Top Energy Stocks in India: Overview of the Best Energy Company Shares

Energy stocks in India are gradually becoming a popular choice for investors. Over the past few years, India has connected hundreds of millions of its citizens to electricity. This has prompted the adoption of highly efficient LED lighting in most homes and encouraged the expansion of renewable energy sources. Notably, solar energy stocks have gained significant attention, as they represent a crucial segment of this expanding market.

As India recovers from a Covid‐induced slump in 2020, it is re‐entering a very dynamic period in its energy development. Thanks to rising incomes and improving living standards, the country consumes a large amount of energy. As a result, India has been ranked as the third-largest energy-consuming country. This booming demand has made solar energy stocks in India particularly attractive to investors, alongside other renewable energy companies in India. Consequently, the Indian energy market is huge! With increased demand and supply, power sector shares, including those in solar energy, are set to rise, offering substantial growth opportunities.

Considered the fastest-growing economy in the world, business leaders and investors in India are backing up the best renewable energy stocks in India, including solar energy stock options like KPI Green Energy, effortlessly. Therefore, in this blog, we will discuss some key insights about India’s energy sector, a power sector penny stocks list, and why you should consider investing in these promising energy stocks.

Best Energy Stocks in India

Here is a list of the top 10 energy stocks in India based on their 5-yr CAGR, sorted from highest to lowest:

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data in this energy stock list is dynamic and subject to real-time changes. This data is derived from Tickertape Stock Screener.

🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.

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Top Energy Stocks in India: An Overview

Here are brief overviews of the energy sector companies in India above:

Ujaas Energy Ltd

Ujaas Energy Limited, initially incorporated as “M AND B Switchgears Private Limited” on June 9, 1999, started as a private entity with the Registrar of Companies in Gwalior, covering Madhya Pradesh and Chhattisgarh. It transitioned to a public limited company in November 2010, changing its name to “M AND B Switchgears Limited.” In August 2013, the company rebranded as Ujaas Energy Limited. Over the last 5 years, the company’s net income has grown at a yearly rate of 34.38%, higher than the industry average of 17.52%.

Taylormade Renewables Ltd

Taylormade Renewables Limited began as a private company in Ahmedabad, Gujarat, on 28th July 2010. As one of India’s leading green energy companies in renewable energy, Taylormade Renewables Limited specialises in solar concentrators, CPC collectors, thermal energy solutions, etc. Over the last 5 years, the company’s revenue has grown at a yearly rate of 13.18%, higher than the industry average of -6.33%, and its market share increased from 0.18% to 0.42%. 

Rattanindia Enterprises Ltd

RattanIndia Enterprises Ltd was originally incorporated as Indiabulls Infrastructure & Power Limited on 9th November 2010. It operates in manpower supply, human resource consultancy, payroll management, and technology-related services. Over the last 5 years, the company’s revenue has grown at a yearly rate of 561.18%, higher than the industry average of 8.63%, and its market share increased from 0% to 26.28%. 

Websol Energy System Ltd

Websol Energy System Limited, established in February 1990, is a prominent Indian manufacturer of photovoltaic monocrystalline solar cells and modules. Operating from a modern integrated facility at Falta SEZ, West Bengal, this energy company in India has consistently produced high-quality solar products since 1994, earning global trust. This green energy company is known for its dependable photovoltaic modules, widely used in domestic, commercial, and industrial applications. It is one of the top performing energy stocks with a 5-yr CAGR of 119.79% and a YTD return of 726.7%. 

Adani Green Energy Ltd

Adani Green Energy Limited stands as one of India’s top renewable energy companies, managing a project portfolio of 20,434 MW. Established in 1988 by visionary industrialist Gautam Adani, the Adani Group began as a commodity trading business, with Adani Enterprises Limited as its flagship renewable energy company. Over the last 5 years, the company’s revenue has grown at a yearly rate of 38.22%, higher than the industry average of 10.99%, and its market share increased from 9.82% to 29.57%. 

Gita Renewable Energy Ltd

Gita Renewable Energy Limited was established in 2010 under the Companies Act of 1956. The power company in India focuses on operating and maintaining solar power plants. As of 22nd August 2024, the company has a market capitalisation of Rs. 67.98 cr., and its PE ratio is 188.82. Over the last 5 years, the company’s revenue has grown at a yearly rate of 19.57%, higher than the industry average of 10.99%. 

