A similar trend appears to be emerging in the power sector, according to Jefferies, as private Power companies have entered “this thematic stage,” Jefferies wrote in its note.
Here are the eight previous examples that Jefferies highlighted in its note:
Defence – From September 2022 to July 2024
After the indigenization push, defence stocks had re-rated to over 40% higher than their 10-year average valuations by September 2022. Yet, they outperformed the Nifty by 229 percentage points by July 2024, led by strong order visibility, import substitution and a 33% EPS CAGR, sustaining the premium valuations
NBFCs – October 2021 to February 2026
Jefferies highlights that NBFC stocks had re-rated to nearly 78% above their 10-year average multiple by October 2021 and yet outperformed the Nifty by 40 percentage points led by rising credit penetration, improved asset quality after the IL&FS saga, and scalable digital models, which supported a 23% EPS CAGR.
Cement – June 2014 to May 2017
By June 2013, Cement stocks had turned expensive, trading 74% higher than their 10-year average, but went on to deliver a 47 percentage point outperformance by May 2017. The rally was driven by expectations of a construction / infrastructure upcycle, but the earnings growth remained relatively modest, Jefferies highlighted.
FMCG – December 2014 to December 2019
FMCG stocks were trading at a 44% premium above their 10-year average and went on to deliver an outperformance of 96 percentage points by December 2019. The gains were supported by formalization of the economy, GST-led shifts to organized players, and a 12% EPS CAGR during this period, as per the Jefferies note.
Retail – December 2014 to September 2019
Retail stocks too had begun to trade 41% above their 10-year average by the end of 2014 but Jefferies notes that they went on to deliver an outperformance of 159 percentage points. Formalisation, premiumization and rising discretionary spends contributed a 20% EPS CAGR during this period.
Capital Goods – September 2022 to June 2024
Capital goods stocks had significantly re-rated by September 2022, resulting in them trading at a 28% premium to their 10-year average valuation. Yet, these stocks managed to sustain a 90 percentage point outperformance till June 2024, driven by an investment cycle revival post-Covid in India. Jefferies also noted that strong order inflows and better margins led to a 26% EPS CAGR, justifying premium valuations.
Hospital Stocks – December 2021 to October 2025
Hospital stocks had also begun to trade nearly 44% above their 10-year average multiple by December 2021 post Covid-19, yet managed a 85 percentage point outperformance. Growth was driven by insurance penetration, operating leverage and improving Average Revenue Per Operating Bed (ARPOB), thereby supporting a 23% EPS CAGR.
Hotel Stocks – December 2021 to December 2024
Hotel stocks delivered an outperformance of nearly 290 percentage points compared to the Nifty, even after trading nearly 20% higher than their 10-year average multiple, driven by a post-Covid demand recovery, premiumization and strong expansion visibility.
Why Is Jefferies Betting On Power Stocks?
The brokerage has highlighted JSW Energy, Adani Energy Solutions, Premier Energies and Siemens Energy as their top picks within the power theme.
Jefferies cited falling costs of battery energy storage systems (BESS), which will aid renewable energy viability, improving balance sheets of State Electricity Boards, data center expansion, rising private participation and increasing EV adoption as some of the key reasons behind their bullish stance.
Supply and demand-side drivers are aligning, positioning power stocks among the best structural plays, Jefferies said.
