According to Motilal Oswal Financial Services Ltd, the Indian power sector could experience an investment opportunity of Rs.40 lakh crore over the next decade.
The substantial investment opportunity is driven by India’s vision to raise its installed power capacity to 900 GW by fiscal 2032, up from 442 GW in fiscal 2024. Solar and wind energy are projected to comprise 53 percent of the total installed capacity, while the share of thermal energy is anticipated to decrease to 29 percent.
The brokerage initiated coverage on the sector with a ‘buy’ rating on Power Grid Corp., Tata Power Co., and JSW Energy Ltd. It has a ‘neutral’ rating on NTPC Ltd. and Indian Energy Exchange Ltd.
Target Recommendations
Power Grid Corporation of India Limited
With a market capitalization of Rs.3.26 lakh crore, the share price of Power Grid Corporation of India Limited reached a 52-week high of Rs.366.2 per share on Wednesday, rising 4.5 percent from its previous close.
Motilal Oswal has recommended a “Buy” call on Power Grid Corporation Limited with a target price of Rs.425 per share, indicating an upside potential of 17 percent.
In its latest financial update, the company reported a revenue of Rs.11,006 crore in Q1 FY25, a decline of nearly 1 percent from Rs.11,048 crore in Q1 FY24. Conversely, the company’s net profit increased to Rs.3,724 crore from Rs.3,597 crore during the same period, showing a growth of 3.5 percent.
Tata Power Company Limited
With a market capitalization of Rs.1.51 lakh crore, the share price of Tata Power Company Limited reached an intra-day high of Rs.470.85 per share on Wednesday, rising 0.7 percent from its previous close.
Motilal Oswal has recommended a “Buy” call on Tata Power Company Limited with a target price of Rs.530 per share, indicating an upside potential of 14 percent.
In its latest financial update, the company reported a revenue of Rs.17,294 crore in Q1 FY25, increasing 14 percent from Rs.15,213 crore in Q1 FY24. Conversely, the company’s net profit increased to Rs.1,189 crore from Rs.1,141 crore during the same period, showing a growth of 4.2 percent.
JSW Energy Limited
With a market capitalization of Rs.1.39 lakh crore, the share price of JSW Energy Limited reached an intra-day high of Rs.793.3 per share on Wednesday, rising 0.5 percent from its previous close.
Motilal Oswal has recommended a “Buy” call on JSW Energy Limited with a target price of Rs.917 per share, indicating an upside potential of 17 percent.
In its latest financial update, the company reported a revenue of Rs.2,879 crore in Q1 FY25, a decrease of nearly 1.6 percent from Rs.2,928 crore in Q1 FY24. In contrast, net profit surged to Rs.534 crore from Rs.290 crore in the same period, reflecting an 84 percent increase.
Growth Projections
The Central Electricity Association has set a renewable energy capacity target of 500 GW by 2030, as noted by Motilal Oswal. The brokerage sees potential for growth due to India’s green hydrogen goal of 5 million metric tonnes by 2030.
They estimate an additional investment opportunity of Rs. 5.6 lakh crore for renewable energy linked to green hydrogen, assuming 20 GW of capacity is needed for each million metric tonnes produced.
According to the brokerage, an increase in generation capacity will necessitate significant investment in transmission infrastructure. While Power Grid Corporation anticipates a transmission-related industry capex of Rs.2 lakh crore, Motilal Oswal expects this capex to reach Rs.4 lakh crore.
Written by – Siddesh S Raskar
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