Trishakti Industries Ltd

Trishakti Electronics & Industries Limited was established in 1985. The energy company in India specialises in providing infrastructure and oil and gas exploration services to prominent clients, including the Oil & Natural Gas Corporation Limited, India’s largest oil and gas exploration company, and other public sector units, private companies, and multinational corporations. Over the last 5 years, the company’s revenue has grown at a yearly rate of 166.18%, higher than the industry average of 1.39%, and its market share increased from 0.04% to 4.61%. 

Suzlon Energy Ltd

Suzlon Energy Limited (SEL) is India’s leading renewable energy solutions provider, operating in 17 countries across six continents. The power company in India specialises in designing, developing, manufacturing, and supplying wind turbine generators (WTGs). Suzlon covers the entire wind energy value chain, offering a comprehensive range of services, including project design, supply, installation, commissioning, and lifecycle asset management. Over the last 5 years, the company’s revenue has grown at a yearly rate of 5.03%, higher than the industry average of -6.33%, and its market share increased from 36.85% to 59.16%. 

Power and Instrumentation (Gujarat) Ltd

Power & Instrumentation (Gujarat) Limited began as “Power & Instrumentation (Gujarat) Private Limited” on 12th September 1983. Since its founding in 1975 under Mr. D. Padmanabhan Pillai and now led by Mr. Padmaraj Pillai, the company has earned a strong reputation for reliability. It has become a leading electrical EPC contractor, completing various projects across industrial and commercial sectors, including work for government, semi-government, and private clients. As of 22nd August 2024, the company has a market capitalisation of Rs. 187.65 cr., and its PE ratio is 31.75. It is among the top performing companies, with a 5-yr CAGR of 73.86%, and an ROE of 8.83%.

Global Offshore Services Ltd

Global Offshore Services Limited, established in September 1976, was originally known as Garware Shipping Corporation Limited and promoted by B D Garware of the Garware Group. The company focuses on owning, operating, and chartering offshore support vessels, offering essential services to exploration and production companies. Their vessels assist with oil and gas exploration and offshore projects, with Platform Supply Vessels (PSVs) deployed in India and West Africa. As of 22nd August 2024, the company has a market capitalisation of Rs. 241.93 cr., and its PE ratio is 6.75. Furthermore, the company has a 5-yr CAGR of 73.72%, and a net profit margin of 35.54%.

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How to Invest in Energy Stocks via smallcase?

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The Energy Tracker smallcase enables investors to track the performance of the top energy sector stocks in India. An energy tracker is an exchange-traded fund (ETF) or index fund that invests in a basket of energy-related stocks or other securities.

This smallcase consists of the top energy stocks in India, including companies in Coal, power transmission & distribution, power trading, gas distribution, power generation and oil & gas.

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What are Energy Stocks India?

According to the International Energy Agency, India is the world’s third-largest energy consumer after China and the United States. 

In 2019, the country’s total energy consumption was around 6% of the global total, with Oil, Coal, and Natural Gas accounting for over 80% of the total energy consumed. Renewable sources, including hydroelectric, wind, and solar power, generated the remaining 20%.

Energy sector stocks include companies operating in the energy industry. Such as oil and gas exploration and production companies, energy utilities, and renewable energy companies. These best energy stocks in India are an essential part of the stock market, as they play a crucial role in meeting the energy needs of individuals, businesses, and entire economies. Energy stocks, therefore, provide investors with the opportunity to participate in a sector that is essential to the economy.

Why Invest in Energy Stocks in India?

Investing in the top energy stocks in India can be a lucrative option if you have the financial capacity to handle their inherent volatility. While these stocks may exhibit price fluctuations, they can potentially deliver substantial returns. This is primarily due to their sensitivity to supply and demand dynamics changes. If you seek higher returns and are comfortable with some volatility, top energy companies in India might align with your investment objectives.

