Best Energy Stocks in India
(The stocks mentioned in the blog are as per Analyst Ratings and Market Capitalization)
The energy sector plays a vital role in India's economy, fueling industrial progress and societal advancement. India ranks 3rd globally in primary energy consumption, utilising about 6% of the world's energy.
While coal remains a primary energy source, India is rapidly expanding its nuclear power capabilities, with plans to double the number of reactors by 2030. Given the sector's continual expansion and changing scenario, many investors have eyed investing in energy stocks in India.
Energy Industry in India - A Brief Overview
India ranks as the world's 3rd-largest electricity producer with an installed power capacity of 417 GW. The country's energy sector heavily relies on fossil fuels, particularly coal, which is the primary fuel source. Due to factors such as increasing population, industrial growth, urbanisation and favourable government policies, India has shifted from being an energy-deficient nation to one with surplus energy.
Initiatives like the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA), Unnat Jyoti by Affordable LEDs for All (UJALA) and Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) have played significant roles in India's energy sector. It has contributed to increased access to electricity, rural electrification and the promotion of energy efficiency.
By 2030, India anticipates boosting its installed capacity of non-fossil fuels from 43.7% to a range of 61% to 65%, and by 2047, this is projected to escalate further to between 85% and 90%. Moreover, the renewable energy capacity is projected to escalate from 177 GW in 2023 to 512 GW by 2030 and to 1819 GW by 2047 under the net zero scenario.
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Best Energy Stocks in India 2024 as per Analyst Ratings
The table mentioned below mentions the best energy stocks in India according to analyst ratings. We have opted to take this as a criterion as analysts rate a stock after conducting a complete analysis of the stock market-
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S.No. |
Best Energy Stocks in India (as per analyst ratings) |
BUY Analyst Rating (in %) |
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94 |
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2. |
78 |
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3. |
71 |
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4. |
60 |
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*Our stock selection criteria for top stocks based on analyst ratings are mentioned at the bottom of this blog. |
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Top Energy Stocks in India in 2024 as per Market Capitalisation
The following table mentions the leading energy sector stocks list in 2024 as per market capitalisation:
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S.No. |
Best Energy Stocks in India (as per market capitalisation) |
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2. |
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3. |
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4. |
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5. |
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*Our stock selection criteria for top stocks based on Market Capitalisation are mentioned at the bottom of this blog. |
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Overview of Best Energy Stocks in India as per Analyst Ratings
Here is a comprehensive overview of the best energy sector stocks in India based on analyst ratings mentioned above:
1) NTPC
Founded in 1975, NTPC stands as one of India's foremost power-generating companies. It focuses on generating and distributing bulk power to state power utilities across India. NTPC owns 51 stations, including 27 coal-based, 7 gas-based, 1 hydro, 1 small hydro and 15 solar PV stations. Additionally, it has 42 Joint Venture/Subsidiary stations, comprising 9 coal-based, 4 gas-based, 8 hydro, 1 small hydro, 16 solar PV and 4 wind stations.Â
By 2032, almost half of NTPC's power generation capacity will come from non-fossil fuel sources. It aims to become India's largest integrated power company with a non-fossil fuel-based generation capacity constituting nearly 50% of its portfolio. To achieve this, NTPC plans to diversify its fuel mix and increase its generation capacity to reach 600 billion units.
2) Reliance Industries
Reliance Industries Limited is involved in various sectors including petroleum refining and marketing, hydrocarbon exploration and production, petrochemicals, advanced materials and composites, renewables (solar and hydrogen), retail and digital services. The company operates through segments such as Oil and Gas, Retail, Oil to Chemicals (O2C) and Digital Services.Â
The Oil and Gas segment focuses on exploration, development and production of natural gas and crude oil. The Retail segment includes services related to consumer retail. The O2C segment covers refining, petrochemicals, aviation fuel, fuel retailing and wholesale marketing. It also includes the transportation of fuels, polymers, polyesters and elastomers.Â
3) Oil & Natural Gas Corporation
Founded in 1993, Oil and Natural Gas Corporation Limited (ONGC) is an Indian company that contributes 71% to Indian domestic production. ONGC accounts for roughly 70% of India's crude oil and approximately 84% of its natural gas output.
It engages in the exploration, development and generation of crude oil, natural gas, and value-added products within India, as well as acquires oil and gas acreages globally for exploration and production activities.Â
Additionally, it is involved in downstream activities such as refining and marketing of petroleum products, petrochemicals, LNG supply, pipeline transportation, power generation, etc. Geographically, ONGC operates within India, as well as outside India in around 15 countries.
