Barclays says restructuring measures for state electricity boards "fall short of expectations", and will serve as a bailout arrangement, rather than representing tangible reform measures.
However, it will reduce the risk of financial distress and any working capital concerns for some utilities.
India approved a plan to bail out cash-strapped power distributors saddled with more than $35 billion in debt, but which analysts said offered little to reform a sector whose dysfunction has exacerbated a growth-sapping energy crisis.
"We believe the impact on power equipment stocks is limited as concerns over coal availability, PPA disputes, aggressive competition on new orders and low order activity will remain for some years," Barclays said in a note.
Barclays analyst Venugopal Garre maintains 'underweight' ratings on power equipment stocks such as BHEL, BGR Energy and Thermax.
BHEL shares were up 1.5%, while BGR Energy and Thermax shares were down 0.1 and 0.32% respectively.