Suzlon Energy, Tata Power, BHEL, Power Grid, Coal India: JM shares Q4 previews, price targets for utilities

JM Financial in its latest sectoral note expected utilities under its coverage to report flattish sequential revenue and Ebitda growth, driven by 11 per cent YoY growth in power demand. Key monitorables going forward would be the sustenance in power demand, trend in international coal prices, and the pace of transition to clean energy. Overall, the brokerage remained positive on the utilities space with likely stability in power demand and continued momentum in energy transition.

On Suzlon Energy, it expects profit to rise 16 per cent YoY to Rs 324.20 crore against Rs 279.90 crore YoY. Profit may rise 60 per cent sequentially due to significant reduction in debt.Net sales for the quarter is seen climbing 63 per cent YoY to Rs 2,762.10 crore from Rs 1,694.10 crore, due to higher wind power capacity addition. Ebitda margin is seen at 13 per cent, down 46 basis points over 14 per cent YoY.

In the case of BHEL, JM Financial sees profit rising 52 per cent to Rs 931.70 crore from Rs 611 crore YoY, thanks to higher operating leverage and other income. BHEL reported a loss of Rs 148.80 crore in the December quarter. Sales are seen flattish at Rs 8,250 crore against Rs 8,227 crore YoY. That said, sales may rise 50 per cent QoQ driven by industrial and power segments. Ebitda margin is seen expanding 413 basis points to 16 per cent from 12 per cent.

In the case of Tata Power, profit is seen rising 8 per cent YoY to Rs 838.20 crore from Rs 777.70 crore, thanks to DISCOMS posting better than expected performance. Revenue is seen climbing 21 per cent YoY to Rs 15,090 crore from Rs 12,453 crore, due to strong execution in the RE capacity & operationalisation of Mundra. Margin is seen 344 points YoY to 19 per cent.

For Coal India, JM expects 28 per cent jump in profit at Rs 7,098 crore on 9 per cent drop in sales at Rs 34,608 crore. Sales may fall due to not reaching the target coal production for FY24.

NTPC is expected to report net sales of Rs 43,600 crore in 4QFY24, up 2 per cent QoQ. Ebitda is estimated at Rs 12600 crore and PAT is seen flattish.

"We expect Power Grid to report net sales at Rs 12,500 rcore with a 8 per cent rise in QoQ, and Ebitda margin of 87 per cent. CESC is expected to report 6 per cent YoY revenue growth led by higher generation and lower AT&C losses. NHPC and SJVN sales are expected to decline QoQ due to lower hydro power generation; India experienced a drastic 16.3 per cent drop in hydroelectricity output, the steepest decline in at least 38 years, due to erratic rainfall," JM Financial said.

The brokerage has 'Buy' ratings on NTPC (Price target: Rs 368), Power Grid (Price target: Rs 312), Coal India (Price target: Rs 500), Tata Power (Price target: Rs 439), JSW Energy (Price target: Rs 540), NHPC (Price target: Rs 91), Suzlon Energy (Price target: Rs 54), BHEL (Price target: 243).

JM Financial has 'Hold' rating on CESC (Price target: Rs 130) and 'Sell' rating on SJVN (Price target: Rs 72).