Top Utility Stocks in India To Add To Your Watchlist – Trade Brains

Top Utility Stocks in India: The Utility sector includes companies that provide services like electricity, gas, and water or those that operate as producers or distributors of power. These companies are usually large and may provide one or more of the above-mentioned utilities. Some of them rely on clean and renewable energy sources like wind turbines and solar panels.

Utility companies generally operate with the government or under the aegis of the government. This acts as a barrier to entry into the market and shields these companies from competition. Utilities have the tendency to be resistant to economic cycles because their demand does not change much when compared to most other industries, even when economies take a downturn. Therefore, they act as defensive stocks.

Industry Overview

India has an installed power capacity of 408.71 GW as of October 31, 2022, and it is the third-largest producer and consumer of electricity worldwide. According to an IBEF report, the growing population along with increasing electrification and per-capita usage will provide further impetus. The power sector witnessed a boost in FDI investments as 100% FDI investment is allowed in the sector.

According to the National Infrastructure Pipeline 2019-25, the energy sector projects accounted for the highest share 24% out of the total expected capital expenditure of ₹ 111 lakh crore. The Central Electricity Authority (CEA) estimates India’s power requirement to grow to reach 817 GW by 2030. The government plans to establish a renewable energy capacity of 500 GW by 2030.

The consumption of natural gas in India is expected to grow by 25 billion cubic meters, registering an annual average annual growth of 9% until 2024. The government has allowed 100% Foreign Direct Investment (FDI) in upstream and private sector refining projects. It has also approved an order allowing 100% FDI under the automatic route for oil & gas PSUs.

It is forecasted that natural gas consumption is going to increase at a CAGR of 12.2% to 550 MCMPD by 2030 from 174 MCMPD in 2021. India is planning to double its oil refining capacity to 450-500 million tonnes by 2030.

Top Utility Stocks in India

Most utility stocks are financially stable companies that pay high dividends to their shareholders. Generally, those who invest in utility stocks do it to generate income through dividends. Typically, retirees and conservative investors gravitate towards these stocks. In this article, we are going to take a look at some of the top Utility Stocks in India. These companies are sorted based on their market capitalization.

Top Utility Stocks in India #1 – NTPC

NTPC (National Thermal Power Corporation) Ltd generates and sells bulk power to state power utilities. In addition, it provides consultancy, project management & supervision, energy trading, oil & gas exploration, and coal mining. It is India’s largest power utility with an installed capacity of 71,594 MW (including JVs) and plans to become a 130 GW company by 2032. NTPC became a Maharatna company in 2010.

NTPC has been operating its plants at high-efficiency levels. The company had 16.78% of the total national capacity as of 31 March 2020. It contributes 20.96% of the total power generation due to its focus on high efficiency.

Revenue & Profitability

Year	2018	2019	2020	2021	2022
Revenue (in Crores)	₹87,201.80	₹99,382.10	₹1,08,511.64	₹1,10,368.17	₹1,31,387.21
Profit (in Crores)	₹10,056.45	₹13,362.32	₹11,496.58	₹14,285.53	₹15,940.16
Net Profit Margin	11.53 %	13.45 %	10.59 %	12.94 %	12.13 %

The company’s revenue and profit show an increasing trend. Its revenue grew at a 4-year CAGR of 10.79% and its net profit grew at a 4-Year CAGR of 12.14%. Its net profit margin has also grown, albeit marginally.

Key Metrics

Particulars	Values	Particulars	Values
Face Value ()	10	Dividend Yield (%)	5.19
Market Cap (₹ in Cr)	1,60,043.47	ROE (%)	12.38
EPS (₹)	18.28	Promoter’s Holdings (%)	51.1
Stock P/E (TTM)	9.03	Current Ratio	0.91
Industry P/E	19	Debt to Equity Ratio	1.57

NTPC is a large-cap company with a market capitalization of ₹ 1,60,043.47 crores. Its shares have a face value of ₹ 10 and were trading at ₹ 173 levels at the time of writing this article. They were trading at a price-to-earnings ratio (P/E) of 9.03, which is lower than the industry P/E of 19, indicating that the stock might be undervalued as compared to its peers.

The company has earnings per share (EPS) of ₹ 18.28 and a high dividend yield of 5.19%. However, it has a low return on equity of 12.38%. It has low a current ratio of 0.91, but companies in this sector tend to have a low current ratio. Further, it has a high debt-to-equity ratio of 1.57. However, NTPC is a capital-intensive company and such companies usually have a high debt-to-equity ratio.

Currently, its promoters hold a 51.10% stake in it, followed by domestic institutional investors (DIIs) at 30.63%, foreign institutional investors (FIIs) at 15.65%, and retail investors at 2.62%.

Top Utility Stocks in India #2 – Power Grid Corporation of India

Power Grid Corporation of India (PGCI) is a Maharatna CPSE and India’s largest electric power transmission company. It is engaged in the planning, implementation, operation, and maintenance of Inter-State Transmission System (ISTS), Telecom, and consultancy services.

