BSE Power records 107% surge in a year, 9 stocks including NTPC, Tata Power jump between 100% and 400% – here’s why
Power stocks are surging due to increased power demand from economic activities, with major players like Suzlon Energy and Bharat Heavy Electricals showing significant gains. The country's power consumption is rising, driven by industrial and household sectors.
Power stocks are currently enjoying a robust bull phase, driven by a notable increase in power demand fueled by a strong uptick in economic activities. The BSE Power index, a key indicator of power stock performance, has surged by 107.22% over the past year, with 9 out of 13 constituents delivering multibagger returns.
Leading the pack is Suzlon Energy, with a remarkable gain of 400%, followed closely by Bharat Heavy Electricals, which saw a surge of 296%. Additionally, shares of Adani Power, JSW Energy, NHPC, ABB India, Tata Power Company, NTPC, and Adani Green Energy have all delivered returns ranging between 110% and 190% over the same one-year period.
The country is experiencing a significant surge in power demand each month, driven by increased usage in both the industrial and household sectors. The above-normal temperatures witnessed across most regions during April and May have led to a surge in the use of cooling appliances such as air conditioners and desert coolers, resulting in heightened power consumption.
The India Meteorological Department (IMD) has forecast above-normal maximum temperatures across the country for the summer season.
In April, the country's power consumption surged by approximately 11% to reach 144.25 billion units (BU) compared to the same period last year. May saw even higher demand, with power consumption nearing the projected level of 235 GW for the month.
As per data from the power ministry, the peak power demand, or the maximum supply during the day, surged to 233 GW on May 6, surpassing the previous year's figure of 221.42 GW.
The Ministry recently projected a peak power demand of 260 GW during the summer season (April to June) due to the prolonged heatwave.
Additionally, the power demand is rising due to the increasing usage of electric vehicles (EVs), especially within the transportation sector in the country.
With the rising demand for power in India, renewable energy sources, particularly solar energy, have consistently emerged as the leading source of new power capacity additions in recent years. India's ambitious target of achieving 280 GW of solar power by 2030 further solidifies the prospects of the renewable energy sector.
This increasing demand for clean energy sources presents a promising opportunity for renewable energy firms such as Suzlon Energy and KPI Green Energy to expand their market presence and augment revenue streams.
India has charted an ambitious course for its energy future, aiming to elevate its non-fossil energy capacity to a remarkable 500 GW by 2030. With a significant commitment to sustainability, the nation pledges to derive 50% of its energy needs from renewable sources within the same timeframe.
In a forward-looking approach, India sets a formidable target to achieve net-zero emissions by 2070, solidifying its dedication to a greener and more sustainable future.
However, the persistent rise in power demand has prompted India to announce a substantial expansion of its coal-fired power fleet. Following a peak power demand of 243 GW in September 2023, the Ministry of Power unveiled plans for an additional 80 GW of thermal capacity.
Presently, 27 GW of new capacity is under construction, with plans to develop an additional 55 to 60 GW, as per the power ministry's announcement.
India's power generation heavily relies on its extensive coal reserves, ranking as the fourth largest globally. Coal-based power currently constitutes over half of the country's existing capacity, standing at 425.406 GW.
Disclaimer: We advise investors to check with certified experts before taking any investment decisions.
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