Shares of most companies in the power space are at all-time highs helped by the recent uptick in demand, an improvement in pricing trends, and pick-up in industrial demand.
Shares of Torrent Power, NTPC and Power Finance Corp hit their lifetime highs on Wednesday, while REC hit its lifetime high earlier this month. Renewable energy player Suzlon Energy is also at a multi-year high, while Tata Power was at its highest level in more than a month.
«Given the scanty and dry monsoon, we are seeing power demand shoot up leading to a demand-supply deficit, along with an uptick in rates.
There is also a buzz that the government is looking to revive defunct power plants through green incentives,» said Sunny Agrawal, head of fundamental research at SBI Securities.
«Although the focus is on renewable energy and it will probably see a higher pace of growth, given that it is not consistent yet, renewable and thermal are set to grow hand in hand for the next few years,» he said.
Power demand has jumped 16% on-year between August to October, and is 9% higher compared to the previous year so far in FY24. The inventory level for coal, meanwhile, has dropped to eight days in November as against a normal of 9-11 days, Jefferies said in a recent report.
This robust growth in demand for power is reflected in share prices, with power generators, distributors and financing companies sitting on hefty gains of 32-274% so far in 2023, a significant portion of which has come in the last three months.