The company moves large blocks of power from the central generating agencies and areas that have surplus power to load centers within and across regions. It is under the administrative control of the Ministry of Power, Government of India. In addition, it executes several strategically important projects, assigned to the company by GoI on a nomination basis.

PGCI has over 150 domestic clients and over 25 global clients in more than 23 countries. it has a telecom network of 79,999 km across 256 cities.

Revenue & Profitability

Year	2018	2019	2020	2021	2022
Revenue (in Crores)	₹29,953.62	₹35,059.12	₹37,743.54	₹39,639.79	₹41,616.34
Profit (in Crores)	₹8,204.00	₹10,033.52	₹11,059.40	₹12,036.46	₹16,824.07
Net Profit Margin	27.39 %	28.62 %	29.3 %	30.36 %	40.43 %

The company’s revenue and profit show an increasing trend. Its revenue grew at a 4-year CAGR of 8.57% and its net profit grew at a 4-Year CAGR of 19.67%. Its net profit margin has also grown considerably.

Key metrics

Particulars	Values	Particulars	Values
Face Value (₹)	10	Dividend Yield (%)	6.8
Market Cap (₹ in Cr)	1,49,170.06	ROE (%)	23.02
EPS (₹)	22.39	Promoter’s Holdings (%)	51.34
Stock P/E (TTM)	9.55	Current Ratio	0.73
Industry P/E	19	Debt to Equity Ratio	1.77

PGCI is a large-cap company with a market capitalization of ₹ 1,49,170.06 crores. Its shares have a face value of ₹ 10 and were trading at ₹ 217 levels at the time of writing this article. They were trading at a price-to-earnings ratio (P/E) of 9.55, which is lower than the industry P/E of 19, indicating that the stock might be undervalued as compared to its peers.

The company has earnings per share (EPS) of ₹ 22.39 and a high dividend yield of 6.8%. In addition, it has a high return on equity of 23.02%. It has low a current ratio of 0.73, but companies in this sector tend to have a low current ratio. Further, it has a high debt-to-equity ratio of 1.77. However, PGCI is a capital-intensive company and such companies usually have a high debt-to-equity ratio.

Currently, its promoters hold a 51.34% stake in it, followed by foreign institutional investors (FIIs) at 32.75%, domestic institutional investors (DIIs) at 12.75%, and retail investors at 3.16%.

Top Utility Stocks in India #3 –Tata Power

Tata Power (formerly Tata Electric) is one of India’s largest integrated power companies, present across the entire power value chain of conventional & renewable energy, power services, and next-generation customer solutions including solar rooftop, EV charging stations, and home automation. The company has pioneered technology adoption in the utility sector. It has many firsts to its credit, including setting up one of India’s first hydroelectric power stations in 1915.

The company has 12,772 MW of generation capacity where 30% comes from clean and green sources. It is continuously delivering green technology for smart consumers with energy-saving power services, and multi-city EV charging stations and is India’s #1 rooftop solar provider.

Revenue & Profitability

Year	2018	2019	2020	2021	2022
Revenue (in Crores)	₹26,840.27	₹29,881.06	₹29,480.14	₹32,703.31	₹42,815.67
Profit (in Crores)	₹1,128.68	₹1,329.67	₹363.89	₹611.46	₹680.61
Net Profit Margin	4.21 %	4.45 %	1.23 %	1.87 %	1.59 %

The company’s revenue shows an increasing trend, however, its net profit has declined over a period of five years. Its revenue grew at a 4-year CAGR of 12.38% and its net profit declined at a CAGR of -7.79%. The company’s net profit margin has also decreased.

Key Metrics

Particulars	Values	Particulars	Values
Face Value (₹)	1	Dividend Yield (%)	0.73
Market Cap (₹ in Cr)	65,440.55	ROE (%)	3.15
EPS (₹)	9.58	Promoter’s Holdings (%)	46.86
Stock P/E (TTM)	21.37	Current Ratio	0.8
Industry P/E	19	Debt to Equity Ratio	2.12

Tata Power is a large-cap company with a market capitalization of ₹ 65,440.55 crores. Its shares have a face value of ₹ 1 and were trading at ₹ 207 levels at the time of writing this article. They were trading at a price-to-earnings ratio (P/E) of 21.37, which is higher than the industry P/E of 19, indicating that the stock might be overvalued as compared to its peers. This could also mean that investors are willing to pay a higher price for Tata Power’s future earnings.

The company has earnings per share (EPS) of ₹ 9.58 and a dividend yield of 0.73%. Further, it has a low return on equity of 3.15%. It has low a current ratio of 0.8, but companies in this sector tend to have a low current ratio. Further, it has a high debt-to-equity ratio of 2.12. Tata Power is a capital-intensive company and such companies usually have a high debt-to-equity ratio. However, its debt-to-equity ratio is higher than its peers.

Currently, its promoters hold a 46.86% stake in it, followed by retail investors at 28.85% domestic institutional investors (DIIs) at 14.65%, and foreign institutional investors (FIIs) at 19.63%.

