Suzlon, Adani Power, BHEL, Adani Green, IEX: JM sees up to 60% upside in power stocks

JM Financial believes that India's power and utilities sector is facing heightened uncertainty as peak summer demand for electricity is forecast to surge. The interplay between fuel supplies, energy prices and weather patterns is shaping a complex outlook for power generation firms this year.

Daytime peak power demand has already been observed in the range of 240–244GW, with evening peaks reaching 200–215GW. JM Financial projects this demand to rise further to 275–285GW in the day and 260–270GW in the evening over the summer months, indicating an intensifying strain on the nation's generation capacity.

Gas-fired generation, a key component during periods of high demand, faces particular risks. India has reduced natural gas allocations to industries by 10% to 30%, and in some sectors up to 40%, as of 4 March 2026. This follows major supply disruptions in Qatar amid escalating international tensions.

JM Financial points out that India’s current gas-fired generation capacity stands at 24,628MW, including both private and public sector units. Yet, actual output lags significantly, with only 2.3GW produced during evening peaks – a figure that once reached 12GW under extreme demand in May 2024.

The report cautions that, "In our view prolonged disruption in gas supplies can cause stress to gas power supply during the upcoming summer at a time when peak daytime/evening demand is estimated to touch 275–285GW/260–270GW. (Exhibit 10 & 11)".

Energy prices are also closely intertwined, with JM Financial observing that coal and oil markets influence each other due to substitutability in certain uses. Should oil prices rise amid global supply constraints, coal prices are expected to follow, compounded by regional demand-supply balances and potential Indonesian government production cuts.

Hydro power, which provides 25–28GW of evening supply, could be threatened in 2026 after winter rainfall fell more than 50% short of average. The report notes that in recent years, hydro generation has compensated for reduced thermal output, with hydro PLF (plant load factor) rising from 34% in 2023 to 40% in 2025.

However, with both gas and hydro under pressure, the probability of a sharp increase in coal-based generation to meet evening demand is high. JM Financial underscores that large hydro’s capacity to offset coal may not be reliable in the near term, increasing reliance on coal-fired utilities such as Coal India.

JM Financial has outlined four plausible scenarios for the coming months, each considering variations in coal and gas supplies, commodity prices, and demand patterns. The report incorporates recent channel checks to interpret these changing external factors, with a stated 60% probability of El Niño further impacting weather-dependent capacity.

Major listed competitors in the sector include NTPC, Tata Power, Adani Power and JSW Energy, all of which could be affected by these dynamics. The evolving situation will require utilities to closely monitor supply chain developments, weather patterns, and market signals in the short term.

JM Financial has a 'buy' rating on NPTC (Target Price: Rs 420), Power Grid (Target Price: Rs 314), Adani Power (Target Price: Rs 177), Adani Green Energy (Target Price: Rs 1,204), Adani Energy Solutions (Target Price: Rs 1,199), Tata Power (Target Price: Rs 429), BHEL (Target Price: Rs 355), JSW Energy (Target Price: Rs 614), Suzlon Energy (Target Price: Rs 64), CESC (Target Price: Rs 2,209) and ACME Solar (Target Price: Rs 289). It sees up to 60% upside in these stocks.

JM has an 'add' rating on NHPC (Target Price: Rs 84), Inox Wind (Target Price: Rs 120) and Indian Energy Exchange (Target Price: Rs 145). It has given a 'reduce' tag on Torrent Power (Target Price: Rs 1,410) and Coal India (Target Price: Rs 401). SJVN (Target Price: Rs 67) is the only stock from the pack to get a 'sell' rating from the brokerage firm.