. So just wanted to understand in terms of addressable market you have in that space. And since as you highlighted North America. Is our export having data center orders. Already, what is the proportion has that increased? So is export also will be driven by data center orders globally? Just color on that.
Nuguri Venu
Yeah, I think as I said our exports we are creating again capacities etc for the domestic market. But we are flexible enough to address those exports in the data centers and also in industries etc. In the nearby our regional Southeast Asia and other other aspects of that. So to answer your question, yes, data centers is also one of the things we are looking into. We have already received part of the orders from the data centers as exports and we are also bidding for some other exports, exports or data centers. So what’s the addressable market there? No, I think we will not be bidding everything together from here.
So we will be complementing with our global organization wherever they are bidding it. Suppose you know there’s a requirement for a couple of hundred transformers, you know, they will. They will also source couple of transforms from our side in that. So we will not able to estimate exactly what is the addressable market in those areas. And so what’s the contribution from data center currently? No, from the contribution from the data center. And overall our order influence still at single digit, high single digit.
Parikshit Khan Pal
And this we are expecting to grow much faster. Probably. Yes.
Nuguri Venu
Yes. Okay.
Parikshit Khan Pal
Thank you sir. Thank you so much.
operator
Thank you. Take our next question from the line of Parikshit Kanpal from HDFC Securities. Please go ahead.
Parikshit Khan Pal
Just one question. This news, if you can help us understand regarding the Chinese thing which has been going on the transformer side. So your views on that.
Nuguri Venu
Thank you. Parikshit. I think you know, we have also read the news and we have not seen any government, you know, clarification or official message on that. But what we heard, you know, during our interactions that you know they don’t allow any imports from neighboring countries. Okay. Border countries. So if they may, in case, if they have any manufacturing facility here they may allow. But for us it’s not about which competition is that as long as the level playing field is there we do not have any issues. So we don’t see that as a major threat.
And we are not due to that. We are not holding any of our expansion plans like that. We are very confident that you know, as long as the level playing field is there so we can, we can beat the competition.
Ajay Singh
And second question is around the HVDC order. So understand that you have a level of localization in India and then there will be inputs from the parent entity. So when you calculate royalty, so is, so how does it work? So does the imports are excluded from that or the entire revenue is the royalties will be applicable on entire revenue. So how does it work on the accounting side?
Nuguri Venu
So basically royalty is generally, you know. Is calculated based on the overall revenue. But if there is any, you know, inter company thing that generally gets excluded. So in these two paid as a. Technology not as a, as a localization of import. You know, royalty is because we are getting the technology and the technology we are allowed to localize that. For that you need to pay the liar. And once you localize it, it is not that it will be there. For every time they get an update there will be some addition to the technology. So those things continue to do that. So royalty absolutely required for example because we are paying the royalty. That’s why our SF6 free technology which is available in the world, so we are able to, to bring it here and sell it to our customer in India to PGC allies I think in that.
So that that’s a big advantage. So just wanted to clarify whether this entire HVDC order will warranty will be paid on that or import content will be excluded. Just that clarification. We will not give you exactly like that. But you know what if there will be some, there will be some calculation methodology etc, what is excluded, what is not excluded but it will be at least a percentage on a ballpark, on a overall thing in that.
Parikshit Khan Pal
Okay, sure. Thank you.
operator
Thank you. We’ll take our next question from the line of Mohan Krishnaswamy, an individual investor. Please go ahead.
Umesh Raut
Yeah, thank you for taking my question. On the data center. We have been reading reports stating that there will be an element of of HVDC content in those orders because the power requirement and the speed of transmission is very, very different and very high. So do you think that is correct and do we have the capability to do that in Hitachi Energy India? I think as I said, the data centers are evolving. What kind of data center being built in US is completely different from the data center being built here? So that’s what I said.
