The brokerage mentioned energy demand remained comparatively muted in FY26 resulting from a subdued summer season and an unusually sturdy winter, which diminished electrical energy consumption throughout peak months.
However, early traits in FY27 point out a reversal. Temperatures have already risen, with a number of elements of the nation going through heatwave situations, pointing to a possible surge in electrical energy demand within the coming months.
At the identical time, dangers are rising on the provision aspect. Morgan Stanley flagged the potential of decrease technology from gasoline and hydro energy sources throughout the first half of FY27.
The brokerage mentioned that persistent tensions within the Middle East might tighten world gasoline provides, probably affecting LNG availability for India.
Separately, stories counsel that the Himalayan area could witness one in every of its driest spring seasons on file, which might weigh on hydroelectric output.
Gas and hydro energy collectively accounted for round 2% and 9% of India’s complete energy technology respectively in FY26.
In this backdrop, Morgan Stanley expects thermal coal-based technology to shoulder a bigger share of incremental demand. The shift might additionally result in larger photo voltaic curtailment in sure areas, permitting thermal crops to ramp up output extra easily.
Among shares, the brokerage mentioned stronger service provider energy costs may benefit corporations equivalent to Adani Power and JSW Energy by means of improved earnings.
It added {that a} settlement associated to the Mundra venture or the imposition of Section 11 of the Electricity Act might act as a constructive set off for Tata Power.
Torrent Power might additionally see features from service provider gasoline gross sales the place entry to bodily cargoes exists.
Meanwhile, Morgan Stanley mentioned NTPC might see a re-rating in its price-to-book a number of if peak energy deficits intensify.
