印度电力行业：上周期与本周期——尚未便宜但未来3年短缺难消

Electric India: Last cycle vs. This cycle - Not cheap but shortagesnot going away next 3 years... We see the Indian power sector a structural and not a cyclical story, but the sector has tradedmore like air-conditioner stocks - buy before summer and sell before onset of monsoons. Thesector peaked in mid-CY24, post which demand slowed growing at ~1% YoY for the next 20months. This year it got a fresh boost with a) Weather, b) Energy Security, c) Data-Center. Inthis note we take a look at demand, supply, spot market and valuation indicators to see wherewe are in the cycle. Key charts -Exhibit 1 , Exhibit 4, Exhibit 5, Exhibit 9, Exhibit 13 Exhibit 14. Nikhil Nigania+91 226 842 1414nikhil.nigania@bernsteinsg.com Uma Menon+91 226 842 1490uma.menon@bernsteinsg.com 1) Spot market indicators- when we de-average for non-solar hours - the shortagebecomes apparent: If we look at an aggregate basis, spot power prices are at Rs 3.8/kwhin Apr-May, significantly below 2023 highs. Buy-sell bid ratio is also below 1. But when wede-average by time of day, the evening shortage seems to be only worsening with time. Thespread between morning and evening price is now Rs 7/kwh (and rising), as against beingnearly 0 in the last decade. A perfect arbitrage for battery storage. Buy-Sell ratio in eveningcontinues to inch up as well - e.g. for summer months it was 2.2x this year, vs 0.5x in 2020. Aman Jain+91 226 842 1486aman.jain@bernsteinsg.com 2) Demand- finally some respite, retain our 1x gdp multiplier view long term: Wefaced many questions on our 1x real gdp power demand forecast in the last couple of years,as demand grew just ~1% in FY26. Now on a low base and supportive weather (rainfallforecasts below norma), we see our 6% demand growth assumption for this year also lookconservative now. Usually investors have sold power stocks post summer, but this time weexpect demand growth to continue to pint better in the 2ndhalf. Electrification - energysecurity, are global themes and we see this a structural story. 3) Supply- high chances of evening shortage continuing next 3 years: Last cycle sawa supply glut, in fact ~100 GW of thermal were under-construction in 2012 (equivalentto ~75% of the installed thermal base), this time only ~40 GW is under-construction atpresent- which is just ~16% of the installed thermal capacity. Further, in the next 3 years,we are likely to add just ~15 GW of thermal capacity, against this the evening powerdemand is expected to grow by ~50 GW cumulative even at a 6% growth assumption.Hence, unless we add ~15 GW/ year of batteries in these 3 years we don’t see how eveningpower shortage can be resolved. A lot of BESS tenders have happened last year, but mostof those were aggressive bids by small players - and both BESS prices and Rs/$ hasbecome unfavorable since then - so we expect many of those to not see the light of day. 4) Valuations- no longer cheap but can add on correction: State owned utilitiescontinue to trade cheaper than global peers on P/E (NTPC at 13x, Power Grid 15x vs.Global 18x), EV/EBITDA (NTPC at 9x, Power Grid 9x vs. Global 11x). Private Indian utilitieson the other hand are at significant premium, but we would add thermal players on dips. We retain our structural positive stance on the sector- electrification is a global mega-trendand more important for India than any other country (devoid of oil-gas resources). In themedium term as well - there are hardly any thermal plants coming next 3 years, so we seepower shortages continue in non-solar hours (despite push for BESS). Our preference is stillnon-solar power (thermal-nuclear-battery), over solar. BERNSTEIN TICKER TABLE INVESTMENT IMPLICATIONS We continue to like state-owned companies to invest in India’s power sector- NTPC being our preferred name. Followed byReNew, where there is a take-private offer out, which we expect to be raised. Other than them, we are positive on power lenders(preferring PFC over REC), but they are riskier names, and more a trade in our view (not core holding). On private thermal side,Adani Power was our overall top pick in our coverage, but it has run up too fast - hence we prefer JSW Energy over it. Withrecent fund raise, their debt issues are resolved and the KSK expansion optionality more real. EARLIER REPORTS May 2026 - India Energy Security: 5 consequences of war... learning from the neighbors...Mar 2026 - India Power: Electrification is no longer an option—Initiating coverage on four utilitiesJan 2026 - India Power : Outlook 2026.... from Energy Transition to Energy Addition...Jun 2024 - Electric India: Power Demand...our long term viewMar 2024 - Electric India: Last cycle vs. This cycle- When to run for the hills? DETAILS OUR PECKING ORDER EXHIBIT 1:Pecking order summary 1) SPOT MARKET INDICATORS - NON-SOLAR HOUR PAIN WORSENS... WHILE OVERALL AVERAGE DATA DOESN’T LOOK VERY ENCOURAGING... Trends in the power exchange are the earliest indicators of demand-supply dynamics in the Indian