Power Utilities Set for Robust Q4FY25 Growth Driven by Soaring Demand and Capacity Expansion

Power utilities are gearing up for a strong performance in the last quarter of FY25, with analysts predicting significant earnings growth. This upswing is largely attributed to the expansion of regulated equity fueled by new capacity installations, additional transmission lines, and a surge in electricity demand. Moreover, the short-term market is seeing consistent volume increases, further solidifying the positive outlook for the sector.

Strong Earnings Driven by Renewable Energy

The solar EPC (engineering, procurement, and construction) sector, along with a rise in rooftop solar installations, is expected to contribute significantly to overall earnings.

NTPC continues to show promise, bolstered by increasing regulated equity from its thermal capacity additions.
CESC and NLC are also on the radar as they pivot towards renewable energy and expand their project portfolios, respectively.

“NTPC’s growth is impressive due to its thermal capacity expansion, and we hold a favorable view on both CESC and NLC as they adapt to changing energy landscapes,” noted a representative from Elara Capital in their latest quarterly assessment.

NTPC’s Expansion Plans

State-owned NTPC has made significant strides by commissioning approximately 473 MW of solar capacity in the last quarter and aims to enhance its thermal capacity by a whopping 26 GW by the end of FY32. This aligns with the government’s ambitious goal of adding 80 GW of thermal power capacity to meet the escalating electricity demands.

The regulated equity for NTPC is currently pegged at ₹105,800 crore, with expectations of double-digit growth soon, largely thanks to ongoing projects.
NTPC ensures a stable return on its regulated assets, making it a lucrative investment option.

“Elara Capital projects a robust Q4 for NTPC, estimating a 6% rise in revenue and a 4% increase in profit after tax (PAT), primarily driven by the growth in regulated equity,” the report stated.

Surge in Electricity Generation

As the warmer months approach, electricity generation has seen a notable rebound in Q4 FY25, with total output reaching 453 billion units. This marks a 5.3% year-on-year increase, following a 6.3% rise in Q4 FY24. Here’s how the generation numbers broke down:

January: Increased by 2.5% to 149 billion units.
February: Saw an acceleration of 7% to 143 billion units.
March: Rose by 6.5% to 161 billion units.

Power Grid Corporation’s Growth

Elara Capital also anticipates that the regulated equity for Power Grid Corporation of India will rise to ₹89,600 crore in Q4 FY25. This growth is predominantly driven by the commissioning of new transmission lines and substations, including the crucial Leh transmission project. The brokerage predicts a 3% year-on-year growth in the company’s PAT.

Private Sector Performance

The private sector is also expected to shine in the upcoming quarter:

Tata Power is projected to achieve a 5% revenue increase and a 9% rise in PAT due to its solar EPC operations.
JSW Energy is on track for a strong quarter, benefiting from enhanced generation and contributions from Ind-Barath, with analysts predicting a 6% revenue increase and a 3% PAT rise.

NHPC, a government-owned entity, is set to gain from the commissioning of three Parbati-II hydro units (totaling 800 MW) and expects revenue and PAT growth of 9% and 3%, respectively. Conversely, Coal India may face challenges with a 1.7% year-on-year decline in production, potentially resulting in a 2% drop in revenue, although PAT is projected to grow by 2% compared to last year.

These developments highlight a promising landscape for power utilities, with an emphasis on renewable energy and strategic expansions. Keeping an eye on these trends will be essential for investors and stakeholders in the energy sector.