Power demand in India has had a slower start than was expected, but power stocks have seen sharp price action in recent times. International brokerage house Jefferies believes a few utility companies still stand out, pointing to NTPC and JSW Energy. In February 2026, power demand grew just 1% compared to a year ago.
Demand between April 2025 and February 2026 has also grown only 1%, which Jefferies attributes largely to above-average monsoons dampening electricity consumption. The brokerage noted that its 2% full-year demand growth estimate now hinges on a sharp 14% rise in March, although early data shows generation growth remains modest so far.
NTPC, JSW Energy lead ‘Buy’ recommendations
Despite the near-term softness in demand, Jefferies said earnings growth for the sector remains intact and prefers NTPC and JSW Energy at current levels. The brokerage expects execution ramp-up and capacity additions to drive double-digit earnings growth over the medium term, supporting stock returns even without a broader sector re-rating.
NTPC has been assigned a ‘Buy’ rating with a target price of Rs 440, implying a potential upside of about 14%. Jefferies believes NTPC’s earnings growth should remain steady, supported by ongoing capacity additions and consistent operations, which could also help valuations improve over time as visibility strengthens.
It is similarly positive on JSW Energy, maintaining a ‘Buy’ rating with a target price of Rs 660, which implies a potential upside of about 29% from current levels. The brokerage expects the company’s earnings to benefit from execution-led growth as new projects come online, with financial projections indicating a sharp rise in EBITDA and profits over the next few years.
Other utility stocks on the radar
Jefferies has also maintained ‘Buy’ ratings on Adani Power, Power Grid, Adani Green Energy, Adani Energy Solutions and Torrent Power. While these companies continue to benefit from sectoral tailwinds, the brokerage sees relatively stronger upside and earnings visibility in its top picks.
At the same time, it remains cautious on Tata Power and IEX, where current valuations appear less attractive, limiting near-term upside potential.
Weak demand hits renewable activity
The report highlighted that the demand slowdown has already begun to affect renewable energy activity. Renewable awards stood at 3.3 GW in February and 0.6 GW so far in March, while more than 40 GW of power purchase agreements remain unsigned as state electricity boards delay commitments amid weak demand conditions.
Jefferies noted that strong demand growth of about 9% CAGR between FY22 and FY24 had driven a surge in renewable tenders, but the current slowdown could delay the expected demand recovery cycle.
Discom finances improve after years of losses
One structural positive for the sector is the improvement in the financial health of power distribution companies. Discoms reported a profit of Rs 0.03 per unit in FY25 compared with a loss of Rs 0.16 per unit in FY24, marking a turnaround after at least a decade of losses.
Losses at state-run utilities have also narrowed significantly, supported by better billing efficiency, higher subsidies and regulatory reforms such as the RDSS scheme and late payment surcharge rules. These measures have helped reduce aggregate technical and commercial losses and improve cash flows across the sector.
Demand recovery key for re-rating
Jefferies said that while earnings growth for utilities remains intact over FY25–FY28, a sustained recovery in power demand will be critical for any sector re-rating. Rising temperatures may provide some near-term support, but a broader demand revival will be needed to drive the next leg of growth.
Disclaimer: This article provides factual analysis only and is not, and 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.