Light at the end of the tunnel: Higher plant utilisation sending a current through power stocks

Synopsis
More than 74% of India’s electricity generation comes from thermal power, which is driven primarily by coal. With the lack of a storage solution for renewable power, thermal capacity will be needed to meet India’s rising power needs. New capacity addition takes over five years to come on stream. All this is helping the established power and utility companies.

There’s some electric stuff happening in the power stocks, and the energy is mostly thermal. Power and utilities indices are surging ahead of benchmark indices. On a year-to-date basis, the BSE Power Index and BSE Utilities Index are up 12% and 10% respectively against Nifty 50 which is up 8%. On a six-month basis, the power and utility indices shine even brighter against the broader market. But does this rally have enough fuel to last for long

( Originally published on Nov 30, 2023 )