The global brokerage house Bernstein report points to a changing power landscape in India and identifies several listed companies that could benefit.
Its coverage includes NTPC, Power Grid Corporation of India, JSW Energy, Tata Power, Adani Power, Adani Green Energy, NTPC Green Energy, among others.
NTPC, Tata Power, JSW Energy: What is Bernstein expecting?
The brokerage has a target price of Rs 450 for NTPC, implying around 32% upside from the current market price.
Tata Power has a target of Rs 430, suggesting nearly 15% upside from the current market price, while JSW Energy has a target of Rs 623, indicating around 14% upside.
For Power Grid, the brokerage has set a target price of Rs 313 (suggesting around 15% upside), and for Adani Power, a target price of Rs 220 (suggesting about 8% upside).
In contrast, Bernstein maintains Underperform ratings for Adani Green (target price of Rs 980) and NTPC Green (target price of Rs 85)
Bernstein expects the broader electricity market to increasingly require a combination of thermal generation, renewable energy, storage and transmission.
Why is renewable power facing a new challenge?
India’s renewable-energy capacity is expanding rapidly. Bernstein pointed out that generation capacity alone does not solve the problem.
Some renewable projects are already facing curtailment, where power generation is reduced because the grid cannot absorb or transmit all the electricity being produced.
According to the brokerage report, this issue has not improved meaningfully despite progress in transmission commissioning.
The problem is particularly visible in parts of Rajasthan (Fatehgarh, Bhadla, Bikaner) and Gujarat (Khavda, Lakadia), where renewable projects have faced transmission constraints.
Battery storage could become increasingly important
Bernstein believes battery energy storage systems could play a much larger role in India’s electricity network than previously expected.
The brokerage noted, “Consensus on large role of BESS (larger than planned).”
Pumped storage could also become an important part of the longer-term power system. Bernstein sees it as particularly relevant in regions with high renewable-energy penetration.
New tenders are changing the power opportunity
Another shift is happening in the way renewable power is being contracted.
Bernstein highlighted new tenders designed to provide electricity during specific peak periods. One such tender requires power supply during four non-solar hours selected by the customer.
The brokerage said this is “possibly the biggest need of the hour.”
It expects battery-heavy solar projects to play a role in meeting such requirements.
Bernstein’s calculations imply BESS costs of around $100/kWh for the peak-power tender and about $110/kWh for a theoretical solar+BESS version of the thermal-mimic tender.
What investors need to watch
The report highlighted that the power opportunity is becoming more complicated. Renewable capacity growth remains important, but transmission availability, storage costs, tender tariffs and project execution will determine how much of that capacity can actually translate into earnings.
Bernstein also cautioned that high tariffs for new thermal projects could become difficult to sustain as renewable-plus-storage solutions become more competitive.
Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This should not be construed as an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor before making any investment decisions.