Top Energy Stocks to Watch Out For
India, the world’s second-most populous country, is the third-largest energy consumer. According to the Ministry of Power, the country’s peak energy demand reached 223 gigawatts (GWs) in June 2023, a rise of 3.4% from the highest level in 2022. With ambitious targets set by the Government of India, the energy sector is rapidly transforming. Source: International Trade Administration
As India’s energy, demands grow due to urbanisation and industrial growth, investing in stocks of companies in the energy sector can be productive in the end.
What are energy stocks?
Energy stocks are stocks of companies involved in the production and distribution of energy. The energy sector is vast and comprises several entities, including oil and gas, renewable energy, utility, etc.
List and overview of top energy stocks
| Stock’s name | 3-year trailing returns | Overview |
|---|---|---|
Coal India Limited | 12.50% | Coal India Limited is one of India's foremost coal mining companies. Established in 1975, it produces the majority of India's coal and operates through subsidiaries in different regions of the country. |
Indraprastha Gas Limited | 12.50% | Indraprastha Gas Limited (IGL) is a leading company that supplies natural gas to homes, vehicles, and industries. Established in 1998, IGL is known for providing clean and efficient energy in cities like Delhi and its surrounding areas. |
Indian Oil | 12.50% | Indian Oil Corporation Limited plays a key role in refining, transporting, and marketing petroleum products across the country. It operates a vast network of refineries, pipelines, and fuel stations, ensuring that millions can access essential energy resources. |
NHPC Ltd | 12.50% | NHPC Ltd is a hydropower company that builds and operates dams and power plants to produce electricity from rivers. It has also expanded to include other energy sources like wind, solar and geothermal. |
NTPC Limited | 12.50% | Established in 1975, NTPC generates electricity for India using coal, gas, hydro, solar, and wind energy. NTPC plays a vital role in powering homes, industries, and businesses across India. |
How to identify the best-performing energy stocks?
Spotting the top-performing energy stocks is achieved by analysing financial metrics, industry trends, and macroeconomic factors. Look at:
-
A company's financial metrics
Watch out for firms with consistent earnings and revenues. Check the company's profit margins and return on equity, debt levels, and cash flow. High-profit margins and return on equity, along with low debt levels, are desirable.
-
Industry trends
The performance of energy stocks is closely tied to commodity prices such as oil and gas. They are also impacted by regulatory changes. Watch out for them and analyse their impact on stock performance.
-
Long-term stock performance
Find out how the stock has performed over the long term. It will help you evaluate how the stock has performed across market cycles.
Factors to consider while investing in energy stocks
Before investing in energy stocks, be mindful of:
-
Political and regulatory environment
Government initiatives, policies, and climate change agreements can significantly influence energy stock prices and performance.
-
Company's management
A company's leadership, coupled with its corporate social responsibility, can affect its long-term growth. Firms with strong leadership and sustainable practices are better poised for long-term success.
Invest in promising energy stocks with Kuber basket
The Government of India (GoI) has taken several initiatives to meet India's growing energy needs, particularly geared towards green energy. Some of them are:
➢ National Solar Mission ➢ National Hydrogen Energy Mission ➢ National Smart Grid Mission ➢ National Biofuels Policy
The Kuber Basket from Kotak Securities Basket investing platform can help you seamlessly invest in promising energy stocks. The basket, comprising stocks selected after extensive due diligence by research analysts at Kotak Securities, allows you to add quality energy stocks to your portfolio. For more, click here.
Source: Kotak Securities Basket investing platform
Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed SEBI’s prescribed limit. The securities are quoted as an example and not as a recommendation. SEBI Registration No-INZ000200137 Member Id NSE-08081; BSE-673; MSE-1024, MCX-56285, NCDEX-1262. For compliance T&C and disclaimers, Visit bit.ly/ksecdisc.
