Profit upgrades for NTPC, Power Grid on new power tariffs regulations

Besides stable regulated returns, NTPC will get some respite on coal, O&M under-recoveries

The Central Electricity Regulatory Commission’s (CERC’s) final regulations on power tariffs for FY19-24 comes as a respite for power utilities, with brokerages upgrading net profit estimates for players such as NTPC and Power Grid. The tariffs have a significant bearing on the ability of power companies to earn a stipulated return.

While the Street was expecting a significant dilution of regulated returns for the next five-year period, they were being left unchanged at 15.5 per cent for both generation and transmission was a key positive. A stable return on equity (RoE) is looked at as a key driver for earnings of