Ambit Capital Power Play: ‘Buy’ on NTPC and Suzlon, ‘Sell’ Tata Power as battery costs reset 

The brokerage has ‘Buy’ ratings on NTPC, Suzlon Energy, Emmvee Photovoltaic Power and Saatvik Green Energy. However, Tata Power, Torrent Power, Power Grid Corporation of India, NTPC Green Energy, JSW Energy and Premier Energies have a ‘Sell’ recommendation.

Ambit on battery energy storage system economics

The calls come as landed battery energy storage system prices have risen by about $15 per kilowatt-hour in recent months to roughly $80 per kilowatt-hour, bringing procurement activity to a near standstill. Industry participants now expect about 5 gigawatt-hours of incremental installations in financial year 2027, taking cumulative capacity to 13 to 15 gigawatt-hours, below the Central Electricity Authority’s target of 23 gigawatt-hours, according to Ambit.

Ambit said aggressive bidding had run into the more complicated economics of battery storage, including degradation, cycle life, auxiliary consumption and lifecycle management.

“Several developers bid aggressively without fully appreciating battery degradation, cycle life, auxiliary consumption and lifecycle management requirements. Battery energy storage system economics are considerably more complex than solar, making operating assumptions critical to project returns,” Ambit said.

The brokerage expects many firm and dispatchable renewable energy projects with battery storage to move into financial year 2028 rather than financial year 2027. Ambit also sees the possibility of a recovery in power demand after a weak financial year 2026, which could revive renewable energy and transmission tendering and improve order pipelines.

“That may restore distribution company urgency, revive renewable energy and transmission tendering, and improve order pipelines, tactically positive for utilities. However, most valuations still leave limited room for fundamental upside,” Ambit said.

Ambit Capital on NTPC: ‘Buy’

Ambit Capital has a ‘Buy’ rating on NTPC with a target price of Rs 410 per share, implying about 18% potential upside.

Ambit assigns Rs 312 per share to NTPC’s thermal power business, with the remaining value coming from renewable energy, nuclear power, pumped storage projects, coal mining, flue gas desulphurisation and other businesses.

“Our target price of Rs 410 per share implies Rs 312 per share value for the thermal business and the rest for renewable energy and nuclear power, pumped storage projects, coal mining, flue gas desulphurisation and other businesses,” Ambit said.

The brokerage’s positive view comes with a warning on the need for fresh project wins.

“NTPC remains our only ‘Buy’, though the company will need to win new orders; failing to do so may lead it into a value-trap zone,” Ambit said.

Ambit said power demand growth had slowed because of rooftop solar installations, weaker irrigation demand, softer industrial activity and benign weather. It estimated that rooftop solar alone reduced financial year 2026 power demand growth by about 80 basis points.

The brokerage said high groundwater levels and soil moisture also reduced tubewell usage during the Kharif and Rabi sowing seasons, while mild weather lowered cooling demand. According to Ambit, cooling accounts for about 25% of peak power demand and every one-degree Celsius change in temperature corresponds to roughly 7 gigawatts of demand.

Ambit sees the possibility that El Niño conditions and a neutral Indian Ocean Dipole could increase the risk of heatwaves and support electricity demand. A recovery could increase urgency among power distribution companies and revive renewable energy and transmission tendering.

Ambit Capital on Suzlon Energy: ‘Buy’

Ambit Capital has a ‘Buy’ rating on Suzlon Energy with a target price of Rs 62 per share, implying about 16% potential upside.

Ambit said the stock’s valuation at its target works out to 31 times estimated financial year 2028 earnings per share.

The brokerage identified the implementation of deviation settlement mechanism regulations and a continued slowdown in power demand as risks that could slow wind capacity additions and affect Suzlon’s order book.

Ambit sees the broader electricity demand environment as important for wind project activity. A recovery in power demand could support renewable energy tendering and new orders, while slower demand or regulatory changes could weigh on the pace of wind capacity additions.

Ambit Capital on Emmvee Photovoltaic Power: ‘Buy’

Ambit Capital has a ‘Buy’ rating on Emmvee Photovoltaic Power with a target price of Rs 345 per share, implying about 3% potential upside.

According to Ambit, the target values the company at 9 times estimated financial year 2028 earnings before interest, tax, depreciation and amortisation and 14 times estimated financial year 2028 earnings.

The brokerage identified lower-than-expected margins as a key risk as competition increases and new solar cell manufacturing lines come on stream. Ambit also said weak power demand could reduce the requirement for solar modules.

The company’s ability to protect margins as new manufacturing capacity enters the market will therefore be important, according to Ambit, while the pace of solar project development will influence demand for modules.

Ambit Capital on Saatvik Green Energy: ‘Buy’

Ambit Capital has a ‘Buy’ rating on Saatvik Green Energy with a target price of Rs 520 per share, implying about 10% potential upside.

Ambit said the target values the company at 6 times estimated financial year 2028 enterprise value to earnings before interest, tax, depreciation and amortisation and 9 times estimated financial year 2028 earnings.

The brokerage flagged increasing competition and new solar cell capacity expected over the next 18 to 24 months as risks to margins. Weak power demand could also reduce the requirement for solar modules, according to Ambit.

The brokerage said the domestic solar manufacturing industry faces the prospect of greater competition as new capacity comes on stream, making demand growth and margin protection important for manufacturers.

Ambit Capital on Tata Power: ‘Sell’

Ambit Capital has a ‘Sell’ rating on Tata Power with a target price of Rs 405 per share, implying about 6% potential upside.

The positive return to the target is consistent with Ambit’s rating framework, under which an expected 12-month return of 10% or less is classified as a ‘Sell’.

Ambit factors in a 15% compound annual growth rate in earnings before interest, tax, depreciation and amortisation through financial year 2027. The brokerage said its target values the company at 13 times estimated financial year 2028 earnings before interest, tax, depreciation and amortisation.

Ambit’s call reflects its view that the expected return remains below the threshold for a more favourable rating even after factoring in strong growth in operating earnings.

Ambit Capital on Torrent Power: ‘Sell’

Ambit Capital has a ‘Sell’ rating on Torrent Power with a target price of Rs 1,255 per share, implying about 13% potential downside.

Ambit said the target values the company at 11 times estimated financial year 2028 earnings before interest, tax, depreciation and amortisation.

The brokerage identified lower liquefied natural gas prices as a potential risk to its cautious view because cheaper gas could improve earnings from gas-based power generation. New opportunities in electricity distribution could also lead to a better outcome than Ambit currently expects.

Ambit Capital on Power Grid Corporation of India: ‘Sell’

Ambit Capital has a ‘Sell’ rating on Power Grid Corporation of India with a target price of Rs 290 per share, implying about 3% potential upside.

Ambit said the target values the company at 2.5 times estimated financial year 2027 book value.

The brokerage identified capitalisation of more than Rs 2 lakh crore over the next five years and greater discipline in tariff-based competitive bidding as factors that could lead to a better outcome than its current expectations.

A recovery in power demand could also revive transmission tendering, according to Ambit. The brokerage, however, sees limited potential returns at its target.

Ambit Capital on NTPC Green Energy: ‘Sell’

Ambit Capital has a ‘Sell’ rating on NTPC Green Energy with a target price of Rs 85 per share, implying about 10% potential downside.

Ambit’s estimates assume a 9% compound annual growth rate in earnings before interest, tax, depreciation and amortisation for 75 years. The brokerage assumes the company reaches 110 gigawatts of capacity by financial year 2040 and 290 gigawatts by financial year 2050.

According to Ambit, the target values the company at 15.6 times estimated financial year 2028 enterprise value to earnings before interest, tax, depreciation and amortisation and 11.9 times estimated financial year 2030 enterprise value to earnings before interest, tax, depreciation and amortisation.

Ambit’s assumptions already factor in substantial capacity expansion over several decades, but the brokerage still sees the stock trading above the level supported by its estimates.

Ambit Capital on JSW Energy: ‘Sell’

Ambit Capital has a ‘Sell’ rating on JSW Energy with a target price of Rs 525 per share, implying about 5% potential downside.

Ambit expects the company’s financial year 2030 earnings before interest, tax, depreciation and amortisation to reach four times the financial year 2025 level, while profit after tax is expected to double.

The brokerage said its target values the company at 11 times estimated financial year 2027 earnings before interest, tax, depreciation and amortisation.

