India’s power sector is witnessing a surge in demand, driven by urbanization, electrification, and policy support for clean energy. Investors are closely watching the industry, with many seeking undervalued stocks that offer growth potential. Here are the five cheapest power stocks in India, based on EV/EBITDA valuation, that could present opportunities for investors.
India’s power sector is undergoing a major transformation, with increasing electricity demand fueled by rising temperatures, infrastructure development, and the push for clean energy. The sector is expected to see long-term growth, making it an attractive area for investment. Investors looking for value-driven opportunities often analyze stocks using the EV/EBITDA metric, which considers both debt and earnings. Here are five of the cheapest power stocks in India based on this valuation.
1. Jaiprakash Power Ventures (Madhya Pradesh, India)
Jaiprakash Power Ventures, established in 1994, operates in coal mining, sand mining, cement grinding, and power generation through thermal and hydroelectric plants. The company has an EV/EBITDA multiple of 4.6x, significantly lower than the industry median of 11.65x. Despite a 3.8% drop in its stock price over the last year, the company is investing in Flue Gas Desulphurization (FGD) systems and expanding coal mining capacity, positioning itself for long-term growth.
2. BF Utilities (Maharashtra, India)
Incorporated in 2000, BF Utilities focuses on electricity generation through wind power. Trading at an EV/EBITDA multiple of 5.9x, the stock is undervalued compared to the industry median. While its stock price has increased by 0.7% in the past year, the company remains committed to renewable energy, ensuring operational efficiency and adopting ESG-friendly practices. With strong policy support for wind energy, BF Utilities is strategically placed for growth.
3. Gujarat Industries Power (Gujarat, India)
Gujarat Industries Power, a public sector undertaking founded in 1985, operates a diversified portfolio of thermal, wind, and solar power plants with an installed capacity of 1,184.40MW. The company’s EV/EBITDA multiple stands at 6.1x, indicating a potential undervaluation. With ongoing investments in renewable energy, including a 2,375MW Renewable Energy Park at Khavda, Gujarat, the company is poised to strengthen its green energy footprint.
4. CESC (West Bengal, India)
CESC, incorporated in 1978, is engaged in electricity generation and distribution. Trading at an EV/EBITDA multiple of 7.7x, it is considered fairly valued compared to its industry peers. Over the past year, its stock price has risen by 11.4%. The company is expanding its renewable capacity, with plans to develop 3.2GW of solar and wind power by FY29. Analysts have set a target price of Rs 195, highlighting the stock’s growth potential.
5. RattanIndia Power (Maharashtra, India)
RattanIndia Power, a major private power producer, operates thermal plants in Amravati and Nashik with a combined capacity of 2,700MW. The stock trades at an EV/EBITDA multiple of 9.1x, lower than its 10-year median of 14.9x. With a 22.7% increase in its stock price over the last year, the company is focused on optimizing plant efficiency and securing coal supply, positioning itself to benefit from India’s rising power demand.
India’s power sector is on the brink of a significant transformation, driven by rising demand and policy incentives for clean energy. While these five power stocks appear undervalued based on EV/EBITDA, investors must consider execution risks, regulatory challenges, and financial stability before making investment decisions. With the sector requiring substantial capital investments, government support and strategic planning will be crucial in shaping India’s energy future.
