Elara bets on NTPC, Power Grid; sees hydro sector on strong long-term path

Regulated firms, along with renewables and hydro, remain attractive in the utilities sector even as power generation continues its downward trajectory, according to brokerage Elara Capital. Although power generation declined 0.9 per cent in November, peak demand rose 4 per cent year-on-year (Y-o-Y) during the month, while traded volumes jumped 17.7 per cent Y-o-Y.

 

Elara prefers regulated public-sector utilities such as NTPC and Power Grid Corporation, citing assured returns from regulated assets and a strong capacity-addition pipeline. CESC, it believes, offers meaningful upside driven by its ambitious renewable-capacity expansion plans, while NLC India appears attractive on account of its plan to double regulated equity by FY30.

 

“In the long term, the hydro sector looks promising due to upcoming capacity addition and renewed focus on the industry,” the brokerage said.

Power generation declines in November

After a subdued October, power generation continued its downward trend in November. Electricity generation fell about 0.9 per cent Y-o-Y to 134 BU for the month. Lower temperatures and slowing industrial activity kept demand muted. This was the first instance in at least five years where power demand contracted in November. Typically, demand rises in the latter part of the year as industrial operations pick up and agricultural activity rebounds after the monsoon.

 

Generation at coal-fired plants declined 6 per cent Y-o-Y to 97 BU, while thermal plant load factor slipped to 67 per cent from around 69.5 per cent a year ago. Hydro generation increased 16 per cent Y-o-Y to 10.9 BU, and renewable generation rose 28 per cent Y-o-Y to 18.5 BU. For FY26 so far, generation is down 0.47 per cent Y-o-Y at 1,239 BU.

 

“Despite subdued performance in FY26 to date, power generation is reviving in December and has risen about 5.7 per cent Y-o-Y to 37.63 BU in the first eight days of the month on a high base, up 9.3 per cent Y-o-Y in December 2024,” the brokerage said.  ALSO READ | Acquisitions, partnerships to drive operational gains for JSW Infra

Peak demand increases

Despite the fall in generation, peak demand increased 4 per cent Y-o-Y to 215.5 GW in November, rising 2.4 per cent month-on-month. Elara noted that the Central Electricity Authority had projected peak demand to reach 270 GW in FY26, but actual demand fell short due to early monsoon arrival, which reduced cooling requirements. Peak demand had hit an all-time high of 250 GW in May 2024. The previous record of around 243.3 GW was set in September 2023. This summer, peak demand was around 242.8 GW in June.

 

“Lower temperatures due to the early monsoon arrival led to reduced cooling demand during the summer months,” Elara said.

Volume surges espite muted demand

Despite the decline in power generation, traded volumes rose 17.7 per cent Y-o-Y in November. According to the brokerage, the Indian Energy Exchange (IEX) recorded a monthly electricity-traded volume of 11,409 MU in November, up 17.7 per cent Y-o-Y. About 0.474 million Renewable Energy Certificates were traded.

 

The day-ahead market (DAM) segment logged 5,668 MU in November 2025 versus 5,651 MU in November 2024, a rise of 0.3 per cent Y-o-Y. Real-time market (RTM) volumes increased to 4,233 MU in November 2025 from 3,019 MU in November 2024, up 40.2 per cent Y-o-Y.

 

(Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)