Jefferies Bullish on Power Sector in 2026, Names JSW Energy and NTPC as Top Bets

Jefferies expects power sector stocks to rebound in 2026 as electricity demand normalises after unseasonal rains last year weighed on consumption, particularly in consumer durables.

In a recent note, the global brokerage named JSW Energy and NTPC as its top picks, citing capacity additions, investments in new projects, and steady execution of long-term power purchase agreements (PPAs).

Jefferies said medium-term power demand growth is likely to return to a 5–6 per cent CAGR, driven by data centre expansion and rising electric vehicle adoption. It added that renewable energy PPAs and thermal capacity additions are expected to gather pace in 2026.

Stock performance
JSW Energy rose 2.5 per cent to Rs 514.55 on January 2, extending gains to a third straight session. The stock is up over 7 per cent in the past five days but down more than 1 per cent over six months. Over the past year, it has fallen over 20 per cent. JSW Energy trades at a P/E of about 39 and has a market capitalisation of Rs 89,477 crore.

NTPC jumped nearly 4 per cent to Rs 349.30, its highest level since October 29. The stock has gained over 7 per cent in the past five days and more than 4.5 per cent over six months. NTPC trades at a P/E of 14.43 and has a market capitalisation of Rs 3,38,317 crore.

Weather risks: JM Financial
JM Financial said power demand remained nearly flat between April and November last year due to excessive rainfall, underlining the sector’s growing sensitivity to weather patterns.

The brokerage noted that the APEC Climate Center sees an “enhanced probability” of above-normal temperatures in India during April–June 2026, while Skymet has flagged a more than 60 per cent chance of El Niño, raising the risk of a weaker monsoon. JM Financial said it is monitoring evolving ENSO forecasts for their impact on power demand.