Explained - Why GE Vernova, Hitachi Energy, CG Power shares tanked up to 10% on Friday

Shares of GE Vernova T&D Ltd., CG Power Ltd., and Hitachi Energy India Ltd., are down up to 9% on Friday, July 3, after a Ministry of Finance memo, dated June 24, sourced by brokerage firm IIFL, says that a two-year exemption has been granted to four Chinese companies for participating in tenders issued by state-run entities.

The four companies include:

Earlier this year, an approval was granted only to TBEA in February, for reactor category bids for a one-year period, on the condition that the local content in these should be at a minimum 50% level.

According to brokerage firm IIFL, the move is not an unexpected one, as domestic pricing is seen peaking out. The increase in Chinese competition was flagged by the brokerage six months prior.

IIFL further added that more competition efforts by Power Grid Corporation of India to increase the domestic vendor base will drive better pricing and supply timelines for both transformers and switchgears.

On the flip side, HDFC Securities wrote that these companies were already supplying equipment to private developers and now public developers could also buy.

The move could impact standalone procurement, according to HDFC Securities, who does not see any impact in the HVDC projects, as one cannot chose and pick the equipment here.

Ex-HVDC, domestic ordering stood at around ₹5,000 crore, exports stood at ₹3,000 crore, and HVDC stood at between ₹8,000 crore to ₹10,000 crore, and therefore, HDFC Securities believes that the large part of the order book is still insulated.

The brokerage said that it prefers GE Vernova T&D and Siemens Energy within this space, while it does not see a major correction in these stocks.

Shares of GE Vernova are down 9% at ₹4,389.5, those of Hitachi Energy India are down 7.2% to ₹31,300, while those of CG Power are down 6.8% at ₹895.4.

How Have The Stocks Fared?

Shares of GE Vernova T&D have declined every single session since June 22. The stock is down 17% during this nine-day stretch.

Hitachi Energy has declined in seven out of nine sessions since June 22, having declined 13% during this nine-day stretch.

CG Power shares have declined in six out of nine sessions since June 22 and are down 5% during this period.