Tata Power, NTPC, NHPC, JSW Energy shares: Why Kotak retains 'Sell' on these utilities

Kotak Institutional Equities has retained its 'Sell' rating on Tata Power, NTPC, JSW Energy, NHPC, and Power Grid, while assigning a 'Reduce' rating to CESC and Coal India, and a 'Buy' to ACME Solar. The brokerage said weak demand and aggressive capacity addition has weighed on sector sentiment, with valuations and subdued earnings likely to keep stock performance under check.

Kotak noted that project execution by listed companies has lagged targets, partially offset by acquisitions, resulting in disappointing earnings growth over the past two years and a subsequent de-rating of multiples.

“Valuations have become more palatable but still do not offer an attractive entry point and do not factor in execution risk from further delays relative to capacity addition targets. NTPC, NHPC, and Tata Power lagged capacity addition targets in 1HFY26, while JSW Energy (aided by acquisitions) and ACME (with low FY2026 targets) are on track to meet theirs,” Kotak said.

Kotak suggested fair values of Rs 320 for Tata Power, Rs 260 for Power Grid, Rs 325 for NTPC, Rs 75 for NHPC, and Rs 495 for JSW Energy. CESC, Coal India, and ACME Solar were valued at Rs 165, Rs 370, and Rs 350, respectively.

Kotak highlighted that India’s power demand growth moderated to 1 per cent YoY in YTD FY2026, despite a weak FY2025 base of 3 per cent. Weak demand was partly due to an extended monsoon, affecting the agricultural sector, which accounts for 17 per cent of power consumption.

On the other hand, supply additions remained robust, with aggregate capacity rising by 37 GW in the past seven months—led by renewables—surpassing the 33 GW added in FY2025.

“Moderated demand and aggressive capacity addition give the government leeway to selectively approve projects for purchase agreements. Weak demand and high capacity additions weigh on sector sentiment, and combined with weak earnings, keep stock performance constrained,” Kotak said.

The brokerage added that most companies reported lacklustre earnings in 1HFY26, in low single digits, lagging full-year targets. While valuations have become more attractive, concerns over incremental project awards and execution risks continue to pose challenges for earnings growth, it said.