Ambit identified power demand growth of 5% or less, higher curtailment and higher interest rates as risks. Higher borrowing costs could affect project returns for a capital-intensive power company, while curtailment could reduce the effective utilisation of generation assets.

Ambit Capital on Premier Energies: ‘Sell’

Ambit Capital has a ‘Sell’ rating on Premier Energies with a target price of Rs 945 per share, implying about 14% potential downside.

Ambit’s estimates use free cash flow to the firm through financial year 2035, a 12% weighted average cost of capital and a 9.6% terminal growth rate.

The brokerage identified weak power demand and a faster-than-expected ramp-up of new solar cell lines by competitors as risks to its estimates. Additional industry capacity could increase competition and put pressure on margins if supply grows faster than demand for solar equipment.

Ambit’s ‘Sell’ call on Premier Energies contrasts with its ‘Buy’ ratings on Emmvee Photovoltaic Power and Saatvik Green Energy, showing that the brokerage’s view differs across individual solar manufacturers based on their valuations and business outlook.

Why Ambit says the battery storage market is entering a reset

Ambit said a sharp change in battery storage economics is affecting the wider power and renewable energy sector.

The brokerage’s cost analysis puts the landed price of a post-duty direct-current battery energy storage system container at $79 per kilowatt-hour, compared with $63 per kilowatt-hour a few months earlier.

The turnkey cost of a two-hour battery energy storage system has risen to $128 per kilowatt-hour from $110 per kilowatt-hour, while the cost of a four-hour system has increased to $110 per kilowatt-hour from $92 per kilowatt-hour.

Ambit said the increase has slowed procurement. Industry participants now expect about 5 gigawatt-hours of incremental installations in financial year 2027, taking cumulative capacity to 13 to 15 gigawatt-hours against the Central Electricity Authority’s target of 23 gigawatt-hours.

Adani has commissioned 3.37 gigawatt-hours of battery energy storage systems at Khavda, accounting for a significant part of India’s installed base of about 8.5 gigawatt-hours. Another 11 gigawatt-hours is under development, but Ambit expects commissioning to be more likely in financial year 2028.

The Central Electricity Authority is considering stricter technical qualification criteria for future tenders, while Maharashtra and Rajasthan are evaluating re-tendering certain projects, according to Ambit. The government is also considering another 40 gigawatt-hours of viability gap funding support with domestic-content requirements of 40% to 50%.

Ambit expects most battery storage projects linked to firm and dispatchable renewable energy projects to be commissioned in financial year 2028 rather than financial year 2027. Some tender winners have yet to place battery procurement orders, while grid infrastructure availability could also affect commissioning schedules.

Ambit flags challenges for domestic battery manufacturing

Ambit also flagged delays in domestic battery cell manufacturing under the production-linked incentive programme.

According to the brokerage, Reliance has sought a two-year extension, Ola has requested changes to timelines and capacity, while Exide has commissioned capacity but commercial shipments remain limited.

Ambit attributed the delays largely to technology-transfer challenges, a steep manufacturing learning curve and weaker-than-expected customer offtake.

Industry participants told the brokerage that 10 gigawatt-hours of capacity may be insufficient to achieve attractive economics and around 20 gigawatt-hours could be required for meaningful scale.

According to Ambit, Amara Raja is taking a more measured approach by starting with an assembly and pack line and investing about Rs 1,000 crore in a customer qualification plant before placing equipment orders for a gigawatt-scale facility.

The government has reserved the remaining 10 gigawatt-hours under the existing production-linked incentive programme exclusively for battery energy storage systems and is evaluating an additional Rs 12,000 crore incentive programme that could extend support to upstream components, Ambit said.

At current spot prices, Ambit estimates an earnings before interest, tax, depreciation and amortisation margin of only 3% at a battery energy storage system selling price of $79 per kilowatt-hour. For a 2.5-gigawatt-hour plant operating at 75% utilisation, the brokerage estimates a post-tax return on capital employed of about 10%.

Conclusion

Ambit’s analysis points to a possible recovery in electricity demand that could revive renewable energy and transmission tendering, while higher battery costs, delayed storage projects and domestic manufacturing challenges continue to weigh on the sector.

Ambit’s central view is that an improvement in power demand could help project activity and order pipelines, but valuations across much of the utility and renewable energy space still leave limited room for gains.