Crude@$100+: The Rs 3 lakh crore power boom you might be missing

The global energy map is being redrawn by the US–Israel–Iran conflict, and the tremors are delivering a massive windfall to India’s power and energy stocks. As Brent crude hovers above the $100 per barrel, the combined market capitalization of Nifty Energy stocks has surged by Rs 3 lakh crore since the onset of the war.

What began as a geopolitical shock has transformed into a structural revaluation of energy security. While traditional oil marketing companies are bleeding, the power generation and transmission space is witnessing a decadal upcycle. Last month alone, NSDL data revealed that foreign institutional investors (FIIs) poured Rs 5,557 crore into power stocks, signaling an aggressive shift toward the sector as a primary macroeconomic hedge.

The winners: Adani Power and BHEL lead the surge

The market is rewarding companies that provide an alternative to imported fossil fuel dependency. Since the conflict began, the returns have been concentrated in generation and equipment manufacturing. Adani Power leads the pack at 50%, followed by BHEL at 48%, Thermax at 44%, Adani Green Energy at 38%, and Adani Energy Solutions at 27%. Hitachi Energy India is up 26%, Suzlon 21%, NTPC Green Energy 19%, and NLC India 18%.

The carnage is equally decisive on the other side. IOCL is down 27%, BPCL off 25%, HPCL down 16%, Petronet LNG down 16%, MGL off 13%, IGL down 8%, and GAIL off 5%. Reliance Industries has shed 2%.
Also Read | With 50% rally in 2026, Adani Power now most valued power company in India: What’s working in its favour

Vinit Bolinjkar, Head of Research at Ventura, identified three forces sustaining the rally beyond a simple geopolitical trade. “The sustained buying interest in energy stocks is not merely a short-term reaction to geopolitical tensions; it reflects a broader shift in how markets are valuing energy security,” he said.
First, elevated crude realisations are improving profitability and cash flows for upstream E&P companies. Second, energy stocks are increasingly being viewed as an inflation hedge, especially as higher crude prices hammer sectors like aviation, paints, and chemicals. Third, the sector is entering a multi-year energy-transition investment cycle, where hydrocarbon profits are being redeployed into renewables, green hydrogen, battery storage, and transmission infrastructure.Bolinjkar flagged gas infrastructure and LNG-linked businesses as likely to see sustained traction, alongside renewable and energy-transition companies where “persistently high fossil-fuel prices improve the economic attractiveness of solar, battery storage, EV charging, and green hydrogen projects.”

Also Read | 1970s-like oil crisis ahead? Here’s why today’s crude spike reminds analysts of Arab oil embargo-led 300% rally

The decadal upcycle in power equipment

Global investment houses are highlighting a multi-year visibility for power transmission and high-voltage (HV) equipment makers.

Last month, JP Morgan initiated coverage on Hitachi Energy India with an Overweight and a target price of ₹29,000, projecting revenue and PAT CAGR of approximately 35% over FY26–29. The bank notes Hitachi holds around 70% market share in commissioned and awarded HVDC projects, with a potential $15 billion HVDC ordering pipeline. It also initiated on GE Vernova T&D at Overweight with a ₹4,300 target, forecasting 30% revenue and PAT CAGR over the same period, flagging the company’s margin leadership and emerging export optionality. Both names are already in the top-quartile performers since the war began, up 26% and 11% respectively.

On Adani Energy Solutions, Jefferies maintains a “Buy” on the stock, noting it is India’s only listed private sector pure play on transmission and distribution assets, currently trading at a 68% discount to its Jan. 2023 peak.

The great divide: Upstream gains vs downstream pain

While the energy basket is booming, the gains are not uniform. Upstream exploration and production (E&P) firms like ONGC (+5%) and Oil India (+1%) are benefiting from elevated realizations and a recent government decision to reduce royalty payouts.

In stark contrast, downstream Oil Marketing Companies (OMCs) are witnessing meaningful corrections as retail prices fail to keep pace with crude costs:

Sunny Agrawal, Head of Fundamental Research at SBI Securities, said with crude oil prices sustaining above the $100-per-barrel mark, the clear beneficiaries remain upstream oil companies such as ONGC and Oil India. He pointed to the government’s recent decision to reduce royalty payouts for oil producers as a significant additional positive — improving cash flows and enabling more aggressive domestic exploration investment.

On downstream, Agrawal said despite the sharp rise in crude prices, retail fuel prices have not yet seen a commensurate increase, leading to pressure on marketing margins. “Any decision by the government to increase retail petrol and diesel prices could provide substantial relief — stocks like HPCL, BPCL and Indian Oil Corporation could see a strong recovery rally,” he said.

Jefferies has raised its price target on Adani Power to ₹255 from ₹185, rolling over to 20x FY28E earnings, citing rising power demand and healthy growth prospects for three to four years. Separately, Jefferies flags Adani Energy Solutions — India’s only listed private-sector pure play on transmission and distribution assets — as a Buy, with ₹718 billion of transmission projects on hand, up 20% year-on-year, and the stock trading at a 68% discount to its January 2023 peak EV/EBITDA.

Valuation warning

The re-rating has been sharp. PL Capital data shows the Power generation and distribution sector’s PE multiple expanded from 19 at the start of April 2026 to 23 by month end, well above the long-term average of 15, but still within the historical band of 7–28.

PL Capital notes that defence and power are currently the most expensive industries in the market. Axis Securities, which is overweight on power and energy alongside BFSI, telecom, capital goods, and healthcare, appears comfortable with that valuation given the structural tailwinds.

What should investors do?

Karthick Jonagadla, MD and CEO of Quantace Research, urged investors to resist treating the entire energy basket uniformly. “The crude spike has reminded the market that India’s energy vulnerability is structural, not cyclical,” he said. “India imports close to nine-tenths of its crude requirement, and when crude remains above the $100 mark, the transmission is immediate through the current account, rupee, inflation expectations, fertiliser costs and fiscal flexibility.”

But he was precise about where the durable opportunity lies: upstream and gas-linked companies for realisation and volume visibility; gas transmission and city gas distribution players as India pushes cleaner domestic fuel; and, strikingly, the emerging compressed biogas value chain — including OMC offtakers, EPC providers, sugar and distillery companies with press-mud feedstock, dairy-waste aggregators, and municipal waste-to-energy players. “The market is pricing crude as a risk event today, but the larger investment theme is India’s move from imported energy dependence to distributed domestic fuel infrastructure.”

Santosh Meena, Head of Research at Swastika Investmart, argued the upward trend is likely to sustain through at least the next quarter, citing a projected drop in global oil inventories of 8.5 million barrels per day and Brent consistently above $100. “The de facto closure of critical shipping routes like the Strait of Hormuz provides a strong floor for prices.” A cooling off may occur toward late 2026 if geopolitical tensions ease but that resolution, widely expected, keeps getting delayed.

For now, the ₹3 lakh crore that has already been created is less a ceiling than a starting point, provided investors know precisely which side of the fault line they are standing on.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)