Tata Power best pick in sector: Emkay Share

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Tata Power best pick in sector: Emkay Share

Mehul Mukati of Emkay Share & Stock Brokers believes that the power sector will do well for the next few years on demand from a power starved country like India.

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Excerpts from Your Stocks on CNBC-TV18 Watch the full show » RELATED NEWS Power Finance Corp IPO likely to open on Jan 31 Tata Power's PAT expected to rise over 73% in Q3 Tata Power eyeing coal mines abroad ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets BHEL BSE | NSE 25/05/12 Are Mutual Funds betting on BHEL? Other Stocks in this news GAIL India | NTPC | Tata Power Company |