India’s electricity usage soars to 132.98 billion units despite energy crisis

In April, India's electricity consumption reached an all-time high of 132.98 billion units, owing to the country's rising mercury levels.

According to India's power ministry, the country's electricity consumption is likely to grow to 220 gigawatts (GWh) in the upcoming two months, as the meteorological department predicts above-normal maximum temperatures in the west-central, north-west, north, and north-eastern areas.

Therefore, it is no surprise that power-related equities have been the most popular investment choice this year.

Stock prices in the power sector, including electricity generating and distribution, have performed significantly better than benchmark indices.

So far this year, shares of Adani Power, Tata Power, Power Grid, and NTPC have risen between 2 to 175%.

Despite the surge, experts are still positive about linked companies, predicting that power utilities would gain from the gap between expanding power demand and the acute energy crisis.

According to AK Prabhakar, Head of Research at IDBI Capital, the coal scarcity situation would benefit NTPC the most.

NTPC, Tata Power, and Torrent Power are all favourable for him. While electricity demand is likely to stay high through June, he believes Coal India would benefit from peak power demand.

Higher personnel expenses, on the other hand, are a concern for Coal India's profit margin.

However, due to power outages, certain industrial firms in regions such as Uttar Pradesh, Haryana, Delhi, Punjab, Rajasthan, and Tamil Nadu are allegedly considering output cuts.

Although state-owned Coal India has raised supplies to power plants by 6.7 metric tonnes (MT) year on year (Y-o-Y), experts are sceptical that the additional output would meet both foreign and local demand.

According to analysts, Coal India is likely to gain from increased volume growth due to faster coal deployments to power plants on the domestic front.

Meanwhile, high import coal costs caused by geopolitical uncertainty are projected to drive up electricity prices.

Merchant power rates soared to 8.2 rupees per unit in March, up from an average of 4 rupees per unit in February.

According to media sources, merchant tariffs might stay over 6 rupees per unit this quarter, the highest in the last five fiscals.

Investors witnessed markets close on a choppy tone, with the Nifty 50 and Sensex closing 0.67% down.

On the other hand, primary markets were buzzing as the massive LIC IPO was subscribed 2.91 times on the final day.

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Also read: Andhra Pradesh purchased 1,047.78 million units power in April