NTPC, Power Grid get new 'overweight' from JPMorgan on rising demand growth

The brokerage initiated coverage with a 'neutral' rating on Tata Power and Torrent Power while having an 'underweight' stance on JSW Energy

JP Morgan initiated ‘overweight’ coverage on NTPC and Power Grid Corporation of India (PowerGrid), citing rising power demand while noting that other stocks in the sector are overvalued, given execution challenges.

 

The brokerage initiated coverage with a ‘neutral’ rating on Tata Power and Torrent Power while maintaining an ‘underweight’ stance on JSW Energy. There are sectors in which it may make sense to chase expensive stocks, but “power is not one of them”, analysts at the research firm said in a note.

 

Amid this, Indian electric utilities and independent power producers (IPPs) face structural power demand growth and a much tighter demand-supply balance for peak power, JP Morgan said. This is leading to an expanded thermal capital expenditure (capex) opportunity that will benefit NTPC and a transmission capex opportunity that will be an advantage for PowerGrid.

 

The steel industry has consolidated after a “brutal decade” in the 2010s, which saw many bankruptcies, leaving the survivors to benefit from rebounding growth, JP Morgan observed. “However, power is a tough sector — multiple challenges persist, such as the weak financial health of distribution companies, delays in the signing of renewable power purchase agreements (PPAs), the usual execution delays, and regulatory interventions.”

 

Post-pandemic, stocks have rerated sharply due to strong power demand growth, the resolution of payment delays, and high trading multiples accorded to renewable growth prospects, according to the note. JP Morgan noted that the recent correction has reduced the “froth”, with valuations of NTPC and PowerGrid in the “acceptable zone”. However, it finds private IPP/utility valuations still somewhat expensive, especially given execution challenges.

 

Power demand in India continued to rise in March, with a 7 per cent increase in demand and a 6 per cent rise in peak demand, reaching 235 gigawatt in the first 18 days of March due to a harsher summer, according to an HSBC note. Despite this surge, no meaningful shortages were witnessed, as peak demand since November 2024 has come entirely during solar hours, it added.

 

As peak demand in non-solar hours surges seasonally in summer, monitoring shortages will be important. To address the non-solar peak demand issue, incremental battery storage and storage-based renewable energy projects will be key, HSBC said.

 

NTPC share price: The central public sector undertaking’s stock rose as much as 0.56 per cent during the day to ₹369 per share. However, it closed in negative territory with a decline of 3.35 per cent, compared to a 0.77 per cent fall in the benchmark Nifty 50 index. Shares of NTPC have outperformed the Nifty 50 this year so far, with a rally of nearly 6.4 per cent. From its recent low of ₹292 in February this year, the counter has risen by nearly 21 per cent.

 

PowerGrid share price: Shares rose as much as 1.98 per cent to ₹296.75 apiece during the session but closed 0.05 per cent lower on Wednesday. The counter has fallen by 5.7 per cent in 2025 so far, compared to a 0.67 per cent decline in the Nifty 50. The scrip has recovered by over 17 per cent since its February lows.