Synopsis : India’s power sector is seeing stronger demand, higher merchant electricity prices and a pick-up in renewable energy awards. Brokerage house Jefferies remains positive on the sector and sees further room for several power stocks to rise. The brokerage’s top picks are Adani Energy Solutions (AESL), JSW Energy and NTPC. Across its coverage, the highest target-based upside is around 44.9%.
What is driving Jefferies’ preference and which other power stocks are on its ‘Buy’ list? Let’s take a look.
Jefferies’ top picks: AESL, JSW Energy and NTPC
Jefferies has identified Adani Energy Solutions, JSW Energy and NTPC as its preferred stocks in the sector.
Among the three, Adani Energy Solutions has the highest potential upside. The brokerage has a ‘Buy’ rating and a target price of Rs 2,060, implying around 44.9% upside.
For JSW Energy, Jefferies has retained its ‘Buy’ rating with a Rs 720 target price, suggesting around 34.7% upside. NTPC also carries a ‘Buy’ rating, with a target of Rs 425, implying around 27.5% upside.
Jefferies said, “Top picks – AESL, JSW Energy and NTPC.”
The brokerage expects earnings growth for these utilities to remain intact as demand improves and new capacity starts contributing.
Power demand remains strong
According to the Jefferies report, electricity demand increased 13% year-on-year in August 2026, compared with 4% growth in August 2025.
Demand between April and August 2026 was also up 9% year-on-year. Jefferies continues to maintain its estimate of around 7% growth in power demand for FY27.
Regional demand was also firm. Power consumption in the southern region increased 20% year-on-year in August. Peak demand across India rose 12% to 258 gigawatts (GW).
The brokerage said, “August power demand in South region rose 20% YoY.”
Thermal power generation is also showing strength. The all-India thermal plant load factor, which indicates how much of the available generation capacity is being used, stood at 67% in August, compared with 62% a year earlier.
Merchant prices add another earnings trigger
Higher electricity prices in the merchant market are another factor supporting Jefferies’ view.
Average merchant power prices in the second quarter of FY27 so far have risen 48% year-on-year and 14% quarter-on-quarter to Rs 5.8 per unit. Prices touched Rs 7.5 per unit in the first week of September.
Jefferies said, “Merchant power prices are up 2.1x YoY in September 2026 till date.”
The brokerage expects lower-than-average rainfall linked to El Niño could further support power demand and merchant prices.
Renewable energy awards pick up
The renewable energy pipeline is also showing signs of improvement. During FY27 through August, around 5.2 GW of renewable energy projects were awarded, compared with 3.6 GW in the corresponding period.
Jefferies expects stronger electricity demand to support new renewable power purchase agreements over time. It also expects the current slowdown in power demand to push some of the anticipated demand growth into later years.
Other Buy-rated stocks
Beyond its three preferred picks, Jefferies also has ‘Buy’ ratings on Adani Green Energy, Adani Power and Torrent Power.
Adani Green Energy has a Rs 1,695 target, implying around 29% upside. Adani Power has a Rs 270 target, indicating around 25.9% upside, while Torrent Power has a Rs 1,780 target, implying around 36.5% upside.
On the other side, Jefferies has an ‘Underperform’ rating on Indian Energy Exchange (IEX) with a Rs 100 target, implying around 15.3% downside. Tata Power also carries an ‘Underperform’ rating, with a Rs 335 target suggesting around 9.2% downside.
What investors should watch
The key factor for Jefferies is that stronger demand, improving generation and rising merchant prices can support utility earnings over the next few years.
The brokerage said, “FY26-29E earnings trajectory for utilities to remain intact.”
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.
