New power contracts may shape investment by Indian generators as demand grows, The Economic Times reported Oct. 29, citing Ambit Capital’s outlook and three stocks it viewed as possible re-entry candidates.
India’s Central Electricity Authority (CEA) projects an energy requirement of 2,473.8 billion units by FY32, with a 5.33% compound annual growth rate from FY27 to FY32. That projection and Ambit’s reported demand outlook are not directly comparable in period and measure.
The Economic Times reported that Ambit expects demand to rise about 6% annually through FY32, while generation gross block expands about 11% each year. The newspaper also said Ambit sees limited visibility for power-purchase agreements (PPAs) covering capacity expected in FY29 and FY30. That limited visibility could prompt distribution companies to increase procurement over the coming year, according to the report.
Official figures show a small shortfall in FY26. India’s Ministry of Power reported an energy requirement of 1,707,493 million units and availability of 1,706,985 million units, leaving a deficit of 508 million units, or 0.03%.
The Economic Times reported that Ambit set share-price targets of Rs 420 for Tata Power, Rs 535 for JSW Energy and Rs 1,325 for Torrent Power. Ambit placed Tata Power at the top of its Buy-rated list, followed by JSW Energy, NTPC, Torrent Power and Power Grid, The Economic Times reported. The report said the targets imply valuations of 12.5 times FY28 EBITDA for Tata Power, 11 times estimated FY27 EBITDA for JSW Energy and 12.8 times estimated FY28 EBITDA for Torrent Power.
Ambit’s Tata Power model also used a 12% cost of equity and assumed annual EBITDA growth of 15% through FY27, The Economic Times reported. The outlet said the brokerage expects JSW Energy’s FY30 EBITDA to reach four times its FY25 level, with profit after tax doubling over that period.
The Economic Times reported that Ambit sees battery energy storage systems as a risk to Torrent Power’s merchant gas business. Potential thermal capacity additions and distribution opportunities could offset some of that pressure, the report said.
