India Power Demand Rises 1%; Jefferies Touts Top Stocks

Key Highlights of India's Power Sector

India’s power demand saw a modest increase of just 1% year-over-year in February 2026, a slowdown attributed to above-average monsoons. Financial firm Jefferies noted that despite the slow growth, the financial health of power distribution companies has significantly improved, turning profitable in fiscal year 2025 after more than a decade of losses. JSW Energy and NTPC remain top analyst picks.

Current Market Overview

For the fiscal year from April 2025 to February 2026, power demand has increased by 1%. Regional demand varied, with the West and North regions growing at 2-5%, while the South remained flat. Peak demand reached 244 gigawatts, a 3% increase from the previous year. The renewable energy sector saw 3.3 gigawatts in awards in February 2026, but the overall slowdown in demand growth has led to delays in signing Power Purchase Agreements (PPAs), with over 40 gigawatts pending.

Economic Impact and Analyst Outlook

The most significant development is the financial turnaround of power distribution companies. The sector reported a profit of 0.03 rupees per unit in fiscal year 2025, a stark contrast to the 0.16 rupees per unit loss in the prior year. Aggregate technical and commercial losses also fell to 15.0%. Citing strong execution and earnings growth potential, Jefferies maintains JSW Energy and NTPC as its top picks and retains a buy rating on Power Grid due to increasing capital expenditure.

Summary

While macroeconomic factors like monsoons have tempered power demand growth, the underlying financial improvements in India's power sector are a positive signal. Investors are watching key players like JSW Energy and NTPC, which are positioned to capitalize on future growth as temperatures rise and industrial activity continues.

FAQ

Q: Why did India's power demand growth slow down?
A: The slowdown is primarily due to above-average monsoons, which dampened overall electricity consumption.

Q: Which companies does Jefferies recommend in the Indian power sector?
A: Jefferies identified JSW Energy and NTPC as its top stock picks, citing potential for double-digit earnings growth.

Q: Have power distribution companies become profitable?
A: Yes, after at least a decade of losses, power distribution companies reported a collective profit in fiscal year 2025.

Source: Investing.com