Shares of Tata Power and Reliance Infrastructure today gained around 2% following electricity tariff hike in the national capital, a move that would benefit the two companies' power distribution arms.
The electricity tariff in Delhi would be hiked by as much as 26%, effective from July 1. The national capital has three power distribution companies -- Reliance Infrastructure's BSES Rajdhani and BSES Yamuna and Tata Power Delhi Distribution Ltd.
Shares of Tata Power ended the day up 2.25% at Rs 97.65 on the BSE. Intra-day, the stock gained over 4%.
Reliance Infrastructure closed 1.82% higher at Rs 543.90.
"Power utility stocks like Tata Power and Reliance Infrastructure gained on the back of steep tariff hike approved by DERC for power distributed by these utilities in the national capital," Milan Bavishi, Head Research, Inventure Growth & Securities said.
Investors expect other states to raise tariffs as well, said experts.
"Power-related stocks were in limelight today after the Delhi government raised power tariff. Street expects that many states may raise power tariffs," Shubham Agarwal, Associate VP, Motilal Oswal Securities said.
The actual hike for domestic consumers is 24.15% but an additional eight% surcharge that would be levied on the overall bill would effectively take the increase to 26%, Delhi Electricity Regulatory Commission (DERC) had said.
Other power-related stocks moved up in tandem. Torrent Power was up 1.02%, NTPC (0.85%), Power Finance Corporation (5.09%) and Rural Electrification Corporation (4.17%).
Meanwhile, in the broader market the BSE Sensex closed at 16,967.76, up 61.18 points.
