India's transmission and distribution sector is poised for prolonged growth, supported by projected capital investments of approximately INR 9 trillion until 2032, despite weak ordering activity in FY26 attributed to temporary limitations, as per a report from Motilal Oswal Financial Services.

The report stated that "the transmission and distribution (T&D) value chain continues to gain from a strong capital expenditure of INR9T until 2032," mentioning that the T&D capex cycle, which commenced in FY22-23, has already led to "significant growth in order books, revenue, and margin profiles for industry players."

Pointing out the short-term deceleration, the report indicated that "sector-level ordering was less robust in FY26 (16 schemes awarded) compared to FY25 (45 schemes awarded), mainly because of temporary capacity limitations rather than a fundamental demand decline."

It mentioned that local producers are now functioning at high capacity utilization and are progressively concentrating on higher-voltage transformers, which "entail longer manufacturing processes and testing periods," thus prolonging lead times.

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Nonetheless, the brokerage held an optimistic perspective, indicating that "there is still potential for the cycle to persist over the next few years," backed by capacity growth and robust demand from both local and international markets.

The report also indicated that India's National Electricity Plan lays out an "ambitious investment strategy of ~INR9T in transmission," propelled by extensive renewable energy incorporation, resulting in a "structural acceleration in orders during recent years."

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Concerning demand trends, it observed that demand remains robust from both local and international markets while transformer supply has had difficulty keeping up, leading to extended lead times and a positive atmosphere for manufacturers.

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Global prospects are emerging as the report emphasizes that transformer demand in the US and Europe is experiencing a "historic increase" driven by "renewable energy integration, data center growth, industrial electrification, electric vehicle (EV) charging networks, and the pressing need to update outdated infrastructure," resulting in a "demand-supply imbalance" and greater dependence on imports alongside rising transformer costs.