Power stocks extend gain as demand seen rising; Tata Power up 26% in a week

Shares of power companies continued to march higher with the S&P BSE Power index hitting a fresh 10-year high on Tuesday on strong demand outlook. At 10:00 am; the S&P BSE Power index was up 1.5 per cent, when compared to 0.21 per cent decline in the S&P BSE Sensex.

The power index hit an intra-day high of 3,345.64, its highest level since October 2010. It had hit a record high of 4,929.34 on January 8, 2008 on the BSE, the exchange data shows. Tata Power, Adani Transmission, Adani Green Energy, Adani Power and CESC from the power index were up 2 - 4 per cent each.

Shares of Tata Power Company hit a new high of Rs 176.65, and have rallied 5 per cent on the BSE. The stock of Tata Group electric utilities company was trading higher for the sixth straight day. It has zoomed 26 per cent in past one week, as compared to 1 per cent decline in the S&P BSE Sensex. Last week, the stock had surpassed its previous record high was Rs 158 recorded on January 4, 2008.

Tata Power is one of India’s largest integrated power companies and together with its subsidiaries and jointly controlled entities, has an installed / managed capacity of 13,061 MW. The company has presence across the entire power value chain - generation of renewable as well as conventional power including hydro and thermal energy, transmission & distribution, coal & freight, logistics and trading.

Tata Power is steering the transformation as an integrated solutions provider by looking at new business growth in distributed generation through rooftop solar and micro grids, storage solutions, electric vehicle (EV) charging infrastructure, energy service company (ESCO), home automation & smart meters.

India’s demand for power fell significantly by 8.5 per cent in the first half of the financial year 2020-21 (FY21) but picked up pace in the second half of the fiscal, with the easing of lockdown measures. In fact, the country recorded the highest ever peak power utilisation of 190 GW in FY21.

India’s growing urban population, revival in economic activities in the coming quarters after a sizable population gets vaccinated and its quest for affordable, clean and reliable power provide a huge scope for continued growth in power demand.

Meanwhile, the rating agency ICRA has revised energy demand growth outlook upwards from 8 per cent to 8.5 per cent for 2021-22. As per ICRA, low base last fiscal and faster-than-expected recovery in demand after the second wave of COVID-19 seen in April and May 2021 have supported this outlook upgrade.

The all-India electricity demand during the period from April 2021 to September 2021 has increased by 12.7 per cent to 707 billion units (BU) on a year-on-year (YoY) basis supported by a lower base, improvement in economic activity and lower than normal monsoons leading to higher demand from the agriculture segment during July and August 2021, an ICRA statement said, the PTI reported.

Meanwhile, analysts recommend to excercise caution in this space given the sharp rally. They suugest, fresh investment in these counters be made from a two-three year horizon. READ FULL STORY HERE