Tata Power, NHPC, Acme Solar, JSW Energy, NTPC, CESC: Target prices as valuations turn rich

Kotak Institutional Equities in a fresh strategy note said warned that improved performance of utility stocks in anticipation of rising power demand has made valuations rich, even as near-term benefit to earnings is limited. The domestic brokerage said valuations for power stocks have become full following the recent run-up in stocks, and do not offer an attractive entry point, nor do they fully factor execution risk from further disappointment in comparison to the capacity addition targets.

Except for Acme Solar Holdings Ltd, Kotak has 'Sell' or 'Reduce' rating on its coverage electric utilities. It assigned 'Sell' on Tata Power, NTPC, JSW Energy, Coal India and NHPC Ltd. Power Grid and CESC Ltd were two stocks assigned as 'Reduce'.

"NTPC, ACME and NHPC (hydro) largely delivered on their targets in FY2026, while Tata Power Company Ltd, JSW Energy and CESC Ltd were short of their renewable capacity addition targets. We further highlight that reported earnings for most utilities have been lackluster with low single digits growth (excluding the deferred tax benefit)," Kotak said.

Among the public utilities, Kotak said NTPC’s consolidated Q4 net profit was supported by
a deferred tax benefit, as well as higher share of JV profits. NHPC's reported standalone PAT was supported by a deferred tax credit, as well as profits from from Parbati and Subansiri.

JSW Energy, Kotak said, reported 87 per cent YoY growth in Q4 consolidated Ebitda , aided
by the Mahanadi & O2 acquisitions (3.1 GW operational), as well as organic capacity addition in the last 12 months.

"Tata Power's consolidated 4QFY26 PAT of Rs 1,090 crore ( up 6 per cent YoY) was supported by true-up order at Delhi discom, improved profits at cell & module facility and IEL, while being impacted by losses at Mundra. Renewable capacity addition remained weak (968 MW against the 1.4 GW target), as Tata Power was focused on running down its 3P-EPC book," Kotak said.

Kotak suggested a target of Rs 310 on Tata Power, Rs 335 on NHPC, Rs 370 on Coal India, Rs 455 on JSW Energy and Rs 335 on NTPC. Targets for Power Grid and CESC stand at Rs 295 and Rs 172, respectively. ACME Solar is assigned a target of Rs 340.