Implications of the Union Budget 2024-25 on the Energy Sector

Finance Minister Nirmala Sitharaman presented the Union Budget for the seventh time on 23rd July 2024. She outlined the economic development plans of the Modi government’s third term for the current financial year. Here are a few provisions from the Union Budget 2024 that may affect the energy sector in India:

1. In the interim budget, the finance minister announced the PM Surya Ghar Yojana, allocating Rs. 75,021 cr. This scheme aims to power 10 million households, create 1.7 million jobs in the solar sector, add 30 GW of solar capacity, and reduce 720 million tonnes of CO2 emissions. Presenting the Union Budget 2024-25, Finance Minister Nirmala Sitharaman highlighted that the scheme has received over 12.8 million registrations.
2. Sitharaman allocated Rs. 19,100 cr. to the Ministry of New and Renewable Energy, emphasising energy security and employment in clean energy sectors. Guidelines for energy transition pathways will be released to decarbonise energy sectors. Skilling initiatives will enhance the workforce needed for this transition.
3. The solar energy sector received Rs .10,000 cr., higher than the allocation of Rs. 4,757 cr. in the previous budget. This increase supports the new PM Muft Bijli Yojana for the rooftop sector and boosts existing solar initiatives. 
4. The budget exempts Basic Customs Duty on imports of 25 critical minerals vital for renewable energy.

How to Choose the Best Energy Sector Stocks in India?

Choosing the best stocks in the energy sector in India, including the best green energy stocks in India, involves understanding the market dynamics, the types of energy companies, and the factors that drive profitability and growth within the sector. India’s energy sector is diverse, covering traditional sources such as coal and oil, as well as rapidly growing renewable energy sources like solar and wind power. Here’s a step-by-step guide to help investors make informed decisions when selecting stocks in this vital sector.

Understand the Different Segments of the Energy Sector

• Traditional Energy: Includes companies involved in the extraction, production, and distribution of oil, gas, and coal. These stocks are generally influenced by global oil prices and government regulations.
• Renewable Energy: Focuses on companies producing energy from renewable sources such as solar, wind, and hydropower. This segment is growing rapidly in India due to supportive government policies and increasing consumer demand for sustainable energy.
• Power Generation and Distribution: These are companies that generate electricity from various energy sources and distribute it to consumers, including the top power stocks in India. This segment is critical in a country like India, where electricity demand continues to grow with urbanisation and economic development.

Analyse Market Trends and Government Policies

• Government Initiatives: Research initiatives like the National Solar Mission or the Ujwal DISCOM Assurance Yojana (UDAY) are aimed at promoting solar energy and improving the efficiency of power distribution companies.
• Regulatory Environment: Consider the impact of regulatory changes, such as tariffs on imported solar panels or changes in fuel pricing policies, on different companies within the sector.

Evaluate Financial Health and Performance Metrics

• Profitability Ratios: Investors can explore the net margin, return on equity, and return on assets to assess how efficiently a company is converting revenue into profits.
• Debt Levels: Energy projects require significant capital, so it’s important to evaluate a company’s debt levels and its ability to manage debt, especially in capital-intensive segments like power generation.
• Revenue Growth: You can analyse past revenue growth and future growth projections to understand how well a company is positioned to capitalise on India’s energy demand.

Consider Technological and Competitive Advantages

• Innovation: Companies that invest in research and development may be better positioned to benefit from technological advancements, such as improved battery storage for solar energy.
• Market Position: Consider market share and competitive positioning within the sector. Companies with a dominant position often have better bargaining power and greater efficiency.

Review Dividend History and Yield

• Dividend Yield: For investors seeking regular income, the dividend yield is a crucial factor. Energy companies with a history of stable or increasing dividends can be attractive.
• Payout Stability: Evaluate the stability of dividends over time. Consistent dividend-paying companies are often financially stable and less volatile.

Diversify Investments Across Different Energy Segments

To mitigate risks associated with the volatility of the energy market, investors can consider diversifying investments across various segments within the sector, including traditional, renewable, and power distribution companies.

Advantages of Investing in Energy Shares in India

The energy sector stocks encompasses a wide range of industries from traditional oil and gas companies to emerging renewable energy companies. Let’s explore some of the prime advantages that have been listed below: 

• High Dividend Yield: Energy shares in India, including renewable energy shares, can offer high dividend yields, making them attractive to investors looking for regular income. Many energy companies have stable earnings and cash flows, which allows them to pay consistent and growing dividends over time.
• Potential for High Returns: The best energy stocks have the potential to deliver high returns. This happens especially during periods of economic growth and rising demand for energy. As energy demand increases, companies may experience higher revenues and profits, leading to potential capital appreciation for investors.
• Diversification: Stocks in energy can provide diversification benefits to an investor’s portfolio. Investing in a mix of energy companies across various sub-sectors. Such as oil and gas exploration, refining, petrochemicals, and renewable energy, can reduce the overall risk of an investor’s portfolio.

What is the Nifty Energy Index?

