India’s power sector is heading into a period of higher demand, tighter coal inventories and policy intervention, putting power stocks back in focus. Jefferies has maintained a constructive view on the sector and named Adani Energy Solutions, JSW Energy and NTPC among its top picks.
The brokerage noted that the Ministry of Power, using Section 11 emergency provisions, has ordered 112 captive thermal power plants to operate at maximum capacity from October 1 to December 31, 2026. The move is aimed at meeting an expected increase in power demand.
Month-to-date power demand is up 15% year-on-year, while demand has risen 10% year-on-year so far in FY27, compared with Jefferies’ earlier estimate of 7% growth for the year. The brokerage attributed the higher demand partly to increased cooling requirements amid below-average rainfall in the second quarter.
At the same time, coal availability has emerged as a key pressure point. Coal stocks at thermal plants have fallen to around seven days, with more than 40% of thermal plants holding less than 25% of their required coal inventory, according to Jefferies. The Ministry of Power is considering mandatory blending of imported coal to ease supply constraints.
The emergency order primarily covers captive plants serving industrial facilities such as aluminium smelters, steel manufacturers, cement factories and oil refineries. Separately, the ministry has extended the Section 11 order requiring Tata Power’s 4 GW imported-coal-fired Mundra plant to operate at full capacity through December 31, compared with the earlier September 30 deadline.
The tightening supply-demand equation is also showing up in merchant power prices. Jefferies said prices were up 2X year-on-year in September 2026 so far, while average merchant prices in the second quarter of FY27 to date rose 46% year-on-year and 12% quarter-on-quarter to Rs 5.7 per unit.
For utilities, Jefferies expects the FY26-29E earnings trajectory to remain intact, citing execution-led earnings growth. It highlighted JSW Energy and NTPC, while also naming Adani Energy Solutions as a top pick, citing its visible medium-term EBITDA growth trajectory of more than 20%.