Series 43 – Breaking down our Portfolio Review Q2 FY’ 2024 (Episode 3) – Power

Over the next few weeks, we intend to breakdown our Portfolio Earnings review report and elaborate on the sectors that we are bullish on and has exposure to. We discussed the auto and auto ancillaries, about our view on the sector and our portfolio exposure. This week we aim to explore power sector and our portfolio positioning towards power segment. You can read the entire review report by clicking on the link below.

Portfolio Review – 2Q FY24 – ITUS Capital

Power: India with its growing population and strong economy, power generation and consumption has a dynamic landscape. With the data we have seen, between 2007 to 2017 the capacity paced with the annual growth of demand at about 8%. Post 2017, government’s increased focus on renewable capacities and target of green energy of 500GW by 2030, has resulted in minimal expansion of thermal power. This resulted in consumption growth surpassing capacity addition and hence shortages of power during high demand.

The below chart depicts the power consumption growth rate in India in last 20 years, showing the increasing demand. The green energy capex did not pick up significantly to match the demand , today Solar is 7% of the capacity. This has resulted in significant shoot up in the load factor in thermal plants, from around 57% in 2018 to 68% in 2023 approximately (Figure 2 below)

Observing the growth in grid and power infrastructure, our portfolio is aligned with businesses that have pricing power and margin protection. ABB India constitutes our investment, offering crucial electrical components vital to the power sector. And our emphasis on new capacity expansion in both thermal and renewable energy, our portfolio also includes exposure to NTPC.

Over the coming weeks, we will discuss two more sectors in which we have exposure in our portfolio. Meanwhile, to keep you updated, we’re committed to our SIP program, offering a convenient way for investors to regularly improve their portfolios. Feel free to check out the benefits for your clients. If you need more info, reach out to your dedicated relationship manager at [email protected].

These weekly episodes are now available in our website for your quick read and you may access the same in the below link.

Weekly Enlightenment Archives – ITUS Capital