India’s rapidly expanding data centre industry is emerging as a fresh long-term demand driver for the power sector. Across recent reports and expert analysis, NTPC, JSW Energy, Tata Power and Torrent Power have emerged as key listed companies best placed to benefit from the structural increase in electricity demand. However, analysts caution that execution, leverage and valuation will determine which stocks ultimately outperform.
How data centre growth is shaping power demand
Most experts predict a significant surge in power demand as a result of the growing data centres across the country.
JM Financial Ltd. expects India’s data centre power demand to nearly triple by 2030, rising from around 2.5 GW currently to 7-8 GW, with installed data centre capacity reaching 8.5-9.5 GW. The brokerage estimates data centres could account for 7-8% of incremental peak power demand by the end of the decade, with utility grid power expected to remain the primary source of electricity.
“India’s data centre demand has scaled up from 500MW-1GW in FY19 to 2.5GW presently, and projections point towards 7-8GW by 2030,” JM Financial said.
Equirus also believes India’s power demand has entered a structural upcycle, with electricity demand expected to grow 6-7% annually after expanding at about 7.3% CAGR between FY21 and FY25. The brokerage expects thermal power, renewable energy and battery energy storage systems to scale simultaneously, requiring nearly Rs 50 lakh crore of investment by FY32.
# Data centre demand becoming a structural growth driver
According to JM Financial, artificial intelligence workloads are increasing rack density and electricity consumption, making data centres one of the fastest-growing sources of incremental power demand in India.
The brokerage said utility grid power remains the only commercially viable source for large-scale data centres, while solar is the only renewable energy source with meaningful deployment across data centre campuses.
“Utility grid power remains the primary and only reliable source for commercial-scale data centres in India,” JM Financial said.
JM Financial added that battery energy storage systems cannot independently sustain continuous data centre operations because they provide only short-duration backup, leaving diesel generators as the primary emergency power source.
1. NTPC stands out for its capacity pipeline and valuations
Among the key stocks that are in focus and are seen as beneficiaries of the projected power demand include Maharatna PSU, NTPC.
Equirus ranks NTPC as its preferred utility because of its regulated earnings model, expanding generation pipeline and attractive valuation.
The brokerage said NTPC has 90.9 GW of operational capacity, 34.2 GW under construction and additional growth opportunities across renewable energy, nuclear power, pumped storage and battery energy storage systems.
“NTPC combines the sector’s lowest-risk regulated earnings model with the deepest growth pipeline,” Equirus said.
Equirus maintained its ‘Long’ rating on NTPC with a target price of Rs 432, adding that the company offers the highest dividend yield within its coverage universe.
Axis Securities expects NTPC to report stronger Q1FY27 revenue and earnings before interest, tax, depreciation and amortisation, supported by capacity additions and higher generation. The brokerage noted that NTPC added 1,026 MW of renewable energy capacity during the quarter while consolidated installed capacity increased to 90,904 MW.
A quick look at the NTPC share price movement indicates that the stock has declined over 12% in last 3 months. It’s return has been flat on a 1-year period.It has a PE ratio of 12.28x and the EV/EBITDA raio stands at 10.87x
2. JSW Energy: Order book offers earnings visibility
Equirus believes JSW Energy has one of the strongest growth profiles among private utilities because much of its future capacity has already been secured.
The brokerage said the company has built a 32.1 GW locked-in portfolio, already exceeding its FY30 capacity target through acquisitions and renewable energy expansion.
“JSW Energy has built India’s most differentiated private power platform, with a 32.1GW locked-in portfolio that already exceeds its 30GW FY30 target,” Equirus said.
Equirus initiated coverage with a ‘Long’ rating and a target price of Rs 653, expecting revenue, earnings before interest, tax, depreciation and amortisation and profit after tax to grow at compound annual rates of 19%, 23% and 24%, respectively, between FY26 and FY30.
Axis Securities expects JSW Energy’s Q1FY27 generation to recover sequentially as new wind, solar and hydro capacity comes on stream, although year-on-year performance may remain affected by lower plant load factors across some thermal and hydro assets.
A quick look at the JSW Energy share price. JSW Energy stock was trading at Rs 541.40 on the NSE at the time of writing this report 17 July. During the day’s trading session, the stock declined by 0.37%. Over the past five trading days, it has fallen by 1.65%, indicating short-term weakness. However, on a longer-term basis, the stock has delivered positive returns, gaining 11.32% over the past six months.
