NTPC, Power Grid upgraded by JPMorgan on rising power demand

JPMorgan has put a rating of 'overweight' on NTPC and Power Grid Corporation, citing increasing power demand in India and a longer cycle of investment in the power industry. The brokerage house said that although power demand is going to increase structurally, execution issues and financial health remain concerns in the sector.

Meanwhile, JPMorgan was more conservative in its views on other power sector shares. It held a 'neutral' rating for Tata Power and Torrent Power but assigned an 'underweight' rating to JSW Energy, indicating concerns with execution risks and overvaluation in the private utility space.

Thermal and transmission capex drive growth

The report pointed to a widening demand-supply gap for peak power, which has generated greater opportunities in thermal capacity expansion. NTPC, as the largest power generator in the country, should gain from this trend. Likewise, Power Grid should benefit strongly from increasing transmission infrastructure, with the sector receiving a push in investment.

JPMorgan highlighted that power is still a capital-intensive sector with implementation challenges like regulatory issues, financial health of distribution companies, and lag in signing power purchase agreements (PPAs). But it said that the valuation of NTPC and Power Grid is now reasonable after recent market corrections and hence are good investment opportunities.

Sector valuation and demand trends

The power space saw a solid re-rating after Covid as a result of improved financial flows, increased demand, and the movement towards green energy. Though private players are still trading at high valuations, NTPC and Power Grid provide a balanced risk-reward ratio, opines JPMorgan.

India logged a 7 per cent increase in power demand in March, with peak demand reaching 235 gigawatts (GW) during the initial 18 days of the month. Though there was a jump, no significant shortages were experienced since most of the peak demand was fulfilled during sunshine hours, thus easing stress on the grid.

Stock performance and market reaction

After the report, NTPC stocks registered modest gains, going up 0.56 per cent to Rs 369 a share in intraday trade. The stock has risen almost 10 per cent in 2025 and is 25 per cent higher than its February lows.

Power Grid shares also gained, advancing 1.98 per cent to Rs 296.75. However, the stock has declined by 5 per cent in 2025 so far, despite a recent recovery of over 8 per cent from February lows.

JPMorgan's report suggests that investors may find NTPC and Power Grid to be resilient bets in the evolving power sector landscape, particularly as India continues to expand its power infrastructure amid rising demand.