BNP Paribas has initiated coverage on seven Indian power and utilities stocks, turning bullish on CESC, NTPC and Power Grid as it sees the sector entering its next phase of growth as rising electricity demand, higher investments and diversification of the generation mix create fresh opportunities.
In its latest report, the brokerage said electricity demand growth has accelerated, with year-to-date growth at 9% and a two-year CAGR of 6%. It expects demand growth to remain strong at around 5.5% CAGR through FY26-34, driven by urbanisation, rising consumer-durable penetration and policy initiatives such as electric vehicle adoption, green hydrogen and data-centre development.
The brokerage initiated coverage with Outperform ratings on CESC, NTPC and Power Grid, while assigning Neutral ratings to JSW Energy, Tata Power and Coal India. NHPC was initiated at Underperform.
The brokerage also sees a shift towards a more diversified power-generation mix. The Central Electricity Authority's capacity plans point towards greater additions across solar, wind, hydro, nuclear and storage alongside thermal capacity.
CESC is BNP Paribas' highest-conviction call, with a Rs 230 target implying about 57% upside. For Power Grid, BNP Paribas sees transmission capex and the need to evacuate power from new generation capacity supporting the medium-term outlook. Its Rs 340 target implies around 29% upside. NTPC, meanwhile, gets a Rs 400 target, implying 22% upside, with its diversified generation portfolio and planned investments supporting growth.
The brokerage sees more limited potential in JSW Energy, Tata Power and Coal India, while initiating NHPC at Underperform, saying much of its medium-term capacity additions appear to be priced in.
BNP Paribas also flagged power distribution as an underpenetrated opportunity, with privatisation and efficiency improvements potentially creating additional avenues for growth.
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