According to reports from Business Standard and The Financial Express, Ambit Capital believes India's battery energy storage system (BESS) market is entering a reset phase due to multiple challenges facing utilities. The brokerage cites rising landed BESS prices, aggressive bidding, execution delays, and uncertainty about battery life-cycle performance as key factors limiting utility company growth prospects. In the utility space, several developers have bid aggressively without properly calculating battery degradation, life cycle, auxiliary consumption, and lifecycle management requirements, as BESS economics are considerably more complex than solar. Now, the Central Electricity Authority (CEA) is mulling introducing stricter technical qualification criteria for future tenders.
As reported by Business Standard and The Financial Express, Ambit Capital has retained a positive stance only on NTPC, assigning a 'Buy' rating with a target price of ₹410, implying an upside of 16% from Tuesday's close of ₹348.15. The brokerage assigns ₹312 per share to NTPC's thermal power business, with the remaining value coming from renewable energy, nuclear power, pumped storage projects, coal mining, flue gas desulphurisation and other businesses. Analysts noted that "NTPC remains our only BUY, though the company will need to win new orders; failing to do so may lead it into a value-trap zone." The positive view comes with a warning on the need for fresh project wins, as power demand growth has slowed due to rooftop solar installations, weaker irrigation demand, softer industrial activity and benign weather.
According to Business Standard and The Financial Express, BESS prices have risen to $80/kWh, which is $15/kWh higher than a few months ago, causing a halt in procurement activity. The industry now expects 5 gigawatt-hours of incremental installed capacity and a cumulative installed capacity of 13-15 GWh in FY27, which is well below the Central Electricity Authority's (CEA) target of 23 GWh. This shortfall reflects the challenging market conditions facing utility developers, with the Centre considering an additional 40 GWh of viability gap funding (VGF) support with higher domestic-content requirements (40-50%). Adani has commissioned 3.37 gigawatt-hours of battery energy storage systems at Khavda, accounting for a significant part of India's installed base of about 8.5 gigawatt-hours, while another 11 gigawatt-hours is under development but commissioning is more likely in financial year 2028.
As reported by Business Standard and The Financial Express, Ambit Capital maintains cautious stances on several power and renewable energy players, with 'Sell' ratings on Tata Power (target ₹405), Torrent Power (₹1,255), Power Grid Corporation (₹290), NTPC Green Energy (₹85), JSW Energy (₹525), and Premier Energies (₹945). The brokerage believes most utility stocks offer limited upside at current valuations amid rising BESS prices, aggressive bidding, execution challenges and uncertainty over battery lifecycle performance. However, Ambit sees the possibility of a recovery in power demand after a weak financial year 2026, which could revive renewable energy and transmission tendering and improve order pipelines. This recovery could restore distribution company urgency, revive renewable energy and transmission tendering, and improve order pipelines, being tactically positive for utilities, though most valuations still leave limited room for fundamental upside.
According to Business Standard, most BESS projects are part of Firm and Dispatchable Renewable Energy (FDRE) projects, which will be commissioned in financial year 2028. The industry has proposed to remove the ₹10/kWh exchange price cap to improve merchant economics, while some projects are earning close to ₹20/kWh under GRID India's TRAS procurement. However, most participants do not expect such merchant arbitrage to be sustainable, with long-term project returns depending on multiple stacked revenue streams. The capital cost for BESS for FDRE is lower than that for standalone stations, as BESS shares pooling substations etc., with solar and wind in FDRE projects, though the scenario is different for standalone projects.
According to The Financial Express, Ambit Capital has flagged delays in domestic battery cell manufacturing under the production-linked incentive programme. Reliance has sought a two-year extension, Ola has requested changes to timelines and capacity, while Exide has commissioned capacity but commercial shipments remain limited. The brokerage attributes these delays largely to technology-transfer challenges, a steep manufacturing learning curve and weaker-than-expected customer offtake. Industry participants told Ambit that 10 gigawatt-hours of capacity may be insufficient to achieve attractive economics and around 20 gigawatt-hours could be required for meaningful scale. The government has reserved the remaining 10 gigawatt-hours under the existing production-linked incentive programme exclusively for battery energy storage systems and is evaluating an additional ₹12,000 crore incentive programme that could extend support to upstream components.
