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Written by - Fisdom Research

May 11, 2024 7 minutes

India has now become the leading solar power producer globally, surpassing Japan. This marks a significant improvement from its previous ranking of ninth place back in 2015.

As of March 31, 2024, India’s total installed renewable energy capacity is 143.64 GW, not including 47 GW from large hydropower plants (each plant generating 25 GW or more).

Experts noted that when considering large hydro projects, India’s renewable energy capacity totals around 190 GW. Therefore, to reach its goal, India must add 310 GW of renewable energy in the next six years, averaging 50 GW annually. With a surge in electricity demand and supportive government initiatives, companies within the power sector are poised to benefit from these promising developments.

Meeting the Rising Demand

Despite the disruptions caused by the pandemic, India has witnessed a remarkable increase in electricity consumption, with demand rising by a healthy 7 percent over the past 11 months leading up to February 2024. This surge in demand has surpassed initial projections, reaching a peak of 243 gigawatts, highlighting the nation’s growing need for electricity.

Expanding Capacity

To address this escalating demand, India has unveiled ambitious plans to add nearly 88 gigawatts of new thermal power capacity by early 2032. These plans underscore the government’s commitment to meeting the nation’s energy needs and ensuring energy security for all.

India has increased its renewable energy capacity by a record 18.48 GW in the fiscal year 2023-24. This marks a significant growth of over 21 percent compared to the previous year’s addition of 15.27 GW, as per the latest data from the Ministry of New & Renewable Energy.

However, experts in the industry suggest that there is a requirement to add at least 50 GW of renewable energy capacity every year for the next six years. This is essential to meet the ambitious target of achieving 500 GW of renewable energy by the year 2030.

Opportunities for Growth

The upward trajectory of the stocks of power generation companies reflects the optimism surrounding the sector. As demand for electricity continues to rise, companies within the power sector stand to benefit from increased revenue and profitability.

Supportive Government Initiatives

The government has taken proactive measures to support the growth of the power sector. Initiatives such as improving coal production and transport linkages, as well as mandating the blending of coal with imported fuel, have helped fuel optimism in the sector. Additionally, plans to establish medical parks in four states and expand renewable energy projects demonstrate the government’s commitment to fostering growth and innovation within the sector.

Harnessing Renewable Energy

While thermal power plants remain vital in meeting current demand, the government’s focus on renewable energy sources presents new opportunities for growth. Expansion into renewable energy projects, including solar and wind power, offers companies within the sector avenues for diversification and long-term sustainability.

Driving Economic Development

The power sector plays a crucial role in driving economic development and supporting various industries. As electricity demand continues to rise, companies within the sector are well-positioned to support India’s economic growth by ensuring a reliable and efficient supply of electricity to industries, businesses, and households across the country.

Way Ahead

Despite the positive outlook, the power sector faces challenges such as supply chain disruptions and market volatility. However, these challenges also present opportunities for innovation and adaptation. Companies within the sector can leverage technology and operational efficiencies to overcome these challenges and emerge stronger in the long run. India’s power sector is on the cusp of a transformative journey, fueled by rising demand, supportive government initiatives, and technological advancements. Companies within the sector are poised to benefit from these developments, driving growth, innovation, and economic prosperity. As India marches forward on its path to sustainable development, the power sector remains a cornerstone of the nation’s energy landscape, empowering industries, communities, and the economy at large.

Below are some of the major power players in India and their plans for expansion:
Stock NamePlans for Expansion
NTPC– 18 GW capacity under construction Setting up hydrogen fuelling station and solar plant in Ladakh Venturing into hydrogen and energy storage solutions Demonstrating hydrogen co-firing in gas turbines Diversified into various sectors including hydro power, coal mining, and power equipment manufacturing
Power Finance Corporation Limited (PFC)Signed MoUs worth Rs. 2.37 lakh crore with 20 companies in clean energy space
Tata Power– Increasing generating capacity to 18 GW Expanding distribution networks to 4 GW Developing pumped hydro storage projects for 2,800 MW Collaborating for EV charging infrastructure
Adani Power– Exploring investment in Vietnam’s seaport ecosystem and wind/solar energy projects
CESC Limited (CESC)Bid for taking over Chandigarh’s power supply department
NHPC– Signing MoUs for construction of railway siding, CSR initiatives, and development of pumped storage projects and renewable energy Secured a 200 MW solar project within a solar park
SJVN Limited– Plans for 5 GW pumped hydro storage projects Diversification into wind power projects Supplying 1,200 MW of solar power Investment approved for Sunni Dam Hydro Project
Power Grid Corporation of India Limited (PGCIL)– Managing transmission systems President dedicated transmission system for solar power in Rajasthan
Source: IBEF, Fisdom research

Market this week

 06th May 2024 (Open)10th May 2024 (Close)%Change
Nifty 50₹ 22,562₹ 22,055-2.2%
Sensex₹ 74,197₹ 72,664-2.1%
Source: BSE and NSE
  • Market activity paused this week amid concerns about the ruling alliance’s ability to secure anticipated seats, fueled by low voter turnout.
  • Citigroup Inc. strategists adjusted their stance on emerging markets, downgrading China while upgrading India, as reported by Bloomberg. This shift may bolster investor sentiment towards India.
  • The upcoming release of inflation data next week is eagerly anticipated by market participants, who seek deeper insights into the US economic condition.
  • Speculation regarding potential rate cuts by the US Federal Reserve grew, influenced by the latest weekly jobless claims data.
  • The easing of the 10-year benchmark US Treasury Yield overnight made equities more appealing to investors.

Weekly Leaderboard

NSE Top GainersNSE Top Losers
Stock Change (%)Stock Change (%)
Hero MotoCorp7.12 %Shriram Finance(9.18) %
Britannia Industries6.79 %Bajaj Finance(6.91) %
HUL6.76 %TATA Consumer Production(6.78) %
Kotak Mahindra Bank4.89 %IndusInd Bank(6.37) %
TATA Motors3.34 %HDFC Life(6.32) %
Source: BSE

Stocks that made the news this week:

  • Cipla Ltd reported lower-than-expected revenue and margin numbers for the March quarter of FY24. The company’s net profit saw a sharp spike in Q4, mainly attributed to a low base as it was impacted by one-time impairment charges worth Rs 182.42 crore in the year-ago period. Despite this, revenue grew by 13 percent year-on-year to Rs 6,163 crore, falling short of the anticipated Rs 6,224 crore. The revenue was also affected by the divestment of Cipla’s Uganda-based subsidiary QCIL in the previous quarter.
  • Tata Motors, a prominent player in India’s electric vehicle sector, foresees a slow beginning to FY25, attributing it to an anticipated decline in domestic passenger vehicle (PV) demand during ongoing elections. The company projects industry growth to be less than 5 percent, citing factors such as the exhaustion of pent-up demand, high channel inventory, and the impact of elections dampening temporary demand in the first quarter.
  • Hindustan Zinc shares saw a significant surge, climbing nearly 19 percent to reach a 52-week high of Rs 540.95 per share on May 10. This surge was attributed to a notable increase in zinc prices, with the commodity’s price on the London Metal Exchange rising over 2 percent to $2,955. The uptick in zinc prices was fueled by positive China trade data for April, which indicated growth in both imports and exports. China’s robust trade figures signaled a rebound in both domestic and overseas demand, particularly beneficial for zinc prices considering the country’s status as a major consumer and producer of the metal.

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