1 week ago
Global brokerage firm Macquarie has initiated coverage on power financing PSUs—PFC, REC, Power Grid, and NTPC—citing these companies as clear beneficiaries of the sector’s growth cycle, due to their unique positions within the ecosystem.
Macquarie has a 'Buy' rating on Power Grid Corporation of India Ltd., with a price target of ₹380 per share, implying a potential upside of 18% from Tuesday's closing levels.
Macquarie notes that Power Grid stands to benefit from a sharp pickup in transmission capex. The sizeable rebound in the total addressable market (TAM) alleviates concerns about competitive pressure affecting returns on new capital investments in the transmission business.
Power Grid's capex is expected to rise to ₹25,000 crore, ₹30,000 crore, and ₹35,000 crore in FY26E, FY27E, and FY28E, respectively, compared to an annual average of ₹10,500 crore over FY21-24.
Over FY25-32E, PGCIL's capex opportunity is expected to exceed ₹3 lakh crore, with potential upside, versus approximately ₹1.3 lakh crore over FY17-24.
Macquarie has initiated coverage on NTPC with a 'Buy' rating and a price target of ₹475 per share, indicating a potential 25% upside from current levels.
The brokerage highlights that NTPC offers an attractive mix of regulated capex and renewable energy exposure.
NPTC is likely to add 30% of the planned 80 GW thermal capacity additions in India by 2032. Its cost pass-through model for thermal assets ensures a steady return on equity (RoE) under a stable regulatory framework in the medium term, making it a compelling investment.
In addition to its strong position in thermal power, NTPC has ambitious plans to add 60 GW in renewable energy capacity by 2032 and is also foraying into nuclear energy, which is a potential longer-term growth driver.
| Companies | Rating | Target Price |
| Power Grid | Buy | ₹380 |
| NTPC | Buy | ₹475 |
| PFC | Outperform | ₹630 |
| REC | Outperform | ₹660 |
Macquarie has initiated coverage on PFC with an 'Outperform' rating and a price target of ₹630, indicating a 35% potential upside from the stock's closing levels on Tuesday.
The foreign brokerage mentioned that renewable capacity expansion has been a key driver of credit growth in the power sector. Macquarie expects PFC to re-rate as asset resolutions improve, slippages decrease, and the renewable energy mix grows.
On REC, Macquarie initiated with an 'Outperform' rating and a target price of ₹660, suggesting a 28% upside.
Regulatory changes spurred by cyclical power shortages have reduced credit risks, enhancing growth prospects for power financiers like REC, the brokerage said.
Macquarie expects asset resolutions, lower slippages, and increasing renewables mix to drive a re-rating of the stock.
On Wednesday, shares of NTPC are trading 1.25% higher, while those of Power Grid, REC, and PFC are down 0.98%, 2.45%, and 2.43%, respectively.
