In a note on the utilities sector, JM Financial noted that continued healthy energy demand, uncertainty around coal prices, declining solar module and RLNG prices and a revival in utility spending thermal capital (93 GW for FY32E) were some of the common topics discussed by the CEOs during their meeting. March quarter conference calls. With the government anticipating peak power demand of 256 GW in FY24, it expects utilities to continue reporting superior performance in the next quarter.
JM Financial said it elaborated on the comments from Adani Green Energy Ltd, Adani Power Ltd, BHEL Ltd, CESC Ltd, Coal India Ltd, JSW Energy Ltd, NHPC Ltd, NTPC Ltd, SJVN Ltd, Suzlon Energy Ltd and Tata Power Ltd, among others, to read the minds of CEOs and assess the contours of power demand, fuel prices, capacity additions and the dichotomy between growth and sustainability.
Key takeaways included the understanding that power demand can remain healthy and the government also anticipated peak power demand of 256.53 GW in FY25 (peak power demand was 240 GW in FY25). 24 compared to the government's projection of 230 GW). JM Financial said hydropower generation is below expectations due to the deviation in the snowfall pattern, which is likely to continue in the coming quarters as well.
Driven by energy demand and limited contribution from non-thermal sources, utilization of thermal power plants is increasing and all utilities expect a similar push for thermal power generation to continue.
"Tariffs for trading energy on exchanges remain elevated driven by healthy growth in energy demand and limited incremental supplies," he said, adding that coal prices are stable for now, but the trajectory remains uncertain. , with Coal India indicating a 40-50 per cent decline in premium, while Tata Power expects stable prices.
Visibility of new thermal power projects is improving and the government aims to add 93,380 MW of thermal capacity by FY32. NTPC envisaged awarding 16.8 GW of new thermal projects in the short and medium term, JM Financial noted .
"We also believe that capacity addition for new thermal power plants and renewables (solar and wind) will see strong traction in the coming years driven by growing energy demand and limited incremental supply. We currently have a BUY rating on NTPC (target price: Rs 368), Power Grid (target price: Rs 312), Coal India (target price: 500), Tata Power (target price: Rs 439), JSW Energy (target: Rs 540), NHPC (target : Rs 91) and Suzlon Energy (target: Rs 54),โ JM Financial said.
JM Financial suggested a target price of Rs 243 on BHEL. The brokerage has a 'HOLD' rating on CESC with a target of Rs 130 and a 'Sell' rating with a target of Rs 72 on SJVN and Rs 800 on Torrent Power.
