India's power demand surges, monsoon a wild card

India's power sector is experiencing a favorable outlook, underpinned by a rebound in electricity demand and increased renewable energy investments. Demand in July 2026 surged 11% year-on-year, following a 9% increase in the first four months of FY27, with a projected 7% growth for FY27 and a 6% compound annual growth rate through FY30.

A significant variable influencing this outlook is the monsoon. Jefferies suggests that a below-average monsoon, particularly if coinciding with El Niño during the June-September period, could lead to higher power demand. Historically, weaker monsoons correlate with increased electricity consumption across industrial, domestic, and agricultural sectors, which collectively represent about 85% of power demand.

Jefferies has identified Torrent Power as a top pick with a 28% potential upside, followed by JSW Energy and Adani Power, each with 27% upside. Other top recommendations include JSW Energy, Adani Energy Solutions, and NTPC, with analysts emphasizing execution ramp-up and earnings growth.

The renewable energy sector is also showing positive momentum. Awards for renewable energy projects are increasing, with 4.2 gigawatts awarded in FY27 through July, compared to 3.4 gigawatts a year prior. Furthermore, a Rs 54,000 crore transmission project, the Intra-State Green Energy Corridor Phase III, is set to support the evacuation of 135 gigawatts of renewable capacity.