New Delhi, March 21 -- Coal stocks at power plants are comfortable and imported coal plants have been given a pass-through on higher import prices, said global brokerage Jefferies, adding NTPC's expensive gas plants have also been given a go ahead for utilisation ramp up if power demand is higher. The brokerage believes the proactive measures will see the majority of peak summer demand being met till normalising from monsoon July onwards.
Power stocks NTPC (Buy), JSW Energy (Buy), IEX (Underperform) are beneficiaries of this peak demand pocket, as per Jefferies. The brokerage has Buy tags on Power Grid with a target price of Rs.260, JSW Energy (TP: Rs.315), NTPC (TP: Rs.195) whereas it has Underperform stance on Indian Energy Exchange or IEX (TP: Rs.110) and Tata Power (TP: Rs.175).
"NTPC could see 3-5% EPS accretion for FY24E as it earns incentives on higher plant utilisation levels. Generation capacity is primarily based on regulated ROE outside the 25-year fixed tariff solar PPAs. JSW Energy has 13% capacity available for merchant, which is entirely based on imported coal. Merchant power prices are currently at Rs6/unit. Every 5% change in this price could add 5-8% to FY24E EPS," it said.
"Peak power demand deficits are being viewed as a temporary phenomenon for now, though it is being watched closely. Game-changing distribution reform seems to be on the back-burner for now till the May 2024 elections. We believe T&D spend, which has lagged generation, will pick up in 2023 and are positive on Power Grid," the note stated.
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