NTPC, SJVN share price rally, Tata Power slips; Check out what is happening in power stocks
NTPC share price gained over 5%, while SJVN shares rallied more than 9% on Wednesday after Goldman Sachs initiated coverage on the stocks with Buy ratings. Goldman Sachs is of the view that India’s power sector is undergoing a generational shift. It believes that in India’s move to shift towards clean energy, the transition led business model upgrades and rising peak deficits will drive re-rating in power stocks.
The global brokerage sees two key themes playing out in India's power sector. Firstly, economics-led Renewable (RE) transition being driven by the viability of Round-the-clock Renewables (RTC RE), which has the potential to unlock a superior business model for traditional utilities, offering higher returns and access to a better customer base.
Simultaneously, the onset of a peak power deficit cycle caused by a secular rise in peak demand being met by inadequate 'firm' capacity addition. Goldman Sachs has initiated coverage on NTPC with a Buy call and 12-month target price of ₹265 per share, implying an upside of 34% from Wednesday's high price.
NTPC is also the brokerage’s top pick in the sector, given its exposure to both themes. “In our view, NTPC will emerge as a winner in this transition, as its ‘structural advantage’ of low cost debt will provide a strong moat. At the same time, rising peak shortages will re-rate its legacy thermal business, like in the previous cycle," Goldman Sachs said in a report.
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