India Power Capex: Jefferies Picks 7 ‘Buy’ Stocks with High Upside

Jefferies has expressed a strong bullish outlook on India’s power capital expenditure cycle, identifying seven ‘Buy’-rated stocks poised for significant gains. These recommendations span Transmission & Distribution (T&D) equipment, cables, engineering, and power generation sectors, with potential upsides ranging from 18% to 33%.

Siemens Energy India stands out as the brokerage’s top pick, projected for an impressive 33% upside potential. Other companies highlighted include KEI Industries, L&T, Thermax, Kirloskar Oil Engines, Cummins India, and Hitachi Energy India, each offering distinct exposure to the expanding power sector.

Key Upside Projections

• Siemens Energy India: 33% upside
• Hitachi Energy India: 29% upside
• Kirloskar Oil Engines: 27% upside
• Thermax: 25% upside
• L&T: 23% upside
• Cummins India: 23% upside
• KEI Industries: 18% upside

The report underscores that India’s power spending cycle is creating opportunities beyond traditional utility companies. Jefferies projects power capex to grow at a CAGR exceeding 20% between FY25 and FY30, driven by robust demand and renewable energy expansion.

Growth Catalysts and Sectoral Drivers

• Power capex growth: Over 20% CAGR from FY25-FY30
• Power demand growth: 6% CAGR
• Substantial increase in renewable energy capacity by FY30
• Strong capex visibility in defence and power sectors

Each of the seven recommended companies offers a unique participation avenue in this growth. Siemens Energy India and Hitachi Energy India have direct exposure to the power T&D build-out, while KEI Industries is a key player in cables and an EPC contractor in power T&D.

L&T, as an engineering and construction giant, is set to benefit from the broader capex revival. Thermax provides engineering solutions for energy and environment sectors, and both Kirloskar Oil Engines and Cummins India are linked to distributed power generation and industrial applications.

Recent June-quarter order flows confirm that the capex cycle is already generating significant orders across these companies. Despite challenges like commodity costs and pricing competition in specific segments, the overall outlook remains positive.

The brokerage notes that the anticipated 6% CAGR in power demand, coupled with a substantial increase in renewable energy capacity by FY30, underpins the strong long-term investment case for India’s power sector.