India Power: Merchant Kings

As desperation hits the Indian power market with record tariffs and power cuts across many parts of the country, this short note highlights potential winners of this system stress. One of the biggest beneficiaries is an entity which doesn't own a single MW. Power demand is through the roof, shortages are intense and prices are breaking all records, even as the stocks kept hitting lows. The Adani group appears to dominate the chart, with Adani Energy Solutions (not covered) now a big player since Q1. The report estimates merchant revenue and EBITDA for Q2 FY27, assuming a coal PLF of 55% during solar hours and 85% during non-solar hours, a solar PLF of 25%, wind PLF of 35%, and BESS operating one cycle a day at roughly Rs 11/kwh gross. Historically, coal-fired plants have been merchant sellers led by Adani Power, but a new breed of battery storage plants is emerging. Bernstein only covers Adani Power, NTPC, Tata Power, JSW Energy and ReNew, all rated Outperform.