Ambit has identified attractive entry points across Indian power utilities, projecting that upcoming distribution company procurement will trigger major new project rollouts. Tata Power stands as the brokerage's preferred stock with a Rs 420 price target, backed by a projected 15% EBITDA compound annual growth rate through FY27. JSW Energy and Torrent Power also hold Buy recommendations based on expanding thermal capacity and renewable portfolios. Additionally, NTPC and Power Grid have retained Buy ratings, while NTPC Green carries a Sell recommendation.
Key points
Power distribution companies will likely speed up contract procurement within the next ye…: Power distribution companies will likely speed up contract procurement within the next year to secure capacity for FY29 and FY30.
Power Grid's target price of Rs 285 is supported by an existing backlog and over Rs 2 tri…: Power Grid's target price of Rs 285 is supported by an existing backlog and over Rs 2 trillion of capitalisation across five years.
Ambit maintains a Sell rating on NTPC Green with an assigned price target of Rs 85 per sh…: Ambit maintains a Sell rating on NTPC Green with an assigned price target of Rs 85 per share.
Sources checked by our analysis pipeline: 1
In its sector outlook, research analysts Satyadeep Jain and Sarthak Jain said electricity demand could grow at around 6% annually through FY32, requiring generation gross block to expand by approximately 11% a year. Limited visibility on power purchase agreements (PPAs) for capacity expected in FY29 and FY30 could prompt distribution companies (DISCOMs) to accelerate procurement over the coming year, potentially triggering another round of project announcements.
“More importantly, the next catalyst may come from contracting rather than near-term demand,” the analysts said, pointing to limited PPA visibility for FY29–FY30 capacity.
Ambit also sees scope for a recovery in utility valuations following the recent correction. With bond yields approaching multi-decade highs, a potential peak in yields could mark a bottom for utility valuations, according to the brokerage.
Tata Power leads Ambit's preferred power stocks
Among its Buy-rated stocks, Ambit ranks Tata Power ahead of JSW Energy, NTPC, Torrent Power and Power Grid, in that order.
For Tata Power, the brokerage has set a target price of Rs 420 per share, based on a discounted cash flow valuation using a 12% cost…
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