SCHNEIDER ELECTRIC

Over the past year, Schneider Electric Infrastructure's shares surged from ₹175 to ₹747, delivering a remarkable return of 327%, positioning it as a standout performer in Indian equity markets.

The stock has consistently delivered impressive gains over the last four years, with an 83% surge in 2024 alone, continuing its winning streak for the fifth consecutive year.

Schneider Electric recorded gains of 149% and 56% in the previous two years, and offered returns of 25% and 27.5% in CY21 and CY20, respectively, highlighting its consistent growth trajectory.

Schneider Electric is a prominent player in the heavy electric equipment industry, manufacturing products and systems for electricity distribution, such as distribution transformers and medium voltage switchgear.

The company is poised to benefit significantly from the RDSS initiated by the Indian government, driving a substantial capital expenditure (capex) in distribution system expansion and strengthening.

Goldman Sachs projects Schneider Electric to play a pivotal role in over 50% of the total capex outlay under the RDSS, positioning it for significant growth opportunities.

With the proposed implementation of the EU's CBAM, Schneider Electric is expected to benefit from its energy management expertise, aiding in energy efficiency improvement.

The Bureau of Energy Efficiency estimates India's total energy efficiency market size at USD 9 billion, of which only 5% has been tapped, presenting significant growth opportunities for Schneider Electric.

Despite positive aspects, Goldman Sachs initiated a 'Sell' rating on the stock with a 12-month target price of ₹470 apiece, citing inflated valuations for a predominantly commoditized business with limited value addition.

The brokerage's rationale behind the 'Sell' rating is the perceived expensive valuations, considering the business's nature and value proposition.