Macquarie has said it is strongly bullish on India's power sector, initiating coverage on major players such as Power Grid, NTPC, REC and PFC.

What Happened: The firm's positive outlook comes as industry experts anticipate robust growth in the domestic power sector, driven by increasing capital investments and a shift towards renewable energy.

Starting with Power Grid, Macquarie assigned an “outperform” rating, setting a price target of ₹380 per share. The brokerage views the company as a key beneficiary of a renewed push in transmission capital expenditure (capex).

After a period of slowdown, the sector is expected to see a sharp recovery, making Power Grid an attractive pick, it said. The company's strong position in the renewables segment and a significant rebound in the total addressable market make it a solid choice for investors looking to capitalise on the ongoing capex cycle, according to Macquarie.

Macquarie also gave NTPC an “outperform” rating, with a target price of ₹475 per share. The brokerage highlighted NTPC's strategic focus on energy security and the transition towards clean energy as key growth drivers.

See Also: Garden Reach Shares Slump Ahead Of Q2 Results: What Analysts Expect

NTPC's upcoming capacity additions, primarily through brownfield projects, are expected to reduce execution risks, it added. The brokerage sees potential for long-term growth, particularly with the planned expansion into nuclear energy. Despite a strong rally in NTPC's stock over the past three years, Macquarie believes there is significant visibility for continued growth.

Power Finance Matters: Meanwhile, Macquarie's coverage on REC began with an “outperform” call and a target price of ₹660 per share. The firm noted that recent regulatory changes aimed at tackling cyclical power shortages have reduced credit risks, providing a favourable environment for power financiers like REC.

The brokerage remains bullish, citing strong asset resolutions and an increasing focus on renewable energy projects as factors that could lead to a re-rating of the stock. Despite a recent surge in REC's share price, Macquarie believes the company's current valuation does not fully reflect its improved risk profile.

PFC also received an “outperform” rating, with a price target of ₹630 per share. Macquarie sees PFC as an appealing cyclical play with attractive valuations. The brokerage highlighted similar themes as with REC, noting that regulatory overhauls have significantly lowered credit risks, creating a strong growth outlook for power financiers.

While PFC has experienced a substantial rally, Macquarie argued that the stock still has room to run, thanks to better asset resolutions and a growing emphasis on renewables. The firm suggested that PFC offers a more favourable risk-reward profile compared to REC.

Price Action: Power Grid’s share price was down 0.81% at ₹320.05 on Wednesday, while NTPC’s stock was up 0.64% at ₹382.75.

REC was trading 1.9% lower at ₹504.7in the early hours of trade and PFC’s share price eased 1.74% to ₹459.35.

Read Next: BSE Shares In Red Despite Strong Q2 Results; Here’s Why This Brokerage Is Still Bearish On The Company