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Power stocks in limelight as demand outlook seen improving; Tata Power hits all-time high

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Power stocks gained on Monday on expectations of demand improvement in the future. At 1337 IST, shares of Tata Power gained nearly 9 percent to Rs 192.55. The stock hit an all-time high at Rs 193.45 on Monday, whereas shares of Coal India rose 4.5 percent to Rs 197. Other power stocks surged 1-7 percent.

Power stocks in limelight as demand outlook seen improving; Tata Power hits all-time high
Power stocks gained on Monday on expectations of demand improvement in the future.
“Power stocks are in focus due to the increasing demand. Power demand picked up pace in the second half of the fiscal, with the easing of lockdown measures,” said Rahul Sharma, Co- Founder, Equity99.
“In fact, the country recorded the highest ever peak power utilization of 190 GW in FY21. Also, India’s growing urban population and its quest for affordable, clean, and reliable power provide a huge scope for continued growth in power demand. Also, the BSE Power index has made New All-time High,” he added.
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Sharma is bullish on this sector as it has made a move after a long time and he expects the rally to sustain even further with a revival in economic activities. The sector will bounce back with more speed as the power crisis problem is temporary, he believes.
Coal India, Power Finance Corp and Tata Power are his top picks.
Jefferies had said in a note recently that the near-term earnings prospects of Tata Power have brightened with the rally in spot coal prices, which had prompted the brokerage to raise the earnings per share estimate and target price of Tata Power shares.
At 1337 IST, shares of Tata Power gained nearly 9 percent to Rs 192.55. The stock hit an all-time high at Rs 193.45 on Monday.
Further, Jefferies has upgraded its earnings per share estimates for Coal India by a whopping 37-49 percent for FY22-23 on the back of improving near-term earnings outlook.
The brokerage has also raised its target price on the stock to Rs 180 from Rs 135 earlier, and highlighted that the 9% dividend yield also bodes well.
However, the foreign brokerage has retained its ‘hold’ rating due to longer-term concerns around capability to deliver sustainable volume growth, weakening cash flow profile and environmental, social and governance concerns.
At 1337 IST, shares of Coal India rose 4.5 percent to Rs 197.
Other power stocks such as Adani Power, CESC, Gujarat Industries Power Co, Jaiprakash Power Ventures, JSW Energy, NHPC, NLC India, NTPC, Power Grid Corporation of India, PTC India, Torrent Power and Reliance Power rose 1-7 percent on Monday.
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