Citi bets on power utilities; picks NTPC, Tata Power amid capex upcycle

Citi has recommended a 'Buy' rating on NTPC for a target price of ₹485, Tata Power for a target of ₹525, Power Grid for a target of ₹380, and JSW Energy for a target of ₹650.

Brokerage firm Citi has initiated a 'Buy' coverage on the power utilities sector, saying the country is entering a long-term and broad-based capital upcycle driven by rising demand for electricity, expansion in the renewable space, and grid storage.

 

The brokerage has recommended a 'Buy' rating on NTPC for a target price of ₹485, Tata Power for a target of ₹525, Power Grid for a target of ₹380, and JSW Energy for a target of ₹650. Among these, the brokerage said NTPC remains its top pick.

 

Citi said that India’s power sector is witnessing its 'first-ever multi-vector capex upcycle', spanning thermal, renewables, transmission, and grid storage. It expects electricity demand to grow at a compound annual growth rate (CAGR) of 5-6 per cent over the medium term. 

 

 

"It remains a multi-year visible story, with the breadth of power demand gradually expanding. Our medium-term forecast is set at a 5-6 per cent CAGR on the strength of electrification, data centres, cooling load, and policy-supported manufacturing sectors," Citi said. 

Electricity demand grew at ~5% CAGR over past 2 decades

 

An incremental demand likely to come from cooling requirements, data centres, electric vehicle charging and policy-supported manufacturing activities. In 2026, it said that El Niño linked tailwinds to boost demand for agri-pump and cooling products. 

CHECK Q4 Results Today

  The report highlighted that the current investment cycle is being led by multiple load vectors rather than just a single factor. According to Citi, the present cycle is more diversified, which provides greater visibility and sustainability to the upcycle.

 

Policy anchors and new incremental drivers such as more data centres, deeper electrification, and higher cooling demand are leading to the need for sharp thermal and transmission rebounds, renewable additions, and the first meaningful grid storage wave, it said. 

"To boot, regulators’ focus has pivoted from capacity to reliability/ flexibility, and favorable policies are providing greater visibility," the report added.   The brokerage estimated India’s installed power capacity to rise from nearly 533 GW in FY26 to about 786 GW by FY32. The renewable energy additions are expected to remain strong, while coal-based capacity is also likely to increase to ensure grid reliability during non-solar hours.

   ======================= 

Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.