- CLSA raised share price targets for SJVN, Tata Power, and JSW Energy despite potential downside
- CLSA downgraded SJVN to Hold, raising target to Rs 90 citing project delays and valuation
- Tata Power upgraded to Hold with target Rs 369; JSW Energy rated underperform, target Rs 486
Multinational brokerage firm CLSA raised share price targets for SJVN Ltd., Tata Power Co., and JSW Energy Ltd., even as they imply potential downside from the current market price.
Analysts expect subdued returns in India's regulated power utilities stocks due to climate change-related demand weakness, but not a structural decline. "It's an opportunity to buy select utilities and catalysts," they said in a note.
India, the world's third largest power market, will likely see a demand uptick in the second half of the current fiscal. Electricity demand has been tepid in April-August due to higher-than-normal monsoon rains.
CLSA said a structural turn in the power sector equity upsides should benefit relatively inexpensive regulated utilities like NTPC Ltd., NHPC Ltd., and RP-Sanjiv Goenka Group company CESC Ltd., compared to merchant power like JSW Energy and coal-heavy Tata Power.
Nuclear power will be the next focus, where NTPC is likely to launch its first $6 billion project in September, reinforcing the view of it being CLSA's top energy security and transition pick, analysts said.
Analysts also highlighted CESC's entry into solar modules and cells, with the start of a solar module plant expected in the third quarter.
CLSA Price Target Changes
SJVN: CLSA downgraded its rating to 'Hold' while raising its price target to Rs 90 from Rs 46. Analysts cited a multi-year delay in two large projects and an expensive valuation as factors weighing on the rating.
Tata Power: The brokerage upgraded the stock to 'Hold' from 'underperform' on a higher target price, from Rs 351 to Rs 369.
JSW Energy: The stock has been rated 'underperform' and price target hiked to Rs 486 from Rs 423. CLSA factored-in two large M&As and a lower cost of equity, even as it reduced FY27 earnings estimates.
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