"We believe regulated utilities are well positioned to expand their incremental market shares given benign competition," Morgan Stanley analysts Girish Achhipalia, Amit Bhinde and Pranjal Jain said in a note to clients.
The brokerage forecasts capital spending of more than $550 billion in the country's electricity sector over the next 10 years.
Morgan Stanley reiterated its 'underweight' ratings on torrent power and tata power.
"Private independent power producers have also improved their balance sheets and should see growth in their asset base, but managements are conservative and will need to make rational capital allocation decisions as there is too much to choose from," the analysts said.
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