Power stocks: Both PSUs and pvt ones got re-rated. Ready for another round in Modi 3.0? 6 stocks with upside potential of up to 37%

As far as the fundamentals are concerned, they are far better than what they were five years back. So far as individual companies are concerned, they appear to be all fine, both in terms of increasing sales and operating margins. There are many power companies which have settled with banks and are in the process of coming out of IBC. It is probably one of the sector, where the high risk taking investor can have look at companies which have come out of IBC, the only condition, the money they invest in these stock is should be treated as money which they have lost, because any delay in revival may make the stock price slip down once again very sharply and their investment can go down the drain.

The reason why is to look at IBC cases, because there is a possibility that these promoters have learnt their lesson or in some cases, the new promoters have a track record of putting things in order.

To understand the complete picture of the power we will have to go back and track the journey of the sector for the last 20 years.

Between 2005 and 2008 a number of new players entered into the power sector, right from established industrial houses, to new companies without any experience in the power sector. It is very typical of equity markets, not only in India but globally, all of sudden a sector gets discovered, where the street assumes that there is possibility of exceptional growth. There is a mad rush to get exposure to that sector, taking valuations through the roof. Then after the rush, there is sudden cooling off, because things don't pan out in the sector itself.

The reason, a large number of these companies got stuck with legal cases, due to coal issues and the captive mine case hit them very badly. At the same time, there was a surge in global coal prices, making things difficult even more. On the operational side, the power sector being regulated both at central and state level faced multiple headwinds at various points of time.

Some time delay in payment plays havoc with the cash flow and if the balance sheet of the company is leveraged or the cost of the borrowing is very high then it becomes a major trouble. That happened with all of them, a number of ultra mega power projects were stuck with court cases and the operational issues. The end result was that by 2014, most of the power companies were and in a few years, a number of them went to IBC.

Now the companies where the management had been careful enough not to go by what the Dalal Street was saying between 2005 and 2008 were able to buy some of these at reasonable valuations leading to consolidation after 2014. One can look at companies which have bought these IBC assets and have merged it with their existing companies.

Another set of companies which were able to survive were PSU power companies from different segments, not only power producers but power infrastructure owners also. In the case of PSU, despite all their shortcomings, they have some advantages when it comes to raising resources for the long term at a reasonable cost.

Yes, they may not get into areas or segments of the power sector which streets like at a point of time in an aggressive manner, but a reading of the annual report of these company clearly shows they are also moving into new energy area at pace at which one should expect PSU to do given the fact that they will not take that extra risk on their balance sheets. This movement into new areas is likely to get a push in and that brings the possibility of them getting once again re-rated. So have them on your watch list.

About Companies

is a company, which is engaged in the generation and sale of electricity. The principal business activity of the Company is electric power generation by a coal-based thermal power plant. The Company's business segments include Generation and Others. The Company's Other business includes providing consultancy, project management and supervision, re-gasification, oil and gas exploration and coal mining. The Company's subsidiaries include NTPC Electric Supply Company Ltd., NTPC Vidyut Vyapar Nigam Ltd., Kanti Bijlee Utpadan Nigam Ltd., Nabinagar Power Generating Company Ltd., Bhartiya Rail Bijlee Company Ltd., Patratu Vidyut Utpadan Nigam Ltd., North Eastern Electric Power Corporation Ltd., THDC India Limited, NTPC Mining Ltd., NTPC EDMC Waste Solutions Private Ltd., NTPC Renewable Energy Ltd. and Ratnagiri Gas and Power Private Ltd.

