As power distribution network strengthens, these 4 stocks can give up to 34% upside

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26 Aug, 2025 12:21

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The power distribution network is strengthening on improved central funding, Dr Arun Kumar Verma, Joint Secretary, Ministry of Power said while addressing a conference on the power distribution sector.

Verma highlighted that the focus is on strengthening distribution infrastructure, metering and improving financial health of distribution companies (DISCOMs).

On basis of this, Motilal Oswal continues to like Power Grid and NTPC, which offer strong earnings growth potential and good visibility. The research house also likes CESC, as it sees potential for value unlocking through demerger.

Motilal Oswal, in a report, said it has a buy call on Power Grid with target of Rs 261 per share (implying 25 percent upside over Tuesday's closing price) and it also assigned buy rating on NTPC with target price at Rs 211 (implying 17 percent upside).

Motilal Oswal has maintained its buy call on CESC with a price target at Rs 1,360 per share (implying 34 percent potential upside) and also has buy call on Coal India with target price at Rs 335 (implying 20 percent upside).

The research house, however, has a sell call on JSW Energy and Tata Power with a target price of Rs 49 per share and Rs 72, respectively.

Some of the key takeaways highlighted by Motilal Oswal are:-

> Madhya Pradesh (MP), Maharashtra, Rajasthan and Andhra Pradesh (AP) have started supplying power round the clock. However, this has not boosted overall demand. Peak load has declined in MP after feeder separation. Metering and feeder-wise monitoring impacts consumption by freeloaders. These states also mentioned that they have sufficient long-term power purchase agreements (PPAs) to meet demand growth over the next 2-3 years.

> DISCOMs continue to discourage open access. However, they are wooing back industrial customers with lower tariff.

> Political will has improved to tackle AT&C (aggregate technical & commercial) losses in some states.

> There was little discussion on privatisation of DISCOMs and carriage & content, as states are less enthusiastic about them.

> The business model of distribution companies and the regulatory framework will have to evolve from content providers to solution providers. Home automation, energy services, load management will be some of the new service areas.