Jefferies has identified Adani Energy Solutions, JSW Energy, and NTPC as its top picks in India's power sector, with strong fundamentals supporting the bullish outlook. According to the latest Jefferies India Power Monthly report, Adani Energy Solutions leads with a Buy rating and price target of ₹2,060, implying around 44.9% upside from the closing price. JSW Energy also carries a Buy rating with a ₹720 target versus ₹534.65, implying around 34.7% upside. NTPC has a Buy rating and ₹425 target, implying around 27.5% upside from ₹333.25. Among other notable picks, Adani Green Energy is rated Buy with a ₹1,695 target, while Adani Power maintains a Buy rating with a ₹270 target and Torrent Power carries a Buy rating with a ₹1,780 target. The brokerage expects earnings growth for these utilities to remain intact as demand improves and new capacity starts contributing.
India's power demand is running well ahead of expectations, with electricity demand increasing 13% year-on-year in August 2026, compared with 4% growth in August 2025. As reported by Jefferies, demand between April and August 2026 was also up 9% year-on-year, supporting Jefferies' view that the FY27 growth trajectory remains intact. Regional demand was particularly strong, with power consumption in the southern region increasing 20% year-on-year in August. Peak demand across India rose 12% to 258 gigawatts, while thermal power generation showed strength with the all-India thermal plant load factor at 67% in August, compared with 62% a year earlier. The brokerage maintains its 7% YoY FY27E demand growth estimate as demand remains robust across the country.
The power sector is experiencing significant price appreciation, with merchant power prices up 2.1x year-on-year in September 2026 till date. Average merchant power prices in the second quarter of FY27 so far have risen 48% year-on-year and 14% quarter-on-quarter to ₹5.8 per unit, with prices touching ₹7.5 per unit in the first week of September. This price surge supports the brokerage's positive outlook for electricity generators and transmission companies, with the strong fundamentals strengthening the sector's overall outlook. The brokerage expects lower-than-average rainfall linked to El Niño could further support power demand and merchant prices.
The renewable energy sector is showing signs of improvement with around 5.2 GW of renewable energy projects awarded during FY27 through August, compared with 3.6 GW in the corresponding period. As reported by Jefferies, the brokerage 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. This renewable energy momentum, combined with the strong merchant power prices, provides additional support for the power sector's growth trajectory.
On the negative side, Jefferies has an 'Underperform' rating on Indian Energy Exchange (IEX) with a ₹100 target, implying around 15.3% downside. Tata Power also carries an 'Underperform' rating, with a ₹335 target suggesting around 9.2% downside. The brokerage maintains that stronger demand, improving generation and rising merchant prices can support utility earnings over the next few years, with the FY26-29E earnings trajectory for utilities to remain intact.
