5 Undervalued Power Stocks

The S&P BSE Power Index, a sectoral market index that tracks power and energy sector companies listed on the BSE, fell by over 14% in the last year.

Several factors, including valuation correction, weak industrial demand due to weak corporate earnings, FII outflows, and sector-specific hurdles such as rising coal prices and delays in capacity expansion, have contributed to the fall in the price of power stocks.

However, the index saw a rebound, going up by almost 16% in the last three months.

The primary reason is the rising demand for power. Delays in new project execution also limit new supply against the growing demand, benefiting existing power generating companies.

With the power stocks on the rise, we have shortlisted five undervalued stocks in the power sector that are worth adding to your watchlist.

#1 Power Grid Corporation of India

First on the list is Power Grid Corporation of India.

This government-owned entity is India's largest electric power transmission company. It moves large blocks of power from power-generating agencies across regions.

The company also undertakes strategically important interstate transmission system projects and offers consultancy services.

The shares of Power Grid trade at a price to equity multiple (PE) of 17.1. This valuation is lower than the three-year average PE of 10.9 and industry PE of 17.7.

Company	PE	Industry PE	3-Year Average PE
Power Grid Corporation of India	17.1	17.7	10.9

Source: Screener

In the FY25, the company won 24 projects, the highest number since its inception. However, the execution momentum was slower than expected.

As a result, the revenue and net income only saw a marginal increase in the last one year. The company also paid a dividend of Rs 7.75 during the year, which translates into a yield of 2.6% at the current price of Rs 288.

In the last year, the company's share price declined due to lower-than-expected quarterly performance. This was due to slower execution resulting from land acquisition delays and a shortage of skilled labour.

Going forward, the management expects the execution of projects to be faster as new guidelines are in place, and the company plans to invest Rs 280 billion (bn) in capex for FY26 to fulfil its orders worth Rs 4.12 bn.

To know more, check out Power Grid's financial factsheet and latest quarterly results.

Power Grid Corporation of India Financials (2020-2025)

	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025
Revenue (Rs m)	396,398	416,216	456,031	458,431	463,250
Revenue Growth (%)		5.0%	9.6%	0.5%	1.1%
Net Profit (Rs m)	120,365	168,241	154,197	155,732	155,210
Net Profit Margin (%)	30.4%	40.4%	33.8%	34.0%	33.5%
Debt to Equity (x)	1.8	1.5	1.4	1.2	1.4
Return on Equity (RoE)	17.2%	22.1%	18.6%	17.9%	17.3%
Return on Capital Employed (RoCE)	12.0%	14.5%	13.9%	14.2%	12.9%

Source: Equitymaster

#2 NLC India

Second on the list is NLC India.

It is a Navaratna company engaged in the mining of fossil fuels to generate power.

The company generates electricity through thermal sources. However, it recently entered the renewable energy space and has a portfolio of 1,380 megawatts (MW) of solar and 51 MW of wind.

It is also involved in mining coal and critical minerals, which generates almost 20% of its revenue.

The shares of NLC India trade at a price to equity multiple (PE) of 11.9. This valuation is lower than the 3-year average PE of 12.9 and industry PE of 36.9.

Company	PE	Industry PE	3-Year Average PE
NLC India	11.9	36.9	12.9

Source: Screener

In the FY25, the company's revenue grew by 18% due to high coal production and a significant increase in power generation due to strong growth in the plant load factor (PLF). The PLF measures the efficiency of a power plant utilisation. A high PLF is considered good.

As a result, the net profit also jumped 45%, and the net margin expanded over 3%. The company also paid a dividend of Rs 1.5, which translates into a yield of 0.6% at the current price of Rs 232.

In the last one year, the share price of NLC India grew marginally by 1%.

Going forward, the planned capacity expansion in mining and power, along with growing demand for EVs, battery storage, and power consumption, will drive revenue and net profit growth.

Recently, the company has won a mining project of phosphorite and limestone in Chandigarh and has signed a power purchase agreement with the Rajasthan Rajya Vidyut Utpadan Nigam for a solar project.

To know more, check out NLC India's financial factsheet and latest quarterly results.

NLC India Financials (2020-2025)

	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025
Revenue (Rs m)	98,461	119,479	161,652	129,990	152,830
Revenue Growth (%)		21.3%	35.3%	-19.6%	17.6%
Net Profit (Rs m)	13,140	11,151	14,251	18,673	27,140
Net Profit Margin (%)	13.3%	9.3%	8.8%	14.4%	17.8%
Debt to Equity (x)	1.4	1.3	1.2	1.2	1.2
Return on Equity (RoE)	9.7%	7.9%	9.4%	11.3%	14.9%
Return on Capital Employed (RoCE)	10.9%	10.9%	9.1%	10.4%	10.9%

Source: Equitymaster

#3 RattanIndia Power

Next on the list is RattanIndia Power.

The company is one of India's largest private power generation companies, with an installed capacity of 2,700 MW of thermal energy.

It also generates electricity through hydropower and has four medium-scale hydropower projects with a total capacity of 167 MW.

RattanIndia Power has a long-term power purchase agreement with Maharashtra State Electricity Distribution Company (MSEDCL) and also sells electricity in the open market on a merchant basis.

The shares of RattanIndia Power trade at a price to equity multiple (PE) of 34. This valuation is lower than the 3-year average PE of 40.8 and industry PE of 36.9.

Company	PE	Industry PE	3-Year Average PE
RattanIndia Power	34.0	36.9	40.8

Source: Screener

In FY25, the company's revenue decreased marginally due to lower power generation in one of the units due to external factors. However, the company expects to ramp up its power generation and supply soon.

