Defensive Growth Stocks to Add to Your Portfolio, Suggested by Bank of America

Synopsis: BofA is bullish on India’s power sector, driven by rising demand, supportive policies, and seasonal peaks. Strong capacity use, renewable growth, and stable cash flows make utilities like Power Grid, NTPC, and NHPC attractive for growth and defensive portfolios.

Bank of America (BofA) has recently signalled renewed confidence in the power sector, driven by improving demand visibility and stronger earnings prospects across key utilities. In line with this view, leading Indian power stocks like Power Grid Corporation of India, NTPC Limited, and NHPC Limited have attracted upgraded ratings from market participants, reflecting expectations that robust demand, capacity expansion, and grid modernisation will support their earnings growth.

Rising Demand in Key Segments

BofA Securities forecasts that power demand will accelerate to a 7.2% CAGR between FY25 and FY30, up from 5.4% over FY15–FY25. This growth is largely driven by expanding demand from data centres and consumer durables. Data centres are increasingly critical with the rise of cloud computing, AI, and digital services, all of which require large, continuous power supplies. Similarly, as household incomes rise and urbanisation increases, the use of consumer appliances and electronics grows, boosting electricity consumption. 

Government Policy Support

Government initiatives aimed at reducing dependence on imported fuels are expected to reinforce domestic electricity consumption. Policies promoting the electrification of transport, expansion of renewable energy, and incentives for energy efficiency encourage both demand growth and new generation capacity. 

Seasonal Demand Tailwind

Power demand tends to peak during summer months, driven largely by increased use of cooling appliances in homes, offices, and commercial establishments. This seasonal surge offers utilities strong near-term visibility for generation and transmission volumes, allowing better planning for fuel procurement and grid management. The predictability of these seasonal patterns also contributes to steady revenue streams and operational stability.

Defensive Sector Appeal

Power utilities are widely considered a defensive sector, attractive during periods of market volatility. Their stable cash flows, supported by regulated tariffs and predictable demand, make them less vulnerable to economic swings compared to cyclical industries. For investors, this defensive characteristic provides portfolio stability and reliable returns even when broader markets experience uncertainty.

Improving Growth Outlook

The medium-term growth prospects for the sector are strengthening due to several factors. Better capacity utilisation of existing plants enhances efficiency and profitability. Ongoing renewable energy additions diversify the energy mix, while continued policy support in the form of incentives and regulatory backing improves earnings visibility. 

Energy Security Focus

Increasing emphasis on energy security is driving strategic investments in domestic generation capacity. Governments are focusing on self-reliance and reducing exposure to international fuel market volatility. This encourages utilities to invest in renewables, storage solutions, and grid infrastructure.

Power Grid Corporation of India Ltd

Power Grid Corporation of India Ltd (POWERGRID) is a central public sector enterprise under the Ministry of Power, Government of India. It is primarily engaged in the transmission of electricity across the country, operating a vast network of high-voltage transmission lines and substations that ensure a reliable power supply. 

BofA Securities has upgraded Power Grid Corporation of India from ‘Neutral’ to ‘Buy’ and increased its target price from Rs. 301 to Rs. 340, offering 18 percent upside.

Power Grid has raised its FY26 capex guidance to Rs. 35,000 crore and increased its capitalisation target to Rs. 25,000 crore, reflecting improved execution visibility, according to the brokerage. As of March 22, 2026, the company has already achieved 102% of its FY26 capex guidance and 91% of its capitalisation target, underscoring strong progress toward its revised goals.

NTPC Limited

NTPC Limited is India’s largest energy conglomerate, primarily focused on generating electricity through thermal, hydro, and renewable sources. Established in 1975 and headquartered in New Delhi, the company plays a key role in meeting the country’s power demand while expanding its portfolio in clean energy. 

BofA Securities has upgraded NTPC to ‘Buy’ from ‘Neutral’, increasing its target to Rs. 432 from Rs. 352, offering 16 percent upside. It stated that for NTPC, rising thermal capacity needs could strengthen its long-term capital expenditure outlook.

NHPC Ltd

NHPC Ltd is a premier public sector enterprise in India, primarily engaged in the development and operation of hydroelectric power projects. Established in 1975 and headquartered in Faridabad, the company focuses on generating renewable energy, contributing to India’s clean energy goals. 

BofA Securities has upgraded to ‘Buy’ from ‘Underperform’, with the target price raised to Rs. 88 from Rs. 70, offering 15 percent upside. In the case of NHPC, it said that execution-related overhangs at projects such as Parbati and Subansiri Lower are beginning to ease.

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