Power sector: Equirus starts coverage on JSW Energy, Torrent; NTPC top pick

Equirus Securities has assigned a target price of ₹653 for JSW Energy, implying an upside of 15 per cent. Similarly, Torrent Power received a target price of ₹1,515, suggesting over 5 per cent upside

Power stocks in focus: Domestic power companies attracted bullish calls as Equirus Securities initiated coverage on JSW Energy with a 'Long' rating and Torrent Power with an 'Add' rating, citing a favourable long-term demand outlook and a multi-year investment cycle in India's power sector. The brokerage also reiterated its 'Long' rating on NTPC with a target price of ₹432, highlighting its regulated earnings model and strong growth pipeline.

 

The brokerage has assigned a target price of ₹653 for JSW Energy, implying an upside of 15 per cent on the counter from the previous close of ₹553 apiece. Similarly, Torrent Power received a target price of ₹1,515. The target implies an upside of over 5 per cent from the current market price of ₹1,441 apiece.

 

 

Power sector outlook

The brokerage turned positive on the sector, citing strong power demand domestically, which has entered a "structural upcycle, growing at 7.3 per cent CAGR over FY21-FY25. Peak demand is projected to rise from 271GW to 388GW by FY32, resetting the long-term demand trajectory to 6-7 per cent."

 

Equirus noted that India's power demand growth is the fastest among major economies, ahead of China, the US and the global average. 

 

From FY22, India's power demand trajectory decisively reversed, supply deficits re-emerged, and policy embraced renewables for scale alongside thermal for baseload. India crossed 50 per cent non-fossil installed capacity five years ahead of target and subsequently entered its largest-ever build-out, requiring ₹50 trillion of investment by FY32, the report added.

 

The brokerage highlighted that JSW Energy has built India's most differentiated private power platform, with a 32.1GW locked-in portfolio that already exceeds its 30GW FY30 target, driven by stressed-asset acquisitions and unmatched vertical integration. In the same light, Equirus expects the company's revenue to grow at a rate of 19 per cent over FY26 to FY30, Ebitda is expected to grow 23 per cent, and PAT's compound annual growth rate for FY26-FY30 is expected to be at 24 per cent.

 

The brokerage assigned an 'Add' rating to Torrent Power on the heels of strong regulated distribution franchises with its largest-ever investment cycle. 'Stable distribution cash flows support ₹700-800 billion of planned investments across Nabha, the Raigad PSP, the MP thermal project and a 4GW+ renewable pipeline, growing revenue, Ebitda, and profit after tax at an average annual rate of 10 per cent, 20 per cent, and 12 per cent, respectively, from FY26 to FY30,' the report said. 

 

Similarly for NTPC, the brokerage noted that the power company combines the sector's lowest-risk regulated earnings model with the deepest growth pipeline. With 90.9GW operational, 34.2GW under construction, and expansion across NGEL, nuclear, pumped storage and BESS, it provides unmatched long-term growth visibility.

 

Equirus ranked NTPC first for its low-risk regulated earnings model, compelling valuation and deepest growth pipeline, followed by JSW Energy for its locked-in capacity and visible earnings inflection. Torrent Power ranked third, with execution risks and higher leverage moderating the near-term risk-reward.

 

Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.