India’s power demand rose only 1% year-over-year in February 2026, according to a Jefferies analysis, down from a 2% increase recorded in February 2025. The investment bank highlighted that rainfall above seasonal norms has weighed on electricity consumption, contributing to the subdued reported growth.
Over the broader April 2025 to February 2026 window, demand was also up just 1% year-on-year. Jefferies noted that meeting its full fiscal 2026 forecast of 2% growth would require an outsized 14% increase in March 2026. Early March data showed generation up 2% in the first 12 days of the month, with the broker expecting demand to strengthen as temperatures rise later in the month.
Regional demand patterns varied across the country. The West and North regions - each accounting for roughly 31% of national power demand - registered different growth bands, with the West up between 2% and 5% and the North up between 1% and 4% year-on-year. The South, which makes up about 25% of demand, was flat year-on-year, while the East, contributing roughly 12% of demand, posted growth in the 2-5% range.
Peak system demand reached 244 gigawatts in the reporting period, a 3% increase from the prior year, and peak deficits were mostly contained, Jefferies reported. Thermal plant load factor fell to 69% compared with 74% in February 2025, reflecting lower utilisation of thermal units. In contrast, hydro generation increased by 10% year-on-year.
Renewable project awards continued to move forward amid the muted demand environment. Jefferies recorded 3.3 gigawatts of renewable awards in February 2026, with another 0.6 gigawatts awarded through mid-March. For the fiscal year to date, 18.0 gigawatts of renewable tenders were issued, and 52% of those awards were made between December 2025 and mid-March 2026.
The softer demand environment has had knock-on effects on contract activity. Jefferies highlighted a backlog in power purchase agreement (PPA) finalisations, noting that more than 40 gigawatts of PPAs remain unsigned at present.
On the distribution side, the sector returned to profitability in fiscal year 2025 after at least a decade of aggregate losses. Jefferies reported an average profit of 0.03 rupees per unit in fiscal 2025, compared with a loss of 0.16 rupees per unit in fiscal 2024. Private distribution companies - which supply about 7% of power - saw profits rise by 3.3 times, while state electricity boards cut their losses by 70%.
Among the ten largest states, which together account for approximately 70% of power supplied, some notable turnarounds were observed. Maharashtra moved into profitability after five years, and Tamil Nadu was profitable after at least 15 years, Jefferies said. Aggregate technical and commercial (AT&C) losses for the sector fell to 15.0% in fiscal 2025 from 21.9% in fiscal 2021. Payable days for state electricity boards also improved - declining from 169 days in fiscal 2022 to 112 days in fiscal 2025.
Against this backdrop, Jefferies retained JSW Energy (JSWE) and NTPC on its list of top picks, citing expected execution ramp-ups that should support double-digit medium-term earnings growth. The firm also maintained a buy rating on Power Grid, pointing to a likely increase in capital expenditure that supports its investment case.
Summary
Jefferies reports that India’s electricity demand growth slowed to 1% year-on-year in February 2026 as above-average monsoon rainfall compressed consumption. Across April 2025 to February 2026 demand is also up only 1% year-on-year. Regional variations, reduced thermal utilisation, higher hydro generation, ongoing renewable tenders and a backlog of unsigned PPAs characterise the current market. Distribution companies returned to an aggregate profit in fiscal 2025, while Jefferies keeps JSW Energy and NTPC as top stock picks and retains a buy on Power Grid.