Utilities Report : Peak demand scales a new high
Power demand remains robust in Q1FY27, driven by higher Summer temperatures, an extended heatwave, and a delayed Monsoon, resulting in a 9% YoY increase in generation to 524BU and record peak demand of 270GW. Strong electricity demand also resulted in higher volume and prices on Indian Energy Exchange (IEX IN). We expect a mixed earnings quarter across our utilities coverage in Q1FY27, with regulated utilities delivering stable earnings, IEX and Adani Energy Solutions (AESL IN) reporting healthy growth, JSW Energy (JSW IN) and Tata Power (TWPR IN) posting flat performance; renewables equipment manufacturers are likely to face margin pressure due to elevated commodity costs. Our preferred top picks are CESC, NLC India, and NTPC
Generation increases 9% YoY in Q1FY27: Higher Summer temperatures, an extended heatwave, and a delayed Monsoon drove strong electricity demand, resulting in robust power generation during Q1FY27. Total power generation increased 9% YoY to 524BU. Monthly generation stood at 167BU in April, up 5.3% YoY, 178BU in May, up 11.2% YoY, and 178BU in June, 10.5% YoY. Coal-based generation rose 9% YoY to 360BU while hydro generation declined 9% YoY to 39.3BU, due to weaker Monsoon conditions. Renewables energy generation remains strong, up 25% YoY to 93BU.
Peak demand touches record high levels: Scorching heat conditions pushed up peak demand to record high levels of 270GW in Q1FY27. Peak demand increased 8.9% YoY to 256GW in April’26, 17.7% YoY to 270.8GW in May, and ~9.3% YoY to 264.8GW in June’26. In the short-term market IEX, reported an electricity traded volume of 37,534MU, up 15.9% YoY. The market clearing price (MCP) in the day-ahead market at INR 5.1/unit in Q1FY27, up 15.7% compared to Q1FY26. Similarly, the MCP in the real-time market at INR 4.5/unit in Q1FY27, up 13.8% compared to Q1 FY26
Mixed earnings likely for companies under our coverage universe: We expect a mixed earnings for companies under our coverage universe. Regulated utilities, such as NTPC, NLC, PGCIL, SJVN, and NHPC, are likely to deliver stable earnings, supported by assured returns on their regulated equity base. IEX will report healthy earnings on continued volume momentum For Adani Energy Solutions, commissioning of new transmission lines and continued rollout of smart meters should underpin earnings growth. JSW Energy is likely to report a flat quarter, primarily due to lower utilization at KSK Mahanadi and its hydro assets. We expect Tata Power earnings to remain flat during the quarter. In the renewables equipment space, manufacturers, such as Waaree Energies, Vikram Solar, Emmvee Photovoltaic, and Premier Energies, are set to face margin pressure amid higher commodity cost.
Coal offtake to the power sector at 1.8% YoY in Q1FY27: Coal India's coal production remains weak during the initial months of Q1FY27 before recovering in June. Production declined ~9.7% YoY to ~56.06 mn tonne (MT) in April while offtake was stable, falling by ~0.4% YoY to ~64.2MT. In May, production fell further by ~11.6% YoY to ~56.13MT whereas offtake increased ~3.7% YoY to 67.6MT. Offtake rebounded in June, up 5.9% YoY to ~51.4MT. For Q1FY27, coal offtake grew 1.8% YoY to ~154.8MT
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