Not Adani, Not Tata: 2 midcap power stocks with 40%+ margins and solid dividend yield

Powering India’s energy demands 1MW at a time

While market heavyweights like Adani and Tata Power often steal all the headlines and eyeballs, a few stocks silently but impressively deliver what even the bigwigs couldn’t.

So, as India’s power demand keeps growing, smart investors aren’t just chasing scale. They are also chasing yield. For investors tired of high-octane volatility, two midcap power generation players are proving that you don’t need to be a conglomerate to deliver massive shareholder value.

Mind you, these aren’t just speculative bets but could be called cash cows. Both companies are currently boasting operating profit margins (OPM) of over 40%, a feat that even many Nifty 50 giants struggle to achieve consistently. In a volatile market, these firms are using their lean operations to turn every unit of electricity generated into a healthy surplus for their investors.

These power generation companies are riding the massive wave of India’s energy transition. For investors looking for a way to beat the flat market while staying invested in the country’s core infrastructure story, these two dividend champions deserve a spot on your FY27 watchlist.

Nava Ltd: The debt-slashed power engine with 46% margins

Established in 1972, Nava Bharat Ventures Ltd is a multinational company, operating in India, Southeast Asia and Africa with businesses in metals manufacturing, power, mining, agribusiness and healthcare.

With a market cap of Rs 15,629 cr as on 17th March 2026, 75% of the company’s revenues come from the energy sector.

The company has reduced its debt from around Rs 3,500 cr 5 years ago to the current Rs 1,596 cr, reducing the load of heavy interest payments. Also, the company has a current ROCE (Return on capital Employed) of 17%, while the industry median is just 7%. In simple words, for every Rs 100 used as capital, Nava generates a profit of Rs 17, while peers manage only about Rs 7.

Thanks to the debt reduction and the high ROCE, the company is able to share the wins with its investors by means of dividends. The company’s current dividend yield is 1.5%, while the industry median is a flat 0.

Let us look at the financials of the company and try to find out if it is worthy of your FY27 watchlist.

Can Nava sustain the 1,400% gains?

Nava Ltd isn’t just surviving the energy transition; it is thriving by being more efficient than almost anyone else in the room. When you strip away the market noise, you are left with a company that has slashed its debt by half while maintaining profit margins that would make a blue-chip giant jealous.

At the current valuation, the market is still pricing this growth engine at a massive discount to its peers, effectively ignoring a five-year track record of 1,400% returns.

In the latest investor presentation from February 2026, the management said that the FY27 capex spending will be largely tied to ongoing commitments (Phase 2 thermal, solar, avocado, sugar). Management also acknowledged additional projects in the pipeline for FY28 but said it would be too early to discuss.

SJVN Ltd – The Navratna delivering 2.2% yield

Incorporated in 1988, SJVN (Satluj Jal Vidyut Nigam) is engaged in the business of electricity generation and providing consultancy for hydro-power projects.

With a market cap of Rs 27,269 cr as on 17^th March 2026, the company was awarded Navaratna status in August 2024.

What is interesting about the company is its position in India’s renewable energy ambitions. The company has a total renewable energy capacity of 494 MW including the Khirvire wind project of 47.6 MW, the Sadla solar project of 50 MW, the Charanka solar project of 5.6 MW, 390 MW under SJVN Green Energy Ltd (SGEL), and a grid-connected solar plant of 1.3 MW. It is constructing 12 solar projects with a total capacity of 2,058 MW.

Just like Nava above, SJVN also has a solid dividend yield of 2.2% in a flat market.

Looking at the financials, the company’s sales have logged a compounded growth of 3% from Rs 2,703 cr in FY20 to Rs 3,072 cr in FY25. And in the 3 quarters between April 2025 to December 2025, the company has recorded sales of Rs 3,031 cr already.

The solar pivot: Can a 2,000 MW pipeline fuel a turnaround?

The company’s share is trading at a current PE of 43x while the industry median when compared to peers is 30x. The 10-year median PE for SJVN is 9x while that of the industry is 24x for the same period.

SJVN stands out as a rare utility giant that commands a staggering 75% profit margin, a level of efficiency that is almost unheard of in the power sector. While a bumpy road for net profits has led to a 60% correction from its peak, the company’s transition into a renewable energy with a 2,000 MW solar pipeline hints at better times.

At current valuations, you are essentially getting a Navratna growth engine at a bargain price, supported by a 2.2% dividend yield that pays you to wait for the turnaround. For investors looking to capitalize on India’s renewable energy push without paying the conglomerate premium, SJVN deserves a look at.

Currents and currency: The quiet power of the midcap yield

In a market impressed by the high voltage promises of industrial giants, the quiet dominance of Nava Ltd and SJVN suggests that, in the power sector, boring can be beautiful. These midcap players have carved out a lucrative niche by prioritizing operational discipline over aggressive, expansion. With operating margins exceeding 40% and in SJVN’s case, touching a staggering 75%, they are demonstrating a rare ability to convert India’s high power demand into consistent shareholder liquidity.

While Nava remains an undervalued cash engine trading at a significant discount to its peers, SJVN offers a contrarian play on a renewable turnaround, bolstered by a 2.2% yield that provides a comfortable cushion against volatility. As the energy transition accelerates, the real question is no longer which conglomerate will build the most capacity, but which lean operators will prove most adept at harvesting the profits.

It will be a fascinating ride to watch how these two stocks fare in the time to come. Add them to a watchlist and keep an eye on them if you don’t want to miss out on any big movements.

Note: We have relied on data from www.Screener.in and www.trendlyne.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.

The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.

Suhel Khan has been a passionate follower of the markets for over a decade. During this period, He was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India.

Disclosure: The writer and his dependents do not hold the stocks discussed in this article.

The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.

FY	FY20	FY21	FY22	FY23	FY24	FY25
Net Profits/Rs Cr	1,567	1,646	990	1,359	911	818