India’s power sector is entering the March quarter earnings season against a mixed operating backdrop, where demand growth has softened even as capacity addition continues at a robust pace. Brokerage previews suggest that while near-term consumption trends remain subdued, structural expansion in generation and transmission assets is likely to underpin financial performance across key utilities.

According to brokerage estimates and sector data, electricity demand in India rose just 0.8 percent year-on-year to approximately 1,715 billion units in FY26. The March quarter reflected a similar trend, with demand increasing 1.9 percent year-on-year to around 425 billion units. This moderation has been attributed to weather-related factors, including an extended monsoon and a delayed onset of summer, both of which tend to suppress peak consumption cycles.

In contrast, supply-side expansion has remained strong. India added roughly 43 GW of capacity during the year, largely driven by renewable energy installations. Total installed capacity stood at about 529 GW as of February 2026, while an additional 368 GW remains under various stages of tendering, indicating a sustained pipeline for future growth. This divergence between demand and capacity is beginning to shape both operating metrics and pricing dynamics within the sector.

Despite the softer demand environment, earnings expectations for major power companies remain relatively resilient. Brokerages indicate that companies with regulated assets or contracted generation capacities are likely to report stable to improving financials. Incremental capacity additions and long-term power purchase agreements continue to provide revenue visibility.

Large public-sector and private utilities such as NTPC, NLC India, and JSW Energy are expected to post growth in revenue and EBITDA. NTPC, for instance, is projected to report around 9 percent year-on-year revenue growth and approximately 7 percent EBITDA growth for the March quarter, although profit after tax may decline due to a higher base effect. JSW Energy is expected to outperform on growth metrics, supported by renewable capacity additions, though higher depreciation and finance costs could limit bottom-line expansion.

Operational indicators, however, reflect the demand slowdown more clearly. Thermal plant load factors (PLFs), a key measure of capacity utilisation, declined across the sector. Industry-wide PLFs fell to 69.8 percent in Q4FY26 from 73.4 percent a year earlier. NTPC’s PLF dropped to around 76.7 percent from 82.7 percent, while Tata Power reported utilisation of approximately 63 percent compared to 72.9 percent last year. These trends suggest that incremental capacity is not being fully absorbed by demand in the near term.

On the supply side, coal availability has remained comfortable, reducing input-side risks for thermal generators. NTPC maintained about 20 days of coal inventory, equivalent to roughly 59 million tonnes, ensuring operational continuity despite fluctuating demand.

Power pricing trends further underscore the evolving demand-supply balance. Solar-hour tariffs averaged around Rs 3.3 per unit in March 2026, while non-solar tariffs stood near Rs 5.3 per unit. In the day-ahead market, prices averaged Rs 3.77 per kWh during the March quarter, reflecting a 13 percent year-on-year decline, although sequentially prices rose by a similar magnitude. This indicates some recovery in short-term pricing but not enough to offset the broader demand softness.

Peak demand also remained below expectations, reaching approximately 245 GW in FY26, compared to 250 GW in FY25. However, long-term projections remain strong, with the Central Electricity Authority estimating peak demand could rise to 366 GW by FY32, reinforcing the structural growth narrative for the sector.

Within the sector, regulated businesses continue to provide earnings stability. Transmission utilities such as Power Grid Corporation of India are expected to report steady profit growth, supported by expansion in their regulated asset base. This insulation from demand volatility differentiates them from merchant or partially merchant generation businesses.

At the broader sector level, however, utilities are expected to report a modest decline in profitability, with estimates indicating a 4.1 percent year-on-year drop in aggregate profit for Q4FY26. This reflects the combined impact of lower utilisation and cost pressures.

Market performance has mirrored this divergence. Equipment manufacturers and grid-linked companies have significantly outperformed, driven by strong order inflows and the ongoing energy transition theme. Companies like ABB India and Hitachi Energy India have delivered strong year-to-date gains, reflecting investor preference for capital goods and infrastructure enablers.

Among generators, stocks such as Adani Power and NTPC have also performed well, supported by capacity growth visibility. However, renewable-focused and smaller-cap companies like Adani Green Energy and Suzlon Energy have seen sharper corrections in the March quarter, highlighting valuation sensitivity and execution risks.

Valuations across the sector remain uneven. Traditional utilities like NTPC and Power Grid are trading near historical highs, while capital goods and energy transition companies command significantly higher multiples, reflecting growth expectations but also increasing valuation risk.