The Indian government has ordered 112 captive coal-based power plants to operate at full capacity until the end of 2026, as rising electricity demand and declining coal inventories strain the sector, prompting strategic stock and supply management measures.
India’s power sector has moved back into the spotlight after the Ministry of Power ordered 112 captive coal-based plants to run at maximum capacity from October 1 to December 31, 2026, as officials brace for stronger electricity demand in the final quarter of the year. According to industry reports, the directive was issued under emergency powers in Section 11 of the Electricity Act and applies mainly to industrial facilities with their own generation units, including steel, aluminium, cement, fertiliser and refining operations.
The intervention comes against a backdrop of tighter fuel conditions and rising consumption. Jefferies said power demand in September has been running about 15 per cent higher year on year, while year-to-date demand is up around 10 per cent, ahead of its own expectation for the full financial year. The brokerage linked the strength to higher cooling needs and below-average monsoon rainfall, and said merchant power prices have surged sharply, with the average tariff so far in the second quarter of fiscal 2027 at Rs 5.7 a unit, up 46 per cent from a year earlier.
Coal inventories have become a growing concern as well. Research notes from ICICI Direct and other market trackers indicate that stocks at domestic thermal stations have fallen steeply in recent weeks, with some plants now carrying critically low inventories after monsoon-related supply disruptions and heavy demand. One report said nearly 38 per cent of coal-fired plants were at critical stock levels as of September 20, while another found thermal station coal stocks had dropped to about seven days on average, underscoring the strain on fuel availability.
Jefferies remains constructive on the sector despite the pressure points, arguing that utilities should still deliver earnings growth through fiscal 2026 to fiscal 2029 as project execution improves. The brokerage said it prefers JSW Energy and NTPC at current levels, and sees Adani Energy Solutions as one of its strongest ideas, with more than 20 per cent medium-term EBITDA compound annual growth expected. It also pointed to Adani Power, Power Grid, Adani Green Energy and Torrent Power as buy-rated names.
The stock calls imply sizeable upside in several cases. Jefferies has a target price of Rs 2,060 on Adani Energy Solutions, compared with a current price of Rs 1,287.90, implying almost 60 per cent upside. Its targets of Rs 720 for JSW Energy and Rs 425 for NTPC suggest gains of more than 45 per cent and just over 32 per cent respectively. The brokerage is less bullish on Tata Power and Indian Energy Exchange, assigning underperform ratings to both, with targets below their current market prices.
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