Nigania said, “We expect a strong second half for power demand, and longer term, as you said, all those drivers, whether it’s electrification, which is a global theme, whether it’s data centres and energy security, all of that adds up, and we build in about 6% power demand growth for India in the medium to longterm.”
The brokerage believes India’s power mix is creating a mismatch between supply and demand during different parts of the day. Rapid solar additions have led to lower power prices during afternoon hours, while prices spike sharply after sunset when renewable generation falls.
According to Nigania, this imbalance has created opportunities for battery storage projects and conventional power producers that can supply electricity during evening hours.
Bernstein continues to favour companies with exposure to thermal, nuclear and energy storage. Among listed utilities, the brokerage remains positive on NTPC and JSW Energy. It believes NTPC
is well positioned across thermal, renewable and nuclear power, while JSW Energy’s ongoing thermal capacity expansion could support returns over the long term.
The brokerage is relatively more cautious on solar equipment manufacturers despite acknowledging their strong market positions. It expects margins to come under pressure as new manufacturing capacities are added and demand growth moderates because of transmission bottlenecks.
“We think margins for these players could come down, which they have in the last couple of quarters. We think that trend might continue,” Nigania said.
Bernstein believes power financiers appear attractively valued and could offer trading opportunities, though the brokerage considers them relatively riskier bets.
It noted that the impact of foreign exchange movements is not fully reflected in valuations, while loan book growth has remained moderate. As a result, Bernstein remains positive on the sector from a tactical standpoint, but does not view these stocks as long-term buy-and-hold candidates.
For the entire discussion, watch the accompanying video
