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Power sector performance improved in Q2FY27, with underlying demand witnessing a healthy recovery. Peak power demand increased ~11% YoY to 270GW, while energy consumption grew ~12% YoY to 501BU. Short-term prices showed recovery, with DAM prices higher +59% YoY to INR5.9/kWh, supported by strong power demand and lower coal availability. Operational performance was mixed across players: NTPC reported ~15% YoY increase in generation aided by higher PLF of 69%, while TPWR’s Mundra plant witnessed a jump in generation due to Supplementary PPA, Torrent Power’s generation declined ~38% YoY, while JSW Energy and CESC reported ~10% and ~6% growth, respectively. On the financial front, the coverage universe (ex-Coal India) is expected to report ~10% YoY PAT growth, with AESL & COAL likely to strong earnings growth, while NTPC and ADANI are expected to post stable 10% YoY PAT growth. Top Picks NTPC, PWGR ADANI, CESC.

Power demand rebounds:

Power demand strengthened in Q2FY27, with base demand rising ~12% YoY to 501BU, while peak demand increased ~11% YoY to 270GW. Monthly demand growth remained strong, with July, August and September witnessing ~23%, 12% and 17% YoY growth, respectively. Merchant power prices recovered sharply by ~59% YoY to INR5.9/kWh and increased 15% QoQ, reflecting stronger demand and tighter market conditions. However, coal inventories declined to 21MT (7 days) from 46MT (20 days) YoY, indicating lower stock levels at power plants. Meanwhile, imported coal prices rose ~38% YoY to USD140/t, adding pressure on fuel costs.

Mixed operational performance:

As per CEA data for Q2FY27, NTPC and NHPC reported strong generation growth of ~15% and ~48% YoY, respectively, supported by higher PLFs of 69% and 79%. Adani Power and NLC also delivered ~10% YoY growth, although NLC’s PLF moderated to 49%. Tata Power reported a sharp increase in generation, led by Supplementary PPA of Mundra which increased generation compared to base year, while Torrent Power’s generation declined ~38% YoY amid lower PLF of 26%. JSW Energy reported ~10% growth with PLF improving to 79%, while CESC maintained healthy performance with ~6% generation growth and 92% PLF. Renewables remained strong, led by NTPC Green’s ~52% YoY increase in monitored capacity.

Financial performance:

We expect the power sector coverage universe to report ~16% YoY growth in sales, with EBITDA and PAT growth of ~11% and ~15%, respectively. Adani Energy Solutions is likely to lead PAT growth at ~91% YoY, followed by Coal India at ~29%, while Adani Power and NTPC are expected to report ~10% growth each. We model ~10% YoY EBITDA growth for JSW Energy, though PAT is expected to decline ~10% YoY. CESC is expected to deliver stable ~5% PAT growth, while EBITDA growth is likely to be led by Adani Energy Solutions and Coal India at ~40% and ~20%, respectively.

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