The 90% of the AI ready data centers are located in those two countries. And I’m sure those data centers won’t start coming up here. So we will also look at it. Yes, absolutely. Today the data centers are having a big challenge in managing getting not only the reliable and affordable and clean power but also ensuring that, managing the flexibility of that. So there are the data centers who are looking at connecting directly to HBDC through any other renewable source in that. So from a competency standpoint, we do have those things in Hitachi Energy in India to do those kind of things as and when it is required and wherever it is required.
And secondly, sir, the recent EU deal, whenever it gets finally signed, being a European company as well, do you think that can have some impact on our export strategy in the years ahead? Yes. So that’s what I said. Definitely we will have, you know, we will look at to, you know, using our factories in India to the benefit of our own companies in Europe because of this tariff defense. So that there will be some tweaking we’ll do or at least we really look into it, how this will happen, how this will pan out and what are the products we supply from here to Europe? Those are the things.
Thanks a lot.
Nuguri Venu
Thank you.
operator
Thank you. We’ll take our next question from the line of Shirom Kapoor from Jefferies. Please go ahead.
Umesh Raut
Hi. Thanks for the opportunity. Just wanted to understand a bit more on the export strategy. Is there any thoughts on the parent allocating greater markets to the Indian entity? Given you the global shortages, is there scope for the Indian entity to serve more exports? Export requirements of the parent?
Nuguri Venu
Thank you, Shirom. I think our export Strategy is very robust and we have been building over a period of time. And we have a three pronged strategy. The first one is that we do have certain global feeder factories and those products we only manufacture and we sell all over the world. And then we have some allocated markets and these allocated markets being reviewed to add little bit more wherever it makes sense for us. And then we develop these allocated markets just like any other market together with the local sales organization of that particular country. And then we start amalgamating our factories and start selling those things.
So this is accelerating as we speak and we are getting more and more market to do that. And the third one is we do have feeder factories where we manufacture the components for the bigger product. And this component, we sell it to our own factories around the world. And the combination of these three, what we are saying, it will be 25 to 30% of our orders going forward, excluding of course you need to take out the big UHVTC project, then it will be 25 to 30%.
Parikshit Khan Pal
Understood, sir, thank you so much. All the best.
operator
Thank you. We’ll take our next question from the line of Shubhedeep Mitra from Nuama. Please go ahead.
Harshit Patel
Good evening and thank you for the opportunity. Just wanted to get a clarification on one point. I’m trying to connect two things. First, you have mentioned in the past that, you know, starting 4Q of FY26, you’re firmly going to be entering double digit margins. I think we’ve already done that two quarters early. Margins are already quite strong. At the same time we are seeing the Adani HVDC project which has gotten delayed for some time now, entering into the commissioning stage. Is there a chance that we could see some delay related penalty or LD related hits that could come in four Q or are you confident of maintaining these levels of margins and only improving from here?
Nuguri Venu
We don’t have any delay in the NHVDC on account of us on LD or anything in that. So that’s very clear. And we don’t see that as a thing. In that, as I said now, we have been building on a long term basis and you have seen in the last, not three quarters but several quarters how we are, what we are saying and what we are doing it. And it’s very consistently we are taking the margins up.
Harshit Patel
Perfect, sir, thank you so much. That clarifies my question.
operator
Thank you. Give me a moment please. Ladies and gentlemen, please take. Okay, so operator, if don’t have any questions so that we almost came to the last minute over to you, sir. For the closing comments. Yes, right.
Nuguri Venu
So one second, thank you very much for your participation and your engagement. And if you need any further information, please do reach out to us. We are happy to engage with you and provide any additional information etc in that. So we are in such an era of sustainable energy future. We are super excited about the opportunities arising not only out of our traditional segment, but also the new segments. And I’m sure you know, like us, you’re also super excited about what we are doing it. And thank you for joining and looking forward to seeing you or meeting you or talking to you soon.
Thank you very much. Have a great day.
operator
Thank you, sir. Thank you. On behalf of Hitachi Energy India Ltd. I would like to conclude this conference. Thank you for joining us. You may now disconnect your lines. Sam.