Shares of NTPC, Power Grid, and BHEL are trading close to 52-week highs. Experts predict that peak electricity shortages will persist
Strong demand for electricity has kept the majority of power providers, as well as transmission and distribution firms, in the public eye. Power Grid Corporation of India reached 52-week highs on Wednesday; NTPC and Bharat Heavy Electricals Ltd., which have gained 26–107% over the last six months, are also trading close to Tuesday’s 52-week highs. JSW Energy is another notable achiever, having seen increases of more than 55% during the previous six months.
November’s peak electricity consumption continued to be strong. Overall, according to statistics from Nuvama Institutional Equities, electricity consumption for November 23–24 increased by 6% year over year to 120 billion units. India’s peak electricity demand from November 23 to November 24 was 204GW (gigawatt), with no shortfall, as opposed to 240GW in September with a 5% shortfall during nighttime hours.
The emphasis on and reliance on the production of thermal electricity are expected to persist as renewable capacity increases. Additionally, researchers predict that even while solar power generation supports demand during the day, nighttime demand is satisfied by increasing thermal plant load factors. This pattern is anticipated to continue until renewable storage capacity is developed, which is four to five years away.
Experts continue to believe that peak power shortages will probably persist since the nation’s power consumption is expected to rise, driven by both the residential and commercial sectors. Demand will increase as a result of the capital expenditures that corporations are making. The results of the most recent state election point to political stability, and financial advisors advise investors to put their money into cyclical industries like banks, power, and industrials. Focus on electricity stocks will thus probably continue.
According to experts at Jefferies India Pvt Ltd, there was widespread agreement after the Jefferies India power summit of 2023 that the peak power shortages would last for at least 18 to 24 months. Both families and industries are the main drivers of the strength of the power demand. They think electricity intensity should increase as India moves into a GDP growth period driven by capital expenditures. Investments in power production and transmission and distribution are projected to increase by 2.2 times to $280 billion in FY24–30 compared to FY17–23.
Analysts predict that, in addition to a major increase in renewable energy, thermal capacity expansion should increase to 17 GW yearly from a run-rate of 2–5 GW since FY18. Jefferies India Pvt Ltd’s top utility selections are NTPC, Power Grid, and JSW Energy.
Among Nuvama’s top options for thermal power given the near-term triggers of increasing PLFs and new investment are BHEL and NTPC.
