Why Does Jefferies See Strong Pockets In Power, Defence, And Data Centres?
Jefferies India, a leading global brokerage, has been closely tracking capital expenditure (capex) trends in India. Recently, its analyst Lavina Quadros highlighted that while overall capex growth is moderating from an earlier pace of 15% CAGR to 8–10% in the post-election and post-budget environment, there are still strong pockets of opportunity. Specifically, sectors such as power, defence, and data centres are showing robust investments and traction. This observation is critical for investors, as it suggests that despite broader moderation, targeted sectors remain resilient and attractive.
About Jefferies And Its Market Role
Jefferies is a globally renowned investment bank and financial services firm, well-regarded for its sectoral insights and forward-looking research. In India, Jefferies has been consistently providing deep market analysis, identifying trends that often play out in stock price movements. Their reports are widely followed by institutional investors, fund managers, and retail investors alike. With a strong team of analysts, Jefferies is not only tracking macroeconomic shifts but also providing actionable insights in emerging sectors. The latest commentary on power, defence, and data centres reflects its commitment to guiding investors toward opportunities even in times of moderated growth.
Power Sector: A Long-Term Growth Story
The power sector continues to attract significant investments, driven by India’s ambitious renewable energy targets and the government’s commitment to ensuring energy security. From solar and wind projects to grid modernization and transmission upgrades, this sector is poised to benefit from large capital inflows. The electrification of rural and semi-urban areas, coupled with the rising demand from industries, ensures that the power sector is not only resilient but also expanding. Jefferies believes that companies engaged in power equipment, distribution, and renewable projects will continue to gain traction in the years ahead.
Defence: Strategic Investments For National Security
India’s defence sector has been a focus area for both policymakers and investors. With rising geopolitical tensions and the government’s Atmanirbhar Bharat (self-reliant India) initiative, defence manufacturing is receiving unprecedented attention. The emphasis on indigenous production, along with rising defence allocations in the Union Budget, ensures that the sector continues to expand. Jefferies notes that companies engaged in defence equipment, technology, and manufacturing are well-positioned to benefit. The Make in India initiative, coupled with export opportunities, could turn India into a global hub for defence manufacturing.
Data Centres: Backbone Of Digital India
The digital economy is expanding rapidly, and data centres are at the heart of this transformation. With increasing adoption of cloud computing, digital payments, e-commerce, and artificial intelligence, the demand for storage and processing capacity is rising exponentially. Jefferies identifies data centres as a high-growth pocket where substantial investments are being made. India’s policy framework, along with global hyperscalers entering the market, makes this sector a powerful long-term opportunity. Companies involved in construction, equipment, and IT infrastructure will continue to benefit from this boom.
Housing And Capex Trends
Apart from the three major pockets, Jefferies also noted traction in housing-related capex. Urbanization, infrastructure upgrades, and rising household income are pushing housing demand upward. Although the broader capex growth is moderating, these pockets ensure that capital formation continues steadily across the economy. Investors can expect certain companies tied to housing materials, construction, and finance to gain.
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Investor Takeaway
While overall capex growth in India has slowed to 8–10%, strong pockets remain in power, defence, and data centres. Jefferies highlights these sectors as resilient drivers of long-term growth, supported by government policies, technological advancements, and structural demand. For investors, these insights suggest that selective bets in infrastructure, defence manufacturing, and digital infrastructure could yield sustainable returns.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services
