Indian utilities offer Rs 40 lakh crore investment opportunity, 'buy' Power Grid, Tata Power: Motilal Oswal

This aligns with India’s ambitious goal of achieving 500 GW of renewable energy capacity by 2030

Motilal Oswal initiated coverage on the Indian power sector, issuing 'buy' ratings for Power Grid, JSW Energy, and Tata Power, with target prices of Rs 425, Rs 917, and Rs 530 per share, respectively.

Analysts project a substantial investment opportunity of over Rs 40 lakh crore in the sector, driven by rising demand, modernisation of outdated infrastructure, and transition to cleaner energy sources. This aligns with India’s ambitious goal of achieving 500 GW of renewable energy capacity by 2030.

In contrast, Motilal Oswal assigned 'neutral' ratings to IEX and NTPC, with target prices of Rs 226 and Rs 450, respectively.

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For NTPC, analysts note limited upside potential, as its green energy subsidiary, NTPC Green Energy, is preparing for a Rs 10,000 crore initial public offering. Investors may increasingly favor NTPC’s renewable arm for clean energy exposure rather than the parent company.

IEX is seen as having a solid growth outlook, with the launch of long-term contracts potentially boosting volumes by 4 percent. However, the implementation of market coupling remains a regulatory overhang, which could impact IEX’s growth due to its dominant market share.

While India’s power consumption trends mirror China's growth trajectory from the early 2000s, the country’s power consumption is expected to compound at over 7 percent annually in the coming decade, supported by robust GDP growth and new demand drivers like electric vehicles (EVs) and data centers, said Motilal Oswal.

By 2035, analysts estimate that one-third of power demand growth could stem from these sectors, with data center capacity projected to grow at 30 percent annually and significant EV adoption expected across vehicle categories.

The brokerage also highlighted opportunities in the transmission segment, where Power Grid alone could tap into an estimated Rs 2 lakh crore capex potential, further enhancing its growth prospects.

JSW Energy, too, is on a strong growth pedestal, with capacity set to grow 2.4x over the next 2.5 years and on track to achieve guided 20 GW in installed capacity before 2030.

Meanwhile, Tata Power is undergoing a multi-year business transformation, with 45 percent of capex over FY23-27 to be allocated to RE projects. This is instrumental in increasing the share of
core earnings from 40 percent to 90 percent over FY23-27, added Motilal Oswal analysts.

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