Pumped by the brand names, we all can add a list of the best energy stocks in India. However, that doesn’t mean these power shares in India will offer returns according to our expectations. Therefore, we use the Energy Nifty Index, to evaluate the performance of every energy stock India. 

The Nifty Energy Index is a stock market index that measures the performance of 10  companies operating in the energy sector in India. The National Stock Exchange of India (NSE) designed the energy sectoral index. The Index reflects the performance and it is one of the indices in the NSE.

The Nifty Energy Index formula:

The Nifty Energy Index is helpful for investors as it provides them with a benchmark to measure India’s energy sector stocks performance. By tracking the index’s performance, investors can gain insight into the overall health of the energy sector stock in India. 

Additionally, the Nifty Energy Index enables you to invest in the energy sector stocks in India, including the best power stocks to buy in India, through exchange-traded funds (ETFs). The index’s administrators rebalance it on a semi-annual basis, using January 31 and July 31 of each year as the cut-off dates. 

Energy Sector Stocks in India-Synopsis

The energy sector stock in India has undergone significant changes over the last decade. With a shift towards renewable energy sources and an increased focus on energy efficiency.

At present, Coal is still the primary energy source, accounting for approximately 70% of India’s total electricity generation. On the other hand, renewable energy sources like wind, solar, and hydropower have significantly increased over 23% of India’s installed power capacity. Additionally, India is also investing in nuclear energy. Thus, with a plan to increase nuclear energy stocks in India with a capacity from 6.7 GW in 2021 to 22.5 GW by 2031. 

The country aims at an ambitious target of achieving 450 GW of renewable energy capacity by 2030. This target includes 280 GW of solar, 140 GW of wind, 10 GW of bioenergy, and 5 GW of small hydro projects. Considering the dire need to produce greener energy, the government has also launched various initiatives to promote energy efficiency. Such as the Perform, Achieve, and Trade (PAT) scheme and the Ujala scheme.

By 2040, renewable energy is expected to account for more than half of India’s electricity generation. With a plan to reduce its dependence on imports, the government also focuses on developing electric mobility. It aims to achieve 30% electric vehicle penetration by 2030 to achieve Prime Minister’s net zero emission target by 2070.

Types of Energy Sector Stocks

The energy sector in India derives stocks in the form of four channels that have been listed below: 

• Thermal: Since fossil fuels dominate the energy sector, the production of thermal energy has primarily contributed to the energy sector stocks in India. Thus, as of May 2022, India has a total Thermal installed capacity of 236.1 GW. However, the rest of the power is generated from coal largely and then from Diesel, Lignite, and Gas.
• Renewable Energy Stocks: Renewable energy refers to the energy obtained from natural resources. Such as sunlight, wind, rain, and geothermal heat. With a target of achieving 450 GW of renewable energy by 2030, the interest in renewable energy stocks NSE is expected to dominate the market. 
• Hydro: The water movement generates hydropower, also known as hydro energy, which is a renewable energy source. Hydro energy accounts for about 13% of India’s total energy consumption, making hydro power stocks in India a popular investment opportunity for investors interested in the top power sector stocks in India. 
• Nuclear: Considered as the smallest energy segment, Nuclear energy is generated through nuclear energy reactions. Accounting for only 2.5% of the country’s nuclear energy stocks in India, it is generated from nuclear power plants. Therefore, consider investing in these nuclear energy stocks in India for portfolio diversification.

Are There Any Challenges?

Energy sector stocks, including clean energy stocks, can be a valuable addition to a well-diversified investment portfolio. However, it is critical to understand its challenges to be prepared to tackle them efficiently. Some of the primary challenges are:

• Volatility: Energy stocks in India, including a list of green energy stocks in India, can be highly volatile due to fluctuations in global oil prices, changes in government policies related to the energy sector, and geopolitical risks. Investors in the best power stocks in India should be prepared for stock price fluctuations and market conditions changes.
• Environmental Concerns: The energy sector significantly contributes to greenhouse gas emissions and climate change. In response, energy companies are under increasing pressure to reduce their carbon footprint and invest in renewable energy due to environmental concerns. Failure to adapt to this changing landscape may result in reputational risks and regulatory challenges for energy companies.
• Geopolitical Risks: The energy sector in India is also subject to geopolitical risks, including tensions with neighbouring countries and supply chain disruptions. These risks can impact the operations of energy companies and lead to higher costs and lower profitability.

Who Should Invest in Top Energy Stocks?

