NTPC, Power Grid, BHEL share prices are trading near 52-week highs. Peak power shortages are here to stay say analysts.

The peak power demand in November remained buoyant. Overall, power demand for November-23 grew 6% year-on-year to 120 billion units, according to data by Nuvama Institutional Equities. India’s November-23 peak power demand touched 204GW (giga watt) with no deficit compared to 240GW in September and 5% deficit in evening hours. 

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As renewable capacities are rising, the focus and dependance on thermal power generation is likely to stay. Also, though daytime demand is being supported by solar power production, evening demand is met by ramping up thermal Plant Load factors and the trend is likely to continue till renewable storage capacities come up which is four–five years away, say analysts.

Analysts remain of the view that peak power shortages are likely to stay as power demand in the country is likely to continue growing led by both household and industrial segments. The capex being incurred by corporates will also contribute to a rise in demand. The recent state election results have indicated towards political stability and experts at recommending investors for investments in cyclical stories as power, industrials, property, banks etc. Thus focus on power stocks is likely to continue

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Post Jefferies India power summit 2023, analysts at Jefferies India Pvt Ltd have said that there was broad consensus that peak power shortages are here to stay for 18-24 months at least. The Power demand strength is being driven by both industrial and households. They believe as India enters a phase of capex-driven GDP growth, power intensity should rise. Power generation and Transmission & distribution investments should rise 2.2 times to $280 billion in FY24-30 versus FY17-23.

Analysts believe thermal capacity addition should rise to 17 GW annually from 2-5 GW run-rate since FY18, while Renewables rise materially also. NTPC, Power Grid and JSW Energy are top picks of Jefferies India Pvt Ltd within utilities.

BHEL and NTPC stand amongst top picks of Nuvama given near-term triggers for thermal power amidst rising PLFs and new capex.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

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Published: 06 Dec 2023, 11:02 AM IST