Its subsidiaries include ONGC Videsh Limited, Mangalore Refinery and Petrochemicals Limited, Hindustan Petroleum Corporation Limited, etc.
4) Power Grid Corp
Headquartered in Gurgaon, Power Grid Corporation of India Ltd (Powergrid) is primarily owned by the government, with a majority share of 51.34%. It holds the prestigious status of being a Maharatna company.
The Power Grid operates as an electricity transmission utility, managing a network of transmission lines and executing power transmission projects.Â
This company provides services for operations and maintenance of transmission systems, as well as offering smart grid, telecom and consultancy services. Utilising optical ground wire on power transmission lines, Powergrid operates overhead optic fibre networks and employs various technologies to plan, coordinate and deploy transmission networks across India.Â
Factors to Consider Before Investing in Energy Stocks in India
The following are some important points you must consider before buying energy sector shares in India:
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Fluctuations in Global Oil Prices
Changes in global oil prices have a significant impact on energy sector stocks. Since energy companies deal with oil exploration, production and distribution, fluctuations in oil prices directly affect their revenues and profits.
Higher oil prices typically mean higher profits, while lower prices can result in reduced profits.
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Impact of Government Regulations
Many of India's energy companies are regulated by the government, impacting their stock performance. These regulations aim to ensure environmental protection and consumer safety. For instance, stricter regulations on carbon emissions may require energy companies to invest more in technology compliance, potentially reducing their profitability.
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Influence of Weather Conditions
Weather conditions can affect energy sector stocks, especially in renewable energy. Factors like sunlight availability impact solar power generation, while wind strength affects wind power generation.
Extreme weather events like hurricanes and droughts can disrupt energy supply and damage infrastructure, impacting stock performance.
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Political Dynamics on Energy Stocks
Political factors such as trade policies, geopolitical tensions, and taxation can also influence energy sector stocks. Instability in oil-producing countries may drive oil prices higher, benefiting energy companies.
Conversely, trade restrictions on energy imports or exports can limit growth opportunities for energy stocks.
Should You Invest in Energy Stocks?
Investing in top energy stocks in India can diversify your portfolio, but it is crucial to recognise the challenges associated with this sector. As energy stocks are influenced by various factors like global oil price fluctuations, government policies and geopolitical risks, you should be prepared for potential market uncertainties.
Moreover, environmental concerns present another challenge for energy companies. With increasing pressure to reduce carbon emissions and transition towards renewable energy sources, companies must adapt their strategies to meet their regulatory requirements and reduce risks.
Additionally, tensions with neighbouring countries and supply chain disruptions can impact the operations and profitability of energy companies. It is in your best interest to stay informed about these risks and their potential impact on the energy sector before making investment decisions.
The Bottom LineÂ
Various government policies are driving the growth of renewable energy in India, making energy stocks in India an attractive investment opportunity. Despite the challenges in this sector, investing in the energy stocks in India can diversify your portfolio and align with the transition towards a sustainable future.
All you need to do is stay updated with market dynamics and environmental concerns while investing in the energy sector.
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*Stock Selection Criteria for Top Stocks Based on Analyst Rating Investors must carefully read through the following information on stock selection criteria while running through the stocks based on analyst ratings- These stocks have been shortlisted as per Analyst ratings provided by the I/B/E/S (The Institutional Broker’s Estimate System) database, further aggregated by Refinitiv. Ratings are determined by analysts' forecasts of company performance, taking into account metrics like earnings per share, sales, and net income. These ratings should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).  Before investing, investors must conduct independent research and not solely rely on the information provided here. This will allow investors to make appropriate investment decisions based on their financial goals, investment objectives and risk tolerance. |
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*Stock Selection Criteria for Top Stocks Based on Market Capitalisation These stocks are chosen based on their market capitalization, which represents the total value of a company's outstanding shares. The selection is arranged in descending order, placing the largest companies first and the smaller ones later. This helps prioritize stocks based on their market size. It is important to note that market capitalization in no way guarantees a company’s performance or the returns from its stocks. However, it can be used as a criterion for shortlisting companies from within a sector. Investors should recognize that other factors, such as financial health, management efficiency, and market trends, play crucial roles in determining the actual success of an investment. This stock selection should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.). |
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Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory. To read the RA disclaimer, please click here |