3. Tata Power is building the grid for the AI and data centre era
Tata Power is positioning itself at the heart of India’s data centre-driven power infrastructure build-out through investments across generation, transmission, distribution and clean energy. According to the company’s FY26 Integrated Report, around 62% of its capital expenditure over the past five years, or nearly Rs 33,000 crore, has been allocated towards clean energy and grid transformation, with management highlighting that AI-led data centres will require significant investments in transmission networks, storage and flexible generation to ensure reliable 24×7 power supply.
Motilal Oswal also sees multiple long-term growth catalysts for the company, including its planned entry into the nuclear power sector through a partnership with NPCIL, noting that nuclear power is well suited to meet the round-the-clock, low-carbon electricity needs of AI-driven data centres.
The brokerage expects Tata Power’s profit after tax to grow around 34% year-on-year in FY27, supported by lower losses at Mundra, strong profitability in its solar business, commissioning of 2-2.5 GW of renewable energy capacity and higher transmission investments. It has reiterated a ‘Buy’ rating on the stock with a target price of Rs 488.
A quick look at the Tata Power share price. A quick look at the Tata Power share price. Tata Power stock was trading at Rs 376.80 on the NSE at the time of writing this report on 17 July. Over the past month, the stock has declined by 6.15%. However, it has gained 3.74% over the past six months. On a year-to-date basis, the stock is down 1.32%, while over the past one year, it has fallen by 8.86%, reflecting a mixed performance despite moderate gains over the six-month period.
4. Torrent Power is entering its biggest investment cycle
Equirus said Torrent Power Ltd. combines one of India’s strongest regulated electricity distribution businesses with its largest investment programme.
The brokerage expects stable distribution cash flows to support Rs 70,000 crore to Rs 80,000 crore of investments across thermal power, pumped storage and renewable energy projects.
“Torrent Power combines one of India’s strongest regulated distribution franchises with its largest-ever investment cycle,” Equirus said.
Equirus initiated coverage with an ‘Add’ rating and a target price of Rs 1,515, while noting that execution risks and higher leverage could moderate near-term returns despite healthy long-term growth prospects.
A quick look at the Torrent Power share price. Torrent Power stock was trading at Rs 1,406.80 on the NSE at the time of writing this report on 17 July. During the day’s trading session, the stock declined by 0.98%. However, it has gained 5.19% over the past six months and is up 6.01% on a year-to-date basis. Over the past one year, the stock has advanced 1.52%, while it has delivered a robust return of 192.78% over the last five years, highlighting its strong long-term performance.
# Battery storage execution remains a key monitorable
While rising electricity demand strengthens the long-term outlook for utilities, brokerages say battery energy storage systems remain an important execution challenge.
Ambit Capital said landed battery energy storage system prices have risen to around $80 per kilowatt-hour, slowing procurement and reducing expected installations in FY27 to around 5 GWh, well below the Central Electricity Authority’s target.
The brokerage warned that aggressive bidding, project execution challenges and slower domestic manufacturing continue to weigh on the battery storage market.
“Several developers bid aggressively without fully appreciating battery degradation, cycle life, auxiliary consumption and lifecycle management requirements,” Ambit Capital said.
Ambit Capital added that most battery energy storage projects linked to firm anddispatchable renewable energy projects are now expected to be commissioned in FY28 rather than FY27.
Conclusion
Brokerages broadly agree that the next phase of India’s power demand will increasingly be driven by data centres, artificial intelligence infrastructure and continued renewable energy expansion. JM Financial expects data centre demand alone to nearly triple by 2030, while Equirus believes the sector has entered a structurally stronger investment cycle backed by rising electricity demand, improved fuel security and disciplined capacity expansion.
Against this backdrop, NTPC, JSW Energy, Torrent Power and Tata Power are among the key stocks to watch keeping in mind on account of various factors like distribution business, order pipeline and expanding investment pipeline.
Disclaimer: The stock recommendations, ratings, and target prices mentioned in this article are sourced from independent brokerage reports and do not constitute personal financial advice or an offer or solicitation by this publication. Equity investments are subject to market risks, and previous performance does not guarantee future returns. Readers are strongly advised to verify the information and consult a SEBI-registered financial advisor before making any investment decisions.
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