What are Energy Stocks?

Energy stocks include stocks of those companies that are involved in exploring and developing oil and gas products, coal as well as renewable energy sources such as solar and wind. Investors often use energy stocks in their portfolios as a hedge against inflation due to the essential nature of energy in global economies. These stocks are mainly classified into the following categories:

• Oil and Natural Gas Stocks
• Green energy stocks
• Solar energy stocks

Favorable Government 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 further played important roles in India's energy sector. It has led to increased access to electricity both in rural and urban areas and the promotion of energy efficiency.

 

Before starting investing, you are required to open demat account with a reliable depository participant (DP)s to buy all the stock in dematerialized form which is a secure way to exchange stocks.

Best Energy Stocks to Invest in 2024

Here are the top energy stocks you can invest in 2024, ranked according to their market capitalization:

Energy Stock	Mar Capital Cr.*	P/E Ratio
Reliance Industries Ltd.	2164370.47	30.90
NTPC	365952.49	17.58
Power Grid Corpn	315662.49	20.27
Tata Power Co.	138549.23	40.16
JSW Energy	129736.98	78.28

* as of data 09/07/2024

 

A Brief Account of The Best Energy Stocks in India

Here is a brief overview of the best energy stocks in India you must consider before investing in them:

 

Reliance Industries

Reliance Industries is involved in the oil refining, petrochemical, gas, retail, and textile businesses and boasts consolidated sales of more than $60 billion. RIL aims to invest $75 billion in clean energy projects and renewable energy sources over the next 15 years.

It also aims to be a carbon net-zero conglomerate by 2035 and has made investments in the green energy space.

 

NTPC (National Thermal Power Corporation)

NTPC has become the leading energy conglomerate involved in all aspects of power generation. NTPC has moved its focus from fossil fuel to hydro, nuclear, and renewable energy sources. To boost its core business, it has diversified its operations into consultancy, power trading, professional training, rural electrification, ash utilization, and coal mining.

 

NTPC plans to develop the country’s largest solar power park to achieve a renewable energy capacity of 60 gigawatts (GW) by 2032. Currently, it is operating at a capacity of 16 GW and aims to scale up to become a 130 GW company by 2032.

 

Power Grid Corporation

Power Grid Corporation is one of the world’s largest transmission companies. It plays an essential role in ensuring reliable power supply throughout the country. The company showed a year-end growth of 9.51% YOY, and revenue was recorded at ₹45,581.28 crores.

Powergrid Corporation shares have given an impressive return of more than 50% as of 18th March 2024. It envisions a promising future with approximately 45% of the nation’s power transmitted through its network.

 

Tata Power Company

It is one of the largest renewable energy players in India. Tata Power has developed India's first 4000 MW Ultra Mega Power Project in Mundra (Gujarat).

Based on its strong presence in Rooftop Solar and Solar Pumps and new businesses (such as EV Charging and Home Automation), the company aims to increase its market share by ~20%. And double its revenue by FY25.

Factors to Consider Before Buying Energy Stocks in India

Here are the top factors that have a strong influence over the energy sector in India that you must consider:

• Government Policies: Energy stocks are greatly impacted by government policies, incentives, and subsidies.
• Innovation: The stocks with higher potential are those companies that invest in innovation and new technologies.
• Competition: Companies with a competitive advantage over the market are expected to give good returns in the long run.
• ESG Performance: The company’s environmental, social, and governance (ESG) performance indicates long-term sustainability.
• Diversification: Energy companies with a balance of conventional and renewable energy sources can mitigate risks and maximize returns. 
• Geopolitical Dynamics: Factors such as trade policies, geopolitical tension, and taxation can also influence energy sector stocks. Instability in oil-producing countries may drive oil prices higher, benefiting energy companies.

Doing research and analysis is recommended before choosing the right stocks for your portfolio. You can go through this comprehensive guide that guides you on how to select the best stocks for trading or investment. You will get basic understanding for buying or selling stocks in the Indian Stocks Market.

Conclusion

Energy stocks are beneficial as you can hedge them against inflation. Additionally, investing in renewable energy stocks has great future potential. India’s energy needs are expected to more than double over the next 10 years. This makes energy stocks an attractive investment opportunity.

Open a free Demat account with Almondz Trade today to start investing in the top power and energy stocks in India. Besides energy stocks, the tech-driven investment platform allows you to invest in options, currencies, ETFs, and more.

 

Disclaimer: This blog is posted solely for educational purposes. The securities mentioned are examples and not recommendations. It is based on various secondary sources from the internet and is subject to change. Kindly consult an expert before making any related decisions.