In the last one year, the company's shares fell almost 20%.

Going forward, the management is positive about its growth due to higher power consumption. It plans to scale up its thermal capacity in one of its plants.

Through its subsidiary, the company plans to increase its solar capacity and diversify into wind energy projects.

To know more, check out RattanIndia's financial factsheet and latest quarterly results.

RattanIndia Power Financials (2020-2025)

	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025
Revenue (Rs m)	15,599	32,595	32,312	33,640	32,840
Revenue Growth (%)		109.0%	-0.9%	4.1%	-2.4%
Net Profit (Rs m)	-9,419	-19,814	-18,699	88,967	2,220
Net Profit Margin (%)	-60.4%	-60.8%	-57.9%	264.5%	6.8%
Debt to Equity (x)	-14.7	-2.7	-0.6	0.7	0.79
Return on Equity (RoE)	150.6%	74.4%	41.3%	203.9%	5.0%
Return on Capital Employed (RoCE)	15.1%	8.1%	-33.5%	150.6%	8.7%

Source: Equitymaster

#4 Jai Prakash Power Ventures

Next on the list is Jai Prakash Power Ventures.

Incorporated in 1994, the company is engaged in coal mining, sand mining, cement grinding, and the production of thermal and hydroelectric electricity.

Its total power generation capacity is 2,220 MW, of which 1,820 MW is thermal and 400 MW is hydroelectricity.

56% of the company's capacity is under a long-term power purchase agreement, whereas the rest is sold to merchants on a short-term basis.

Jai Prakash Power's shares trade at a price to equity multiple (PE) of 15. This valuation is lower than the three-year average PE of 15.4 and the industry PE of 36.9.

Company	PE	Industry PE	3-Year Average PE
Jai Prakash Power Ventures	15	36.9	15.4

Source: Screener

In FY25, the company's revenue fell 19% due to the shutdown of both thermal plants for a certain time period for annual maintenance. As a result, the net profit also slightly dipped, but the net margin was maintained at around 15%.

In the last one year, the company's shares fell 10% due to poor performance in the last three quarters.

Going forward, the company plans to invest Rs 15 bn over the next two years to establish an FGD (Flue-gas desulfurisation) unit at its thermal power plant. This will help the company generate valuable byproducts like gypsum and increase its power plants' efficiency.

To know more check out Jai Prakash Power Ventures' financial factsheet and latest quarterly results.

Jai Prakash Power Ventures Financials (2020-2025)

	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025
Revenue (Rs m)	33,017	46,246	57,867	67,628	54,622
Revenue Growth (%)		40.1%	25.1%	16.9%	-19.2%
Net Profit (Rs m)	2,272	1,075	554	10,220	8,136
Net Profit Margin (%)	6.9%	2.3%	1.0%	15.1%	14.9%
Debt to Equity (x)	0.5	0.4	0.4	0.3	0.3
Return on Equity (RoE)	2.2%	1.0%	0.5%	8.9%	6.6%
Return on Capital Employed (RoCE)	6.1%	5.8%	5.4%	11.3%	10.5%

Source: Equitymaster

#5 Adani Energy Solutions

Last on the list is Adani Energy.

Part of the Adani Group, Adani Energy is a multidimensional organisation with a presence in power transmission, distribution, smart metering, and cooling solutions.

It is also India's largest private transmission company, with a power distribution network of 485 square km serving over 12 million (m) customers across 14 states and a transmission network of 29,269 circuit km.

The shares of Adani Energy trade at a price to equity multiple (PE) of 48.4. This valuation is lower than the 3-year average PE of 99.2 and industry PE of 48.8.

Company	PE	Industry PE	3-Year Average PE
Adani Energy Solutions	48.4	48.8	99.2

Source: Screener

In FY25, the company's revenue grew by a whopping 43.1%, and the net profit stood at Rs 9.2 bn. The net profit and net margin fell slightly due to a one-time deferred tax.

The debt to equity ratio also decreased drastically due to the company's capital management program.

In the last one year, Adani Energy's shares fell almost 44%.

Going forward, the company plans to invest Rs 180 bn in capex to expand its transmission lines and smart meters. It has won several orders during the year, indicating strong revenue guidance.

The management is optimistic about renewable energy and state-level transmission, which will help the company grow its revenue and profits.

To know more, check out Adani Energy's financial factsheet and latest quarterly results.

Adani Energy Solutions Financials (2020-2025)

	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025
Revenue (Rs m)	99,263	112,575	132,927	166,074	237,671
Revenue Growth (%)		13.4%	18.1%	24.9%	43.1%
Net Profit (Rs m)	12,896	12,358	12,806	11,956	9,217
Net Profit Margin (%)	13.0%	11.0%	9.6%	7.2%	3.9%
Debt to Equity (x)	4.4	4.5	2.7	2.7	1.7
Return on Equity (RoE)	21.2%	18.0%	10.9%	9.5%	4.2%
Return on Capital Employed (RoCE)	11.4%	10.8%	10.4%	9.8%	7.3%

Source: Equitymaster

Conclusion

The Indian power sector is experiencing robust growth due to several tailwinds.

Rising demand for power, the transition towards renewable energy, and government policy to improve the participation of private players indicate strong growth in the power sector.

However, several headwinds, such as project delays, aggregate technical and commercial losses (AT&C), and underutilisation of generation capacity, can slow down the growth of power companies.

Hence, it's essential to carefully analyse the company's fundamentals, including its financial performance, corporate governance practices, and growth strategies.

Happy Investing.

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