Power Grid, BHEL, Tata Power: Power stocks charged up; S&P BSE Power index gains over 2%

Power stocks in focus: Shares of most power stocks gained in trade on Monday (August 21) amid a broad-based rally in the market. The S&P BSE Power index ended 2.31 per cent higher at 4,355.40 levels.

Among individual stocks, Adani Power was the top gainer on the index (up 6.70 per cent) at Rs 325.05. Other gainers were Adani Transmission (up 5.98 per cent), Adani Green (up 2.44 per cent), and Power Grid (up 2.74 per cent). 

On the flip side, CG Power and JSW Energy were the two losers on the index, down between 0.47 per cent and 1.41 per cent. 

Power stocks have been in demand as electricity demand is at a peak given a significant rise in mercury levels post-monsoon. As per Zee Business Research, power demand hit a record peak of 233 GW on August 16. There has been a change in temperature in India due to the arrival of El Nino, the research desk notes. 

Before this, in July, the country's power consumption grew by 8.4 per cent to 139 billion units. In the year-ago period, power consumption stood at 128.25 billion units (BU), higher than 123.72 BU in July 2021, according to government data.

The report further said that the power demand has been highest in North and Western India. The demand for electricity is expected to be high till October. Increasing electricity demand will in turn propel the demand for coal, the research team says further.

Power stocks performance in last one month 

In the past one month, Tata Power shares have gained nearly 8 per cent while NTPC shares have rallied nearly 12 per cent. Power Grid has risen over a per cent during the window, Trendlyne data show.

Stocks to buy

NTPC

JM Financial, in its research note on NTPC issued on July 31, said that given better visibility of its thermal and renewable capacity addition pipeline and aggressive focus on transitioning to a green portfolio, It has revised its estimates upwards for FY24/25. "We value the company’s thermal business at 1.6x FY25E regulated equity and assign a 10x multiple to FY25E EBITDA of its RE business. We maintain our buy rating with a revised TP of Rs 240 (Rs 205 earlier)," the report said.

Power Grid 

The stock, after the short correction, has consolidated and taken support near the lower base of the channel pattern on the daily chart, near Rs 239 levels, and shown signs of improvement in the bias to anticipate a further rise. The RSI is also well placed after the short dip and has indicated a trend reversal to signal a buy, with immense upside potential visible. "With the chart looking good, we suggest buying and accumulating the stock for an upside target of Rs 270, keeping the stop loss at Rs 235," said Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher Pvt.