The National Electricity Plan (NEP) covering the period from 2023 to 2032 has been finalized. Union Power Minister Manohar Lal shared this news at a press conference held in New Delhi on 23rd September 2024.
The NEP 2032 outlines a strategy for developing central and state transmission systems to meet the projected peak power demand of 458 GW by 2032, with a total investment of Rs. 9.15 lakh crore (or Rs. 9 trillion).
This initiative aims to address rising electricity demand and support the integration of renewable energy (RE) and green hydrogen loads into the grid.
Additionally, the Union Minister mentioned that the Ministry has created a 100 Days Plan focused on strengthening power infrastructure, enhancing capacity, improving connectivity, and expanding international reach.
The achievements in the power sector during this period highlight the Ministry’s commitment to policy reforms and the introduction of new initiatives aimed at strengthening and empowering the Indian power sector.
The transmission network is set to expand from 4.85 lakh km in 2024 to 6.48 lakh km by 2032. Similarly, transformation (or substation) capacity will increase from 1,251 GVA to 2,342 GVA.
Additionally, nine new High Voltage Direct Current (HVDC) lines, with a capacity of 33.25 GW, will be added to the existing 33.5 GW. Inter-regional transfer capacity will rise from 119 GW to 168 GW by 2032, covering a network of 220 kV and above.
The Union Minister also announced the approval of 50 GW of ISTS capacity. A transmission network of 335 GW is being planned to facilitate the evacuation of 280 GW of Variable Renewable Energy (VRE) to the Inter-State Transmission System (ISTS) by 2030.
Of this capacity, 42 GW has already been completed, 85 GW is currently under construction, and 75 GW is in the bidding process. The remaining 82 GW will be approved in due time.
Here are a few stocks that could benefit from the National Electricity Plan (NEP):
Kalpataru Projects International Limited
With a market cap of Rs. 21,865.3 crores, the stock surged nearly 4.3 percent on BSE to Rs. 1,426, during Tuesday’s trading session.
According to sources, Amit Uplenchwar, director of KPIL, highlighted that the NEP’s focus on advanced technologies such as HVDC and regional grid integration will generate new opportunities.
KPIL has announced a capex of Rs. 450-500 crore for FY25 to prepare for the anticipated increase in demand driven by the NEP. This investment aims to enhance their operational capacity and broaden their service offerings.
It is noted that transmission networks are not particularly capital-intensive businesses; instead, what is needed is strong engineering capability, which the company already possesses.
The company has reported a robust order book valued at ~Rs. 58,410 crores, significantly supported by T&D projects.
With an estimated visibility of tenders around Rs. 50,000 crores annually in the coming years, KPIL expects revenue growth of over 20 percent and improved profit margins as they leverage new opportunities arising from the NEP.
The company has reported a significant growth in revenue from operations, with around an 8.2 percent YoY rise from Rs. 4,241 crores in Q1 FY24 to Rs. 4,587 crores in Q1 FY25. However, the net profit decreased by 25.7 percent YoY from Rs. 113 crores to Rs. 84 crores, during the same period.
The stock has delivered multibagger returns of nearly 110 percent in one year, and around 90.8 percent returns year-to-date.
Kalpataru Projects International Limited, formerly known as Kalpataru Power Transmission Limited, is a global EPC player with diversified interest in buildings and factories, power transmission and distribution, roads and bridges, water pipelines, railway track laying and electrification, oil and gas pipelines laying, etc.
Power Grid Corporation of India Limited
With a market cap of Rs. 3.26 lakh crores, the stock surged nearly 1 percent on BSE to Rs. 356, during Tuesday’s trading session.
According to a few sources, Goldman Sachs considers the National Electricity Plan to be beneficial for asset developers, especially Power Grid.
The company is strategically positioned to benefit from the upcoming investments in transmission infrastructure. Given its robust financial position and access to low-cost debt, Power Grid is expected to secure a significant share of the transmission capital expenditure opportunities.
The company has reported a marginal decline in revenue from operations, with around a 0.4 percent YoY decrease from Rs. 11,048 crores in Q1 FY24 to Rs. 11,006 crores in Q1 FY25. However, the net profit increased by 3.5 percent YoY from Rs. 3,597 crores to Rs. 3,724 crores, during the same period.
The stock has delivered positive returns of nearly 77 percent in one year, as well as around 48.4 percent returns year-to-date.
Power Grid Corporation of India Limited (PGCIL) is primarily engaged in the business of implementation, operation and maintenance of Inter-State Transmission System (ISTS), telecom and consultancy services.
KEI Industries Limited
With a market cap of Rs. 38,812.8 crores, the stock surged nearly 1.1 percent on BSE to Rs. 4,342.8, during Tuesday’s trading session.
According to sources, Anil Gupta, Chairman and Managing Director of KEI Industries, anticipates that the NEP will boost growth, predicting a 50-60 percent increase in sales from cables in the power sector, with a compounding effect of 2.5 to 3 times over the years.
This plan is expected to significantly increase the demand for products used in power systems through the transmission of this type of power.
The management plans to expand the network’s circuit kilometre, by almost 50-60 percent, while also increasing the transformation capacity of substations by 70-75 percent.
The company also plans to introduce large HVDC extra high voltage cables in its facilities, reaching up to 525 KV.
With the introduction of new HVDC lines, it is expected that a significant number of these will utilise HVDC cables rather than relying only on overhead lines. This development will help the company as it will increase the use of extra high-voltage power cables in both high-voltage alternating current (HVAC) and HVDC applications.
The company has reported a significant growth in revenue from operations, with around a 15.5 percent YoY rise from Rs. 1,783 crores in Q1 FY24 to Rs. 2,060 crores in Q1 FY25. Similarly, the net profit increased by 24 percent YoY from Rs. 121 crores to Rs. 150 crores, during the same period.
The stock has delivered positive returns of nearly 59 percent in one year, as well as around 34.4 percent returns year-to-date.
KEI Industries Limited is involved in serving three major segments: Cables & wires, EPC projects and Stainless steel wire.
It is engaged in the business of manufacturing, sale and marketing of a wide range of power cables up to 400kV – Low Tension (LT), High Tension (HT) and Extra High Voltage (EHV), control and instrumentation cables, specialty cables, elastomeric/rubber cables, submersible cables, flexible & house wires, and winding wires.
KEI is also engaged in the execution of EPC projects for survey, supply of materials, design, erection, testing & commissioning on a turnkey basis.
Closing Point
Further, more companies including GE T&D India Limited, Skipper, CG Power, TRIL, KEC International, Hitachi, and Siemens are also the key beneficiaries from this National Electricity Plan (NEP) for the period 2023 to 2032.
Written by Shivani Singh
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