India has experienced an extraordinary rise in temperature, due to which higher than normal power demand is expected in the upcoming summer season. Although India depends on coal for three-quarters of its electricity generation, it is increasing renewable energy production at a record pace.
This comes amid growing concerns over disruptions in LNG supplies due to the Iran-Israeli-US war.
The temperature increases
The World Meteorological Organization (WMO) has warned that there is a widespread indication of above-average land surface temperatures during the March-May period due to varying climatic conditions.
The India Meteorological Department (IMD) has issued a heatwave warning for Friday and Saturday in different areas of Mumbai. The city has witnessed heatwave conditions for three days in March so far.
According to the India Meteorological Department (IMD), the temperature in Delhi is likely to rise to 36 degrees Celsius today, which is above normal levels.
Heatwave conditions persist in other parts of the country as well, the Meteorological Department has predicted heatwave conditions in Gujarat and Madhya Pradesh in the next few days. Gujarat’s Rajkot recorded 42 degrees Celsius on Tuesday, the highest so far this year.
Also read | Silver ETF sees first outflow in 26 months. Profit Booking or Cautionary Approach?
The government says India has sufficient supply of coal
Amid rising temperatures, power demand is expected to peak. Additionally, the Indian government said earlier this week that the country has sufficient coal supplies to meet an expected surge in demand during the summer months.
The Coal Ministry said in a statement on Wednesday that production and supply of coal in the fiscal year ending March 31 exceeded consumption.
Earlier this week, JM Financial said Coal India’s long-term demand outlook remains intact and the company is targeting 5% annual growth over the medium term.
“Both prices (FSA and e-auction) have stabilized after the recent run-up and are expected to remain at the same level barring short-term spikes due to supply constraints. Initial trial of substituting imported coal (40-45 MTPA requirement) with domestic coal is encouraging. The company is trying to increase non-power. (Eastern India) and cement sales are expanding rapidly but stagnant around 300-320 MT by FY29. It will be done,” he said.
Jefferies recently raised its target price on Coal India to Rs. 485, argued that the state-run miner’s valuation remains reasonable between the earnings outlook and healthy dividend yield.
Shares of Coal India rose more than 1% to Rs. A fresh 52-week high of 476 was reached, erasing all gains and slipping into the red. The stock is up more than 19% so far this year.
(with inputs from agencies)
(disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. (These do not represent the views of The Economic Times)
As a trusted and reliable news source
Add now!
(You can now subscribe to our ETMarkets WhatsApp channel)