Bernstein has revised upward its expectations for India's electricity demand in the second half of 2026, saying consumption is now likely to exceed its earlier forecasts. The brokerage tied the upgrade to recent climate developments that point to a warmer latter half of the year as the climate pattern shifts from La Nina to El Nino sooner than anticipated - possibly beginning by May.
Despite forecasting stronger demand, Bernstein cautioned that the increase is not expected to translate into commensurate earnings growth for power companies. The brokerage highlighted that higher consumption does not necessarily equal higher corporate profits across the sector.
In its sector view, Bernstein maintained NTPC (NS:NTPC) as its preferred stock among power companies. The brokerage also sees potential upside for Larsen & Toubro (NS:LART), which it expects will secure construction orders tied to expansion projects in thermal and nuclear power.
Looking further ahead, Bernstein projected that for fiscal year 2027 India's power demand growth will be equivalent to 0.9 times the country's real gross domestic product growth. The firm also warned that changing climate conditions could create headwinds for companies focused on wind and hydro generation.
Market moves reflected some of these assessments on Thursday, with NTPC shares rising 3.4% and Larsen & Toubro advancing 3%. Both were among the top performers on the Nifty 50 index, which closed up 0.7% for the session.
Context and implications
Bernstein's update combines a near-term demand upgrade with caution about the profit dynamics across power businesses. While thermal and nuclear construction activity could benefit certain engineering and EPC contractors, the brokerage's view implies that utilities and renewable operators may not uniformly capture improved top-line volumes in their bottom lines.
What remains uncertain
The brokerage noted climate variation as a key variable. An earlier-than-expected transition to El Nino and the prospect of a warmer second half of 2026 introduce variability in generation patterns and may affect the operational performance of some technologies.