Hitachi (6501.T): Still Buy: Looking increasingly undervalued

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Hitachi (6501.T): Still Buy: Looking increasingly undervalued

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06 Jul 2026 05:34:36 ET │ 16 pages

Hitachi (6501.T)

Still Buy: Looking increasingly undervalued

CITI'S TAKE

We maintain our Buy rating on Hitachi and raise our target price from

¥6,200 to ¥6,500. The shares continue to underperform TOPIX, with the

YTD relative performance standing at -19%. The shares, which currently Buy

trade at c18x our FY3/28E EPS, strike us as undervalued given our projected Price (06 Jul 26 15:30) ¥4,805.0

FY3/26-FY3/29 OP CAGR of 16%, which represents our strongest growth

forecast within the industrial electronics sector (Mitsubishi Electric: 22x, Target price ¥6,500.0↑

15%; Fuji Electric: 17x, 11%; Meidensha: 16x, 12%). We believe a brisk set of from ¥6,200.0

Q1 results could trigger a re-rating. Additionally, potential catalysts include Expected share price return 35.3%guidance hikes heading into H1 results and announcements of business

divestitures such as the storage business. Expected dividend yield 1.2%

Expected total return 36.5%

Earnings outlook —We project FY3/27 adjusted OP of ¥1,434bn, up 20% YoY. We Market Cap ¥21,476,727M

see energy as the strongest earnings driver, with DSS and mobility also contributing

US$133,086Mto profit growth. For FY3/28, we forecast adjusted OP of ¥1,641bn, up 14% YoY. We

expect the energy business to remain the primary earnings driver. With capacity

expansion through capital investment, we expect energy revenue to grow at c20%

annually, with the adjusted OPM gradually rising to 12.9% in FY3/27 and to 13.5% in

FY3/28. We anticipate share buybacks to expand to ¥548bn in FY3/27 (¥48bn Price Performance

announced in FY3/26 plus ¥500bn announced in April 2026) and ¥600bn in FY3/28. (RIC: 6501.T, BB: 6501 JP)