4 power stocks to watch next week as suggested by HDFC Securities
Brokerage firm HDFC Securities took a look at the power sector and chose Borosil Renewable with an “Add” rating, NTPC with a buy rating, Tata Power with a reduced rating and JSW Energy with a sale, estimating that India will add 342 GW of RES capacity between FY22 and FY30, led by solar +280 GW, representing an investment potential of INR 11.2 trillion.
| Company | Recommendation | Target price | Up (%) |
| Borosil Renewable | To add | 704 | 9.0% |
| NTPC | To buy | 174 | 12.1% |
| Tata power | Reduce | 231 | -0.9% |
| JSW Energy | Sale | 160 | -51.5% |
HDFC Securities said in a note that “renewables are poised to play a huge role in India’s power sector, with capacity quadrupling by 2030, aided by stringent renewable energy obligation standards. (RPO), decarbonization efforts and growing demand for electricity. However, the success of RES will require the penetration of hybrid structures (rather than simple tenders) as well as viable storage systems to ensure peak power requirements and grid stability. Another major breakthrough that India and other global economies are pursuing is green hydrogen, which will replace conventional polluting fuel in the fertilizer, ammonia, steel, marine, refinery, and and heavy vehicles, but not in the passenger vehicle segment. »
The brokerage firm said India would need around 21 GW of electrolyser capacity by FY30 to meet its projected demand of around 4 MT of green hydrogen demand, which will be supplied by around 80 GW of RES capacity. The growth of RES would require about 20 trillion Indian rupees of financing over the next decade.
“In our view, NTPC (BUY), Borosil Renewables (ADD) and Tata Power (REDUCE) will be the top listed beneficiaries and should be considered for long-term investments,” HDFC Securities said.
“We expect India to add approximately 342 GW of RES capacity in FY22 to FY30, led by solar + 280 GW, representing a $11.2 trillion investment opportunity. INR (INR 9.0 Trillion Debt Funding). 40% higher RPO obligation (vs. 20% currently), which would push discoms to sign renewable PPAs. Bankability would improve with hybrid projects as it ensures the power of the RTC. Companies with a broad portfolio of hybrid and storage facilities will attract better valuations,” the brokerage’s report states.
The brokerage firm further asserted that “we expect the mega transition from gray to green energy, together with favorable policies, will give strong impetus to domestic manufacturers to make RES a sustainable industry. and competitive. Additionally, the viability of storage and green hydrogen will play a key role in the success and wide adoption of RES energy in the system. However, any failure or delay in reducing storage costs or finding another viable alternative could significantly derail the country’s renewable energy adoption agenda. »
The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.