Suzlon Energy, BHEL, NTPC shares: What Nuvama says on power sector cos

Nuvama believes the annual EPC execution capacity for Suzlon Energy and Inox Wind may limit their growth trajectory, despite strong macro demand.

Nuvama Institutional Equities recently met with MNRE, CEA, CERC, PGCIL and private renewable energy players and among the key takeaways was: annual ordering of over 10GW thermal and 8-10GW wind is envisaged to counter rising base/peak demand in non-solar hours.

Nuvama said it stays bullish on shares of BHEL and NTPC Ltd on rising thermal demand. While rising wind ordering bodes well for Suzlon Energy Ltd (non-rated by Nuvama) and Inox Wind Ltd, their EPC execution capacity may cap growth, Nuvama said. The domestic brokerage said high-voltage transformer shortage aids Siemens Ltd, Hitachi Energy India, GE T&D India Limited, CG Power and Industrial Solutions Ltd, TRIL (non-rated).

Nuvama said the rising wind demand is led by corporate power purchase agreements (commercial and Industrial), firm and dispatchable (FDRE) and round-the-clock (RTC) tenders, where wind mix is 2–3 times at 50 per cent to cater to supply in non-solar hours.

“This was augmented by smaller storage/more flexible conditions of market procurement for hours when neither solar or wind is available. With 8–10GW of wind tendering targeted by MNRE and additional demand from C&I segment, we expect higher market share for turnkey wind EPC providers (Suzlon Energy/Inox Wind), as PSUs/C&I players lack EPC/O&M capabilities,” Nuvama said.

That said, the brokerage believes the annual EPC execution capacity for Suzlon Energy and Inox Wind may limit their growth trajectory, despite strong macro demand.

On the other hand, out of 50GW fresh thermal ordering, 30GW are already identified brownfield projects as per NEP while the rest are under finalisation. CEA plans most of these as brownfield expansions already having land, water, fuel and provisional clearances, to ensure faster ordering and execution, Nuvama said adding that it finds over 7GW under bid submission in December with awards expected soon.

Meanwhile, short supply in transformers extends to HV 400/765Kv segments where suppliers have over 12 months OB resulting in delivery timelines doubling to 18 months (versus nine months earlier). “Transmission IPPs have now started ordering certain transformers in advance anticipating TBCB wins. Positive for all suppliers (Siemens, Hitachi Energy, GE T&D, CG Power and TRIL – non-rated),” it said.

With Thanks Reference to: https://www.businesstoday.in/markets/stocks/story/suzlon-energy-bhel-ntpc-shares-what-nuvama-says-on-power-sector-cos-410296-2023-12-21