Tata Power and JSW Energy shares climb higher on October 8

Shares of Tata Power and JSW Energy saw an upward trend on 8 October, as brokerage firm Nomura initiated positive coverage of the power sector. This boost comes with optimistic projections for both companies, underlining their strong growth potential. As power companies gain momentum, this movement offers fresh opportunities for those involved in share market investment.

Tata Power receives a ‘buy’ rating from Nomura

Nomura has rated Tata Power's stock ‘buy’ and set a target price of ₹560 per share. The firm expects a 16% compound annual growth rate (CAGR) in earnings before interest, tax, depreciation, and amortisation (EBITDA) over the financial years 2024-27.

This projected growth is driven by the company's plans to double its renewable energy capacity and successfully execute its ₹15,700 crore solar engineering, procurement, and construction (EPC) order book. Additionally, Tata Power’s Odisha operations are expected to see a marked improvement in profitability, adding to the company’s overall positive outlook.

JSW Energy shows strong potential

Similarly, JSW Energy has also been given a ‘buy’ rating, with Nomura setting an ambitious target price of ₹885 per share. The company is forecasted to achieve an impressive 38% CAGR in EBITDA over FY24-27.

This growth will be supported by a more than twofold increase in operational capacity, which is expected to significantly boost JSW Energy’s profitability. The company’s renewable energy projects are another contributing factor, with analysts highlighting their healthy margins as a key driver of financial success.

Power sector optimism extends beyond Nomura

Nomura is not the only brokerage firm with an optimistic outlook on the power sector. In September, domestic brokerage firm Motilal Oswal initiated coverage on five power companies, including Power Grid, NTPC, Tata Power, JSW Energy, and IEX. The firm predicts potential upsides of up to 24% over the next year.

Motilal Oswal sees the Indian power sector as a multi-decade investment opportunity, estimating investments worth ₹40 lakh crore. Key areas of focus include power generation, transmission, and smart metering, accounting for 86%, 10%, and 4% of this total investment, respectively.

India's energy transition to drive future growth

Motilal Oswal's bullish stance is underpinned by the increasing demand for power and the need to upgrade ageing power infrastructure. India’s transition to cleaner energy sources is also seen as a major factor. With the country targeting 500 GW of renewable energy capacity by 2030, companies like Tata Power and JSW Energy are well-positioned to benefit from this shift, further highlighting the appeal of share market investment in the sector.

Market performance reflects positive sentiment

At 9:28 am on 8 October, Tata Power’s shares were trading 1% higher at ₹445, while JSW Energy’s shares were priced at ₹679.50 on the National Stock Exchange (NSE). Year-to-date, Tata Power has seen a 35% rise in stock value, while JSW Energy has surged by 67%. In comparison, the Nifty index has risen by 14% during the same period.

Over the past 12 months, JSW Energy’s stock has rallied 65%, and Tata Power has surged by 79%, significantly outperforming Nifty’s 27% return over the same period. This strong performance further demonstrates the growing confidence in the power sector.