The deficient monsoon has put the focus on some unlikely winners. As electricity demand continues to rise faster than expected and power plants are  running harder than ever before, power prices are in focus. 

As a result of the demand and price projections heading higher, the global investment bank Jefferies remains constructive on the sector and has identified JSW Energy, NTPC and Adani Energy Solutions among its top picks. Its wider power-stock coverage points to upside potential of up to 54% across the names it tracks.

Power sector: Jefferies ratings, target prices and upside potential

Adani Energy Solutions has a Buy rating and the highest target-based upside in the list at 54%, with Jefferies setting a target price of Rs 2,060.

According to the report, Jefferies has a Buy rating on NTPC, with a target price of Rs 425, implying an upside potential of 30%. 

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Adani Power also carries a Buy rating, with a target price of Rs 270, indicating 33% upside. Power Grid has a Buy rating and a target price of Rs 315, translating into 17% upside. 

Adani Green Energy has a Buy rating with a target price of Rs 1,695, implying 31% upside. 

JSW Energy also carries a Buy rating, with a target price of Rs 720, implying 42% upside. Torrent Power has a Buy rating and a target price of Rs 1,780, also indicating 42% upside.

Tata Power, however, has an Underperform rating, with a target price of Rs 335, indicating a potential downside of 9%.

What is changing in India’s power sector? Jefferies outlines the evolving dynamics  –

Power demand is moving higher

According to the  report, electricity demand has been rising faster than its earlier expectations. Month-to-date power demand is up 15% year-on-year, while year-to-date demand has increased 10%.

Jefferies had earlier estimated around 7% year-on-year growth for the FY26-27.

One reason is higher cooling demand. The second quarter of FY26-27 has seen below-average rainfall, which has increased the need for cooling in several parts of the country.

The impact is also visible in electricity prices.

As per the report, “Merchant power prices are up 2.0x YoY in Sept 2026 to date.”

Coal shortage adds another layer

Coal inventories at thermal power plants have come under pressure. According to the report, coal stocks at thermal plants have fallen to around seven days.

“40%+ of thermal plants have less than 25% of the required coal inventory,” the report noted

This has prompted the Ministry of Power to take emergency measures.

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Why JSW Energy is in focus

Jefferies continues to prefer JSW Energy at current levels. The brokerage expects the company’s execution ramp-up to support earnings growth over the coming years.

As new capacity comes on stream and projects move forward, the company can potentially increase its generation and earnings base.

Jefferies said, “FY26-29E earnings trajectory for utilities to remain intact.” The brokerage also expects stock returns to be supported by earnings growth even without assuming a further valuation re-rating.

NTPC gets a similar earnings-growth argument

NTPC is another stock that Jefferies prefers at current levels. The company has a large thermal generation base, while also expanding its presence in renewable energy and other power-related businesses.

For Jefferies, the key factor is execution. The report noted, “we prefer JSW Energy and NTPC at current levels, as execution ramp-up contributes to earnings growth and leads to stock returns even with no re-rating.”

Adani Energy Solutions has a different trigger

The third top pick is Adani Energy Solutions. Unlike generation-focused companies, the company’s key exposure is to power transmission and distribution infrastructure.

Jefferies expects a visible medium-term growth trajectory for the company’s EBITDA.

“Adani Energy Solutions is also among our top picks as it is locked in for 20%+ visible medium-term EBITDA CAGR, which should drive upside on delivery,” added Jefferies in its report.

What investors need to watch

Higher demand, tighter thermal coal inventories, stronger merchant prices and fresh capacity requirements are all becoming important factors.

At the same time, the emergency measures show how quickly supply can become a concern when demand rises.

Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This should not be construed as an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor before making any investment decisions.