(ET)
India’s power utilities sector remains well-positioned for long-term growth, backed by robust renewable energy (RE) additions, resilient coal production, and policy-driven supply-side readiness.
Despite a near-term moderation in electricity demand, structural tailwinds such as energy transition, rising electrification , and economic growth are expected to support sustained sectoral momentum. Peak power demand in India reached 250GW in FY25 and is projected to touch 270GW in FY26. Although demand growth moderated to ~5% in FY25 (vs. 7–9% in FY22–24) and further eased to ~2% YoY in April 2025 due to high base effects and milder weather, demand volatility in peak months suggests potential for a sharp rebound in the near term.
Capacity additions in FY25 were a standout, with total generation capacity rising by 33.3GW—a 29% YoY increase. Renewable energy was the key driver, contributing 28.8GW, led by solar additions of 23.8GW.Wind energy contributed the remaining 5GW, demonstrating the sector’s clear pivot toward cleaner sources. On the other hand, thermal capacity witnessed a net decline of 2.2GW, reflecting India’s gradual shift away from conventional power generation.
The Ministry of Power has taken proactive steps to ensure peak season preparedness. Under Section 11 of the Electricity Act, 2003, gas-based power plants have been directed to maximize generation during summer months.
Meanwhile, Grid India will coordinate and notify operational schedules in advance. The move gains relevance as India decommissioned ~4.4GW of inoperable gas-fired capacity, leading to a sharp decline in operational gas capacity to 20.1GW in Apr’25 from 24.5GW in Mar’25.Coal availability—a key supply metric—remains solid. In Apr’25, domestic coal production rose 3.6% YoY to 81.6MT, with Coal India alone holding 105MT of stock (+22.1% YoY).Total coal inventory stood at 125.8MT, offering significant buffer for summer demand, complemented by government efforts to ease supply for imported coal-based plants.
On the pricing front, average Day-Ahead Market (DAM) rates stayed stable at INR5.2/unit in April, while Real-Time Market (RTM) prices dipped 24% YoY in May (till 25th), helped by unseasonal rainfall and improved sell-side liquidity on IEX.
With a strong pipeline of RE projects, policy thrust on thermal reliability, and rising energy needs, India’s utilities sector is entering a structurally resilient phase.
Growth in power demand, coupled with expanding clean energy capacity, positions the sector favorably for sustained investment and operational growth in FY26 and beyond. Suzlon Energy (SUEL) remains our high-conviction pick amid improving execution, a net cash balance sheet and strong earnings momentum ahead. Positive developments with respect to the implementation of local content in wind turbine manufacturing will boost market share and protect margins.
We model FY26 delivery of 2.4GW, implying a quarterly run rate of 600MW, which we believe is reasonable (3QFY25 delivery: 447MW).
For SUEL, we estimate a CAGR of 46%/51% in revenue/adj. PAT over FY25-27. As per our understanding, key orders slated for FY26 already have substantial land acquisitions completed and have high power evacuation visibility.
JSWE reported consolidated revenue of INR 31.8b in 4QFY25, with adjusted PAT up 34% yoy, aided by higher other income and deferred tax benefits. Operational capacity reached 12.2GW, with a robust project pipeline of 6.7GW, reflecting strong growth visibility.
Completion of KSK Mahanadi and O2 Power acquisitions positions JSWE for EBITDA expansion in FY26. Net generation rose 24% yoy, supported by new capacities and high thermal PLF of 84%.With merchant exposure below 1GW and coal import dependence reduced to 9–10%, earnings volatility is expected to decline. We give a Buy rating, backed by clear growth visibility and strong capacity additions.
