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| CESC was locked at its upper circuit at Rs 139.30, Surat Electricity was up 9.89 per cent over its previous close, at Rs 241.10, BSES was up 0.42 per cent at Rs 479.45, Tata Power was up 0.66 per cent at Rs 264.15 hitting an all-time high of Rs 268.90 in intra-day trades, Alstom Power was up 7.48 per cent at Rs 60.30, Bhel was up 0.95 per cent at Rs 456.85, ABB was up 2.33 per cent at Rs 527.40 and Siemens was up 2.41 per cent at Rs 646.35. |
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| A better than expected financial performances has played its part in the recent market interest in power stocks. |
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| The markets see good future prospects for these companies following reforms as well as restructuring in several companies. |
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| Investors see a lot of value in the sector, especially in the light of a sustained reform campaign in state electricity boards (SEBs). |
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| A host of positives has led to good buying interest in the power sector with prices of most companies registering massive gains. CESC has surged 140.97 per cent in the last three months: from Rs 49.55 on August 10 to Rs 119.40 on November 10. |
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| Gujarat Industries Power has risen 69 peer cent from Rs 27.40 to Rs 46.35, Neyveli Lignite has added 60 per cent from Rs 36.85 to Rs 59.05, BHEL has moved up from Rs 293.80 to Rs 454.60, gaining 54.73 per cent, Tata Power is up 53 per cent from Rs 161.20 to Rs 246.70 and BSES has surged 51.48 percent from Rs 306.60 to Rs 464.45 in the last three months. |
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| The interest in the power stocks was ignited by the enactment of the Electricity bill earlier. The Act is expected to improve the financials of power companies, whose performances in the past have not been too good. |
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| The electricity Act seeks to give the power sector a new lease of life by doing away with licensing, revitalising cash-strapped state electricity boards (SEBs) and encouraging them to upgrade their infrastructure, thereby reducing losses in transmission and distribution (T&D). |
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| In what is expected to be a free market system, power producers will be free to determine their own charges and there will be no assured return- currently 16 per cent. |
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| Power generating companies will gain from free market access. They can expand their capacities or set up power plants wherever they wish to and there will be no curbs on supplies. |
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| They could literally supply to anyone, anywhere. Power generating companies like BSES and Tata power which can afford to expand capacities and push up their top lines will benefit the most, market sources said explaining the special interest on these counters. |
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| The flip side to this story is the actual implementation of this Act. Most industry sources and analysts feel that the biggest risks are in the implementation besides certain other contentious issues like tariffs that are yet to be addressed. |
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| In a report on the Indian power sector, Fitch ratings says economic growth and infrastructure upgrades, coupled with changes in the current regulatory framework, will fuel demand and improve the sector fundamentally. |
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