is a company, which is primarily engaged in the generation and distribution of electricity. Its operation spanning the value chain from mining coal, generating power and distribution of power. Its businesses consist of Kolkata operations as well as other generation and distribution ventures. Its Kolkata operations include distribution of electricity, with its own generation facilities, across its licensed area in Kolkata, Howrah, Hooghly, North and South 24 Parganas, West Bengal. Its generation projects include operational thermal and renewables projects with a cumulative generation capacity of approximately 800 megawatts (MW), which are owned and operated by its subsidiaries. It has distribution license for Greater Noida, Uttar Pradesh; approximately three distribution franchisees (DFs) in Kota, Bharatpur and Bikaner in Rajasthan; and its new DF in Malegaon, Maharashtra. Its subsidiary include Haldia Energy Limited

is a power transmission company engaged in planning, implementation, operation, and maintenance of Inter-State Transmission System (ISTS), telecom and consultancy services. The Company's segments include Transmission Services, Consultancy Services and Telecom Services. Transmission Services is engaged in transmission of bulk power across different states of India consisting of extra high voltage/high voltage (EHV/HV) networks. Consultancy Services provides consultancy services in the transmission, distribution, and telecom sectors, including planning design, engineering, load dispatch, optical ground wire (OPGW) on intra state transmission network, procurement management, operation and maintenance, financing, and project management. It utilizes the spare Optical fibers available in the OPGW laid on the transmission network for providing telecom services to various customers. Its Smart Grid enables real time monitoring and control of power system.

is a company that is primarily engaged in the generation of electricity. The Company is also focused on contracts, project management, consultancy works and power trading business. It has an installation base of approximately 7071.2 megawatts (MW) from over 24 power stations. The Company's power stations project includes Baira Siul, Loktak, Salal, Tanakpur, Chamera - I, Uri - I, Rangit, Chamera - II, Indira Sagar, Dhauliganga, Dulhasti, Omkareshwar, Teesta - V, Sewa - II, Chamera-III, Teesta Low Dam - III, Nimmo-Bazgo, Chutak, Uri-II, Parbati - III, Teesta Low Dam - IV, Solar Power, Kishanganga and Jaisalmer. The Company is engaged in the construction of over nine projects aggregating to a total installed capacity of approximately 5999 MW. The Company's consultancy services offer survey and investigation, planning, design and engineering, construction, operation and maintenance, renovation, modernization and updating of hydropower projects.

is an integrated power company engaged in the business of generation and sale of power. The Company's segments include Power Trading, Equipment Manufacturing and Mining. Its plants include Baspa, Karcham Wangtoo, Barmer, Vijaynagar and Ratnagiri. Baspa Plant is located in the higher reaches of the Himalayas and has a generating capacity of approximately 300 megawatts (MW). The Karcham Wangtoo plant is located on river Satluj in District Kinnaur of Himachal Pradesh and has a generating capacity of approximately 1091 MW. Barmer Plant is located close to its fuel source, the lignite mines in Kapurdi and Jalipa. The Vijayanagar plant is located in Karnataka, this plant consists of two separate business units BU I and SBU I, with a combined capacity of approximately 860MW. The Company generates approximately 4,559 MW, out of which approximately 3158 MW is thermal power approximately 1391 MW is hydropower and approximately 10 MW solar power.

SJVN Limited is primarily engaged in the business of generation and sale of power. The Company operates through Thermal Power segment. The Company is implementing power projects in Himachal Pradesh, Uttarakhand, Bihar, Gujarat, Rajasthan and Arunachal Pradesh in India besides neighboring countries, which include Nepal and Bhutan. The Company operates approximately 1,500 megawatt (MW) Nathpa Jhakri Hydro Power station. Its thermal power project under survey and investigation is Buxar Thermal Power Project. Its wind power project in operation is 47.6 MW Khirvire Wind Power Project. Its solar power projects under survey and investigation include 4,000 MW Ultra Mega Green Solar photovoltaic (PV) Power Project; five MW Solar PV Grid Connected Power Project, and Ultra Mega Hybrid Renewable Energy (Solar and Wind) Park. Its Power Transmission project under development is Power Transmission Project. The installed capacity of the Company is approximately 1,959.6 MW.

Source for About Companies: SR Plus

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