Suzlon, BHEL, ACME Solar: JM says buy these power stocks despite subdued demand in Q4

Domestic brokerage firm JM Financial has shared its views and targets for the utilities sector companies ahead of March 2025 quarter results. The brokerage believes that 4QFY25 is largely going to be a flat performance with subdued demand for the sector. However, it is positive for the majority of the companies from this space.

Power generation utilities are likely to report a modest performance in 4QFY25 driven by subdued energy/peak demand due to the extended monsoon in FY25. Fuel (coal) production and prices also remained soft in India as well as globally. During 4QFY25, merchant power prices (Rs /kWh) also moderated to Rs 4.4 versus Rs 4.9 during 4QFY24, said JM Financial.

Only, JSW Energy is likely to show growth momentum due to acquisitions. However, its merchant earnings will decline, it noted. JM expects power equipment players Bharat Heavy Electricals (BHEL), Suzlon Energy and INOX Wind likely to report good results as execution of their strong order book accelerates.

JM Financial pencilled energy demand/peak demand in FY25 standing at 1,696BU/250GW, up 4.3 per cent/ 2.7 per cent YoY due to the extended monsoon in FY25. It noted that Indonesian coal prices softened to average $87/MT down 8 per cent YoY, while gas prices were range-bound at $13–15 per mmBtu.

Power generation stood at 446BU, up 4 per cent YoY, including 23BU of hydropower (20 per cent YoY) and 62BU of renewables (16 per cent YoY), said. The brokerage noted that thermal/hydro/wind/solar capacity addition in 4QFY25 was 2,559MW/760MW/1,875MW/7,782MW respectively.

The brokerage is expecting NTPC to report a flat quarter as increase in generation will be offset by lower realisation, while JSW Energy’s revenue is likely to increase 4 per cent YoY due to higher thermal generation in 4QFY25 led by incremental contribution from Ind-Barath plant and KSK Mahanadi.

Tata Power, NHPC and Coal India may report a flat rate in net sales, while Torrent Power's revenue may fall 6 per cent on a yearly basis due to lower generation in its gas-fired plants. CESC is expected to report double digit revenue growth due to higher generation and higher demand in its distribution circle, according to JM Financial.

SJVN's sales are expected to increase strongly due to expected increase in generation, while. ACME Solar is expecting a solid Ebitda margin, said JM. BHEL’s net revenue could increase strongly by robust order book in power segments and pick-up in execution, while Suzlon’s net revenue may increase on account of higher dispatches. INOX Wind's revenue may triple on a YoY basis, it said.

JM Financial has a 'buy' rating BHEL, Suzlon Energy, NHPC, NTPC, Power Grid, ACME Solar, CESC, Tata Power, JSW Energy, Torrent Power and Inox Wind. The brokerage has suggested to 'hold' Coal India shares, while SJVN is the only 'sell' recommendation from JM's utility universe.