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Utilities rally looks stretched, says Bernstein; NTPC, REC still offer selective valueBernstein’s Nikhil Nigania sees limited upside in utilities, prefers NTPC on dips, REC for value, and favours integrated players like Tata Power in renewables.By Prashant Nair   |  Reema Tendulkar   |  Mangalam Maloo  April 23, 2026, 10:33:18 AM IST (Published)2 Min ReadThe recent rally in India’s power and utility stocks has been driven by strong structural tailwinds, but valuations are now starting to look stretched, according to Bernstein's Director and Senior Analyst Nikhil Nigania.

Nigania pointed to three key drivers behind the sector’s sharp move — energy security concerns, rising data centre demand, and expectations of stronger power consumption in the coming months give weaker monsoon. Together, these factors have lifted not just utilities, but the broader power ecosystem, including transmission, distribution, and allied plays.

Nigania added, "The valuations have run up too fast. We don't see a lot of headroom from a fundamental perspective.”

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What stands out in the current market is how sharply utility valuations have re-rated. Stocks like NTPC and Power Grid Corporation of India are now trading at multiples comparable to private banks and IT services firms — something rarely seen over the past decade.

NTPC, for instance, has moved from around 1x price-to-book historically to roughly 2x now, while Power Grid trades closer to 3x book. Earnings multiples have also expanded into the mid-to-high teens, bringing them in line with sectors traditionally seen as growth leaders.

This sharp re-rating suggests that much of the optimism around demand and policy support is already priced in.

Given the sharp run-up, Nigania suggests being selective.

Among large-cap utilities, NTPC still offers some room for upside, though timing entry after a correction may be wiser.

In the financing space, REC Limited stands out as relatively inexpensive, despite some near-term concerns around forex exposure.

On the renewables side, the preference is shifting towards integrated players like Tata Power rather than pure-play solar or wind companies.

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Bernstein’s broader thesis remains centred on energy security rather than pure energy transition.

Nigania highlighted that while renewables remain important, segments like coal, nuclear, and transmission are currently underappreciated.

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