Expect coal situation to normalise in 7-10 days; positive on NTPC, CESC, Power Grid: HDFC Securities

Not just China, even India is grappling with a big power crisis currently. India’s coal stocks are at critical levels and it has set alarm bells ringing for states over possible blackouts. After Home Minister Amit Shah took stock of the crisis on Monday, the power and coal secretaries will be making a presentation to the Prime Minister’s Office (PMO) regarding coal supplies later today.

Anuj Upadhyay, institutional equities analyst at HDFC Securities, shared his views on what this means for the listed sphere of stocks and how one can look at some of the companies in the power sector.

Power supply situation 'not very critical'; certain pockets a worry: Power secretary

The situation has been critical as far as the inventories are concerned but with the intervention of the top-notch ministries, in a week or so the situation should get normalised.

“Definitely, it is a matter of time, over the next seven-eight days, we must see the situation normalising and also with the oncoming winter season, the demand would be a bit subdued,” he said.

Also Read: Power shortage: Maharashtra, Rajasthan, TN, UP need to clear coal dues, says Power Secretary Alok Kumar

“Our top bets currently would be NTPC, CESC and Power Grid. All these companies are on a growth path, they are moving towards green energy transition and generating double-digit ROEs,” he explained.

“On a long-term basis, it is still preferable to hold Coal India at current levels,” he said.

Coal India itself has close to 40 million tonne of inventory lying with them.

Also Read: Coal stock sufficient, fear of disruption in power supply 'entirely misplaced': Centre

“I am sure the ministry would ask them to clear off this inventory at a faster pace, which should sort out the inventory levels across many of the sessions,” Upadhyay said.

There have been a series of reforms announced by the government over the past one year.

Also Read: Amid blackout concerns, Govt pushes for optimum power generation; coal crisis to improve soon

On Tata Power, he said, “On a long-term basis, the significant transition, which the company is getting into on the renewable side - whether it is on the solar rooftop or on the electric vehicle (EV) charging segment or the distribution side or on the EPC segment, or utility, Tata Power has its presence and significant market share over there. So, Tata Power has a major role to play and although we have seen a sharp uptick in the near-term, on a long-term basis, we do believe that the stock still has significant upside potential from this level.”