Coal India, CESC and other power stocks: JM Financial analyst explains impact of Bengal elections

Domestic brokerage firm JM Financial sees the West Bengal election outcome as a governance boost for the power sector, with potential headwinds for CESC and incremental positives for Coal India and other central utilities.

Bengal elections: Why it matters for power stocks

West Bengal has historically been central to India’s power sector, with early industrialisation, large coal reserves and a pioneering role in private power supply. The state hosts India’s first thermal power plant, the country’s first rooftop grid‑connected solar plant, one of Asia’s first utility‑scale solar projects and the Purulia pumped hydro project, which JM Financial’s Sudhanshu Bansal describes as “the best performing” in its category. The brokerage notes that the recent assembly election results, which point to a BJP government in the state, “may provide a fillip to reforms in the sector, considering the party’s track record both at the Centre and in states where it is in power.”

The analyst argues that a change in administration could accelerate long‑pending reforms in distribution and support central sector initiatives in coal and power, raising the likelihood of key legislative changes such as the Electricity (Amendment) Bill 2025. JM Financial flags competition in power distribution, support for Coal India’s West Bengal projects, and the possible stock market listing of Damodar Valley Corporation (DVC) as the main themes for investors to track.

CESC: Tariff politics and distribution competition

JM Financial terms the election outcome a “potential negative for CESC,” citing years of public discontent over power bills in Kolkata and across West Bengal. The report points to “disputes around hikes, high fuel adjustment charges, steep fixed charges, allegations of non‑transparent meter readings and high‑handedness in billing,” which have repeatedly triggered protests and political confrontation.

Under Suvendu Adhikari, described as “one of the contenders for Chief Minister,” the BJP organised protests in July 2024 against “high power tariffs, alleging that CESC’s monopoly, combined with high costs, was causing a massive financial strain on consumers.”

Against this backdrop, JM Financial believes a BJP‑led government “could take steps to allay the public’s concerns on high tariffs and other operations.”

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One key risk it highlights is the prospect of “parallel licensing post the passing of Electricity (Amendment) Bill 2025,” which would open up Kolkata’s distribution space to competitors and directly challenge CESC’s entrenched franchise.

The brokerage also flags regulatory scrutiny on the generation side, noting that the Central Electricity Regulatory Commission has already rejected CESC’s plea to approve a tariff of ₹3.81/kWh for a 300 MW wind‑solar hybrid project under subsidiary Purvah Green Power, “raising concerns about transparency.”

Coal India: Governance push seen aiding WB projects

On Coal India, JM Financial’s tone is markedly more positive, arguing that a governance‑focused administration in Kolkata can help unlock value from the miner’s West Bengal portfolio. Coal India operates in the state primarily through Eastern Coalfields (ECL), which accounts for “less than 10% of CIL’s production (52 MT out of CIL’s total output of 768 MT),” but has been saddled with legacy issues.

As per the brokerage’s channel checks, ECL faces “the need to modernise legacy underground mines, manage illegal mining and coal theft and navigate evacuation constraints,” all of which have weighed on productivity and project execution.

JM Financial points to Coal India’s planned surface coal gasification project at the Dankuni Coal Complex, which aims to convert coal into methanol, as a key beneficiary of improved law and order and faster clearances.

“Like BJP governments in other states, a major focus of the new state government is likely to be on law and order, which may facilitate faster execution of various new projects of Coal India including coal gasification,” the report says. The brokerage suggests that a smoother operating environment in West Bengal can support the miner’s growth and diversification agenda, even though the state currently contributes a modest share of group output.

DVC, central PSUs and reform momentum

Beyond Coal India and CESC, JM Financial expects the political reset in West Bengal to strengthen the hand of central PSUs with large footprints in the state. It highlights Damodar Valley Corporation, a central PSU under the Ministry of Power with equity held by the Centre (35%), Bihar (34%) and West Bengal (31%), as a prime candidate.

DVC operates 6,540 MW of thermal capacity and 147 MW of hydro power, and has a contract demand of 3,393 MVA across Jharkhand and West Bengal. The company reported revenue of ₹239 billion in FY25, EBITDA of ₹55 billion and net profit of ₹12 billion, according to the report.

“The Government of India has been discussing the listing of DVC, which was facing challenges due to strained relations with the WB government. We expect this to be expedited,” JM Financial writes, implying that a friendlier state regime could accelerate divestment and capital‑market value discovery for the utility.

The analyst also notes that a BJP government in West Bengal improves the odds of broader sectoral reform, especially when combined with a debutant party forming the government in Tamil Nadu, another large and politically influential state.

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Electricity Bill 2025: Higher passage odds, sector‑wide impact

At the national level, JM Financial sees the West Bengal outcome nudging the balance in favour of the Draft Electricity (Amendment) Bill, 2025, which is aimed at overhauling India’s power distribution framework. The Bill proposes “sharing of distribution network infrastructure (carriage), parallel licensing to increase competition, and mandated cost‑reflective tariffs,” a combination that directly targets the chronic financial losses of state discoms.

The brokerage points out that accumulated discom losses had exceeded ₹6.9 trillion by late 2025 and argues that aligning industrial tariffs more closely with actual costs is essential “to boost competitiveness.”

“With BJP government in WB and first-time government of a debutant party in Tamil Nadu (both large Indian states), we expect higher probability of its passage in upcoming monsoon session,” the report states.

For listed power names, this could mean heightened competitive risk for incumbents like CESC in their home markets, but also better payment discipline and tariff visibility for generators such as Coal India’s key customers and central PSUs like NTPC and DVC. JM Financial frames the Bengal verdict as a catalyst that “adds governance tailwinds for the power sector,” potentially reshaping the risk‑reward profile of Coal India, CESC and other power‑linked stocks as the reform cycle gathers pace.

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