4 Power Stocks To Buy On Which Emkay Global is Bullish

Broking firm, Emkay Global has released its latest report on the power sector. The broking firm is bullish on a number of stocks from the sector. Here below are some highlights from the report and also its recommendations of a buy call on some of these stocks.

Buy NTPC stock with a price target of Rs 200

Emkay Global has set a price target of Rs 200 on the stock of NTPC. Generation for NTPC has grown by 2% in the quarter which is below thermal growth of 7%, largely due to low utilization during Oct-22. For 9MFY22, generation growth was 10% vs 9% thermal growth, for overall India. Performance of NTPC's key subsidiaries/JVs has enhanced - 12% YoY growth for the quarter and 35% for 9M.

NTPC's Coal PLF improves

"While NTPC's coal PLF has improved to 76% in Dec-22 after it dropped to 64% in Oct-22. YTD PLF stands at 75% vs 69%. NTPC would add 18 GW of projects (thermal, hydro and RE) over the next 3 years. RE monetization is expected in Q4FY23. Further, the company intends to tender 5/6GW of coal plants over the next 2 years.

Given the huge under-utilized coal capacity (current PLF in the 75-80% range, while NTPC units have achieved 92-93% PLF earlier, on annual basis), we believe any strong up tick in demand in the medium term stands to benefit NTPC. We maintain our Dec-23 target price of Rs 200 per share for NTPC, which currently trades at 1x with 12% RoE on FY25E," the brokerage has said.

NHPC

According to Emkay Global, NHPC saw 8% YoY decline in generation for the quarter, while seeing 3% YoY growth for 9MFY22. NHDC registered strong generation - more than 100% growth for 9M. "We maintain our Dec-23 target price of Rs 51 per share, based on SoTP methodology. The company has 7.5GW of projects under various stages of construction (including Subs/JVs). The under-construction hydro projects are: i) 2,800MW hydro projects (Subansiri Lower 200MW and Parbati II 800 MW), with project cost anticipated at Rs311bn; these are expected to be commissioned within the next 12-15 months and will add Rs16 bn to NHPC's annual profitability. ii) Projects entailing 2.1GW capacity are being developed via the JV route, with project cost of Rs170bn and expected commissioning during FY26-27. iii) Through its subsidiaries, 1.3GW of projects with project cost of Rs 11 bn are expected to be commissioned in FY26 and a 120MW project (with cost of Rs 9 billion.

Buy CESC and Power Grid Stocks

Emkay Global has maintained a BUY on CESC (BUY; target price of Rs 101) and Power Grid (BUY: target price of Rs 250).

"DIL of CESC has seen strong generation growth for the quarter - 26% YoY. In case of CESC, performance of DFs and tariff revision at the standalone entity remain key concerns. Rajasthan DFs, despite having completed 4/5 years, have not been able to see break-even because of the Kota circle; such DFs made H1FY23 loss of Rs180mn vs Rs210mn loss YoY. Malegaon losses widened to Rs480mn during H1FY23 vs loss of Rs290mn YoY. On a positive note, performance of the Noida circle and of Dhariwal Infrastructure has been encouraging in the current fiscal. Power Grid remains a low earnings-growth (3-5%) story in the medium term, with 6/7% dividend yield. n) is scheduled for commissioning in FY25," the brokerage has said.

Disclaimer

The stocks have been picked from the brokerage report of Emkay Global. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.