JM Financial in its latest note on utilities sector said investors would watch out for the momentum in power demand, trend in international coal prices and the pace of capacity additions in both renewable energy and thermal in the June quarter results. The brokerage, which has 'Buy' ratings on stocks such as Suzlon Energy Ltd, Tata Power Company Ltd, NTPC Ltd, Power Grid and Coal India Ltd, among others, said it remained positive on the utilities space with increasing power demand and more policy focus on capacity additions.
Target prices Ahead of the June quarter results, the domestic brokerage has a target price of Rs 414 on NTPC, Rs 350 on Power Grid, Rs 540 on Coal India, Rs 499 on Tata Power Company, Rs 648 on JSW Energy (Buy rating). Besides, it has a price target of Rs 109 on NHPC, Rs 54 on Suzlon Energy, Rs 353 on BHEL, Rs 163 on CESC and Rs 1,510 on Torrent Power. JM Financial has 'Sell' rating on SJVN with target price of Rs 72.
Q1 result previews
JM Financial expects BHEL’s net revenue to increase 27 per cent YoY, driven by robust order book in power segments. It expects BHEL to report a marginal negative profit after tax. It sees Suzlon Energy's net revenue to increase 36 per cent YoY on account of higher dispatches in spite of lower commissioning of WTG.
JSW Energy’s revenue and PAT may increase merely 1 per cent YoY due to lower thermal generation in Q1FY25, it said while expecting NTPC to log net sales of Rs 44,300 in 1QFY25, up 3 per cent YoY. JM Financial sess Ebitda for NTPC at Rs 12,800 crore and said PAT may rise 8 per cent YoY due to 10 per cent YoY increase in Thermal production and almost negligible share of imported coal.
"We expect Power Grid to report net sales at Rs 12,100 crore with a 10 per cent rise in YoY, and Ebitda margin of 86.7 per cent. CESC is expected to report 3 per cent YoY revenue growth led by higher generation and lower AT&C losses. NHPC and SJVN sales are expected to increase 1 per cent/8 per cent YoY respectively due to substantial higher hydro power generation," JM Financial.
Tata Power’s net sales may improve 12 per cent YoY, JM Financial said citing stronger execution through solar plant and higher thermal generation. Coal India’s revenue may dip 4 per cent YoY due to moderation in overall realisation while Torrent Power may report a revenue of Rs 8,000 crore, up 10 per cent YoY due to higher generation in their gas based plants, JM Financial noted. Below are the key Q1 expectations from each of the companies stated above: