Power stocks surge as India clocks record renewable energy growth in 2024

Elara Securities expect power companies to report robust earnings for the third quarter

Power stocks surged on January 15, with Power Grid, NTPC, and Coal India leading the Nifty 50 gainers, rising as much as 4 percent. The rally followed data from the Ministry of New and Renewable Energy, which revealed that India achieved a record high in renewable energy generation in 2024.

Other power stocks that joined the upward momentum included Adani Green Energy, NHPC, Tata Power, Adani Power, JSW Energy, Torrent Power, SJVN, and CESC, all seeing gains between 1 and 3 percent.

The data showed that India’s renewable energy capacity more than doubled in 2024, increasing by an impressive 113 percent year-on-year to 30 gigawatts (GW), up from 13.75 GW in 2023.

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Solar power led the charge, contributing 24.54 GW to this growth, marking a 33.47 percent year-on-year increase in its cumulative installed capacity to 97.86 GW in 2024. Wind power additions totaled 3.42 GW, bringing total wind capacity to 48.16 GW, 7.64 percent increase from 2023.

Meanwhile, bioenergy capacity grew from 10.84 GW in December 2023 to 11.35 GW by December 2024. Small hydro power projects also saw modest growth, with installed capacity rising from 4.99 GW in 2023 to 5.10 GW in 2024.

The ministry highlighted the significance of these figures in light of India’s ambitious target to reach 500 GW of renewable energy capacity by 2030. To meet this goal, India will need to add an average of 50 GW of renewable energy capacity annually over the next six years.

Analysts at Elara Securities expect power companies to report robust earnings for the third quarter, driven by several factors. These include growth in regulated equity from capacity expansion, new transmission line additions, improved hydro generation, continued volume growth in the short-term market, and contributions from solar EPC and rooftop installations.

"We maintain a positive outlook on NTPC, supported by increased regulated equity from thermal capacity expansion, on CESC due to its strategic shift towards renewable energy, and on NLC, for its expanding project portfolio," the brokerage firm stated.

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