Power Demand Recovery Elusive, Muted Growth Hits Thermal Utilities in Q4

Nuvama expects modest profit after tax growth across its power coverage universe in Q4FY26. "We reckon Nuvama's power coverage universe shall post modest PAT growth in Q4FY26, driven by weak Plant Load Factor across utilities," the report said.

"India's power demand remained muted for yet another quarter (Q4FY26 growth: 1.9% YoY) with Mar-26 demand rising 0.7% YoY," the report said. "FY26 demand remained largely flat (+0.8% YoY) with extended monsoon/a slow start to summer adding to woes." Power demand grew to 150BU in Mar-26 and 426BU/1,715BU in Q4FY26/FY26, "largely affected by extended monsoon/slow start to summer and likely weak industrial output."

Peak demand did improve to ~245GW in Q4FY26 from ~238GW in Q4FY25, up 2.9% YoY. However, thermal plant load factors remained under pressure. "Thermal PLF remained low at ~70% in Mar-26 (73.4% in Mar-25) with most utilities posting muted PLFs in Q4FY26," Nuvama noted. NTPC reported PLF of 76.7% in Q4FY26 versus 82.7% in Q4FY25, while Tata Power posted 63% versus 72.9% YoY. Overall thermal PLF was muted at 69.8% in Q4FY26, down from 73.4% a year ago.

The supply-demand equation is diverging between solar and non-solar hours. "Solar-hour supply outpaced demand with negligible deficiency (IEX prices declined to INR3.3/unit in Mar-26 versus INR3.7/unit in Feb-26) while non-solar hours reported stronger demand and reduced supply (prices at INR5.3/unit in Mar-26 versus INR3.4/unit in Feb-26)," the report said. IEX electricity volume grew 23.5% YoY in Mar-26 and 24% YoY in Q4FY26, led by strong RTM growth. Total volume, including REC, grew ~34% YoY in Mar-26 and 21% YoY in Q4FY26.

The renewable pipeline remains strong, offering medium-term visibility. "RE Tendering pipeline as on Mar-26 remains elevated at ~368GW, largely driven by solar + storage (~65% of total tenders). Total RE addition of ~43GW YTD (till Feb-26)," Nuvama noted.

Going forward, a normal monsoon and a pickup in industrial activity will be key to reviving power demand growth in FY27. Until then, utilities with regulated equity growth, strong commissioning, and improving plant availability are better placed. Thermal PLFs remain the key monitorable, along with non-solar hour prices on exchanges, which indicate tightening supply when solar generation drops off. If summer sets in earlier next year, both demand and PLFs could see a cyclical rebound off a low base.

- ANI