Investing in top energy stocks can be a strategic move for various types of investors, each with different financial goals and risk tolerances. The energy sector, encompassing a broad range of companies involved in the production and distribution of energy, including oil and gas drilling, renewable energy, and power generation and supply, offers unique opportunities and challenges. Below, we explore the profiles of investors who might be particularly well-suited for adding top energy stocks to their portfolios.

Long-term Investors

Energy stocks, especially those from well-established companies, often provide stable dividends. Investors looking for consistent income might find these stocks attractive as they pay higher yields than other sectors.

With the global energy transition towards renewable sources, companies in the renewable energy market exhibit significant growth potential. Long-term investors can benefit from capital gains as these companies expand and capitalise on new technologies, particularly when investing in renewable energy stocks in India.

Value Investors

The traditional energy sector (like oil and gas) is highly cyclical, often correlated with fluctuations in commodity prices. Value investors can buy stocks at a low price during a downturn and benefit from substantial gains when the market recovers.

Due to the volatility in energy prices, stocks in this sector can sometimes trade below their intrinsic value, presenting opportunities for value investors to acquire valuable assets at a discount.

Risk-Tolerant Investors

The energy sector can be prone to significant price swings influenced by geopolitical events, energy policy changes, and oil and gas price fluctuations. Investors who are comfortable with high volatility and can manage the risks associated with such fluctuations might find these stocks suitable.

For those looking to make speculative bets, segments within the energy sector, such as small-cap renewable energy companies or new energy technology firms, offer high-risk and high-reward investment opportunities, particularly among green energy penny stocks list in the energy sector in India.

ESG-focused Investors

As the world shifts towards sustainable energy solutions, investing in renewable energy helps support this transition. These investments align with the environmental, social, and governance (ESG) criteria, appealing to socially conscious investors.

Renewable energy companies often benefit from regulatory support, including subsidies and tax incentives, providing a more stable investment environment and potential for substantial growth.

Institutional Investors

Energy projects, particularly in renewables like wind or solar farms, require substantial capital outlays. Institutional investors such as pension funds or large asset managers, with access to large amounts of capital and long investment horizons, are well-positioned to invest in such assets.

Energy stocks can offer institutional investors portfolio diversification benefits, helping to spread risk across various asset classes.

Sector Rotators

Investors who specialise in rotating their holdings based on sector performance can capitalise on the cyclicality of the energy sector. They can maximise returns by timing their entry during low cycles (e.g., a dip in oil prices) and exiting during highs.

Factors Affecting the Top Energy Sector Stocks in India

The growing demand for renewable energy has primarily influenced by the top energy stocks in India. Therefore, before investing in an energy stock in India, let’s understand some of its factors. 

Global Oil Prices

Global oil prices have a significant impact on energy sector stocks. As energy companies are involved in oil exploration, production, and distribution, oil price fluctuations can directly impact their revenues and profits. Higher oil prices can lead to higher profits, while lower oil prices can lead to lower profits.

Government Regulations

Government regulations also affect energy sector stocks, including the top green energy stocks in India. As most of India’s energy sector companies in India are regulated by the government, this greatly affects stock performance. Governments regulate the energy sector to ensure the environment and consumers’ safety. For example, if the government imposes stricter regulations on carbon emissions, the best energy stocks may have to invest more in technology to comply, which can reduce their profitability. 

Weather Conditions

The weather can also affect energy sector stocks, particularly in the renewable energy sector. For example, solar power generation can be impacted by the amount of sunlight received. Wind strength and consistency can impact wind power generation. Extreme weather events such as hurricanes and droughts can also affect the energy sector stocks, particularly regarding energy supply and infrastructure damage.

Political Factors

Political factors such as geopolitical tensions, trade, and taxation policies can also impact energy sector stocks. For example, instability in oil-producing countries can lead to higher oil prices, which can benefit energy companies. On the other hand, if trade restrictions are imposed on energy imports or exports, the growth potential of the top energy stocks can be limited.

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To Wrap It Up…

In conclusion, the Indian energy sector offers a variety of investment opportunities, from traditional oil and gas companies to emerging green energy stocks. Investing in Indian green energy stocks promotes sustainable development and offers the potential for high returns as the world moves towards a more sustainable future. With government support and increasing demand for renewable energy, green energy stocks in India are poised for growth in the coming years. So, let’s do our bid to make India a net zero-emission country by 2070. How? You could start by investing in smallcase today! 

Frequently Asked Questions on Energy Stocks in India