Top Utility Stocks in India #4 – GAIL

GAIL (India) is a Government of India undertaking and an integrated natural gas company in India. It has diversified interests across the natural gas value chain of trading, transmission, LPG production & transmission, LNG re-gasification, petrochemicals, city gas, E&P, and so on. The company operates a network of around 14617 km of natural gas pipelines spread across the country. GAIL commands ~70% market share in gas transmission and has a gas trading share of over ~ 50% in India. In addition, it is expanding its presence in renewable energy like solar, wind, and biofuel.

Revenue & Profitability

Year	2018	2019	2020	2021	2022
Revenue (in Crores)	₹54,496.35	₹76,189.89	₹72,517.70	₹57,371.91	₹92,769.83
Profit (in Crores)	₹4,651.80	₹5,777.57	₹7,268.04	₹4,428.24	₹10,541.29
Net Profit Margin	8.54 %	7.58 %	10.02 %	7.72 %	11.36 %

The company’s revenue and profit show an increasing trend. Its revenue grew at a 4-year CAGR of 14.22% and its net profit grew at a 4-Year CAGR of 26.41%. Its net profit margin has also grown over a period of five years.

Key Metrics

Particulars	Values	Particulars	Values
Face Value (₹)	10	Dividend Yield (%)	6.42
Market Cap (₹ in Cr)	62,956.58	ROE (%)	17.97
EPS (₹)	12.83	Promoter’s Holdings (%)	51.91
Stock P/E (TTM)	7.46	Current Ratio	1.08
Industry P/E	12	Debt to Equity Ratio	0.12

GAIL is a large-cap company with a market capitalization of ₹ 62,956.58 crores. Its shares have a face value of ₹ 10 and were trading at ₹ 95 levels at the time of writing this article. They were trading at a price-to-earnings ratio (P/E) of 7.46, which is lower than the industry P/E of 12, indicating that the stock might be undervalued as compared to its peers.

The company has earnings per share (EPS) of ₹ 12.83 and a high dividend yield of 6.42%. However, it has a low return on equity of 17.97%. It has a current ratio of 1.08. Further, it has an ideal debt-to-equity ratio of 0.12.

Currently, its promoters hold a 51.91% stake in it, followed by domestic institutional investors (DIIs) at 23.88%, foreign institutional investors (FIIs) at 18.04%, and retail investors at 6.17%.

Top Utility Stocks in India #5 – NHPC

NHPC is a Miniratna category I public sector utility and is the largest hydropower development organization in India. It primarily generates and sells power in bulk to various power utilities. It has diversified in the field of Solar & Wind energy development. The company had a total installed capacity of 7097.20 MW as of 31st January 2022. NHPC’s hydro share of 6971.20 MW comes to about 14.88% of the country’s total installed Hydro capacity of 46850.18 MW.

Revenue & Profit

Year	2018	2019	2020	2021	2022
Revenue (in Crores)	₹7,755.43	₹8,982.87	₹10,007.81	₹9,647.89	₹9,188.78
Profit (in Crores)	₹2,784.78	₹2,830.55	₹3,341.87	₹3,605.37	₹3,775.72
Net Profit Margin	35.91 %	31.51 %	33.39 %	37.37 %	41.09 %

The company’s revenue and profit show an increasing trend. Its revenue grew at a 4-year CAGR of 4.33% and its net profit grew at a 4-Year CAGR of 8.81%. Its net profit margin has also grown over a period of five years.

Key Metrics

Particulars	Values	Particulars	Values
Face Value (₹)	10	Dividend Yield (%)	6.51
Market Cap (₹ in Cr)	40,180.14	ROE (%)	14.38
EPS (₹)	3.83	Promoter’s Holdings (%)	70.95
Stock P/E (TTM)	10.45	Current Ratio	1.02
Industry P/E	19	Debt to Equity Ratio	0.96

NHPC is a large-cap company with a market capitalization of ₹ 40,180.14 crores. Its shares have a face value of ₹ 10 and were trading at ₹ 39 levels at the time of writing this article. They were trading at a price-to-earnings ratio (P/E) of 10.45, which is lower than the industry P/E of 19, indicating that the stock might be undervalued as compared to its peers.

The company has earnings per share (EPS) of ₹ 3.83 and a high dividend yield of 6.51%. It has a return on equity of 14.38 and a current ratio of 1.02. Further, it has an ideal debt-to-equity ratio of 0.96.

Currently, its promoters hold a 70.95% stake in it, followed by foreign institutional investors (FIIs) at 6.82%, domestic institutional investors (DIIs) at 16.17%, and retail investors at 6.06%.

In Closing

In this article, we took a look at some of the top utility stocks in India. These companies are capital-intensive and financially strong, making them an entry barrier for new players. This is one of the moats that these companies enjoy. They usually work under the aegis of the government. However, we saw that Tata Power, a private company from one of the largest conglomerates in India is also a major player in the utility sector. That’s all for this article, folks. We hope to see you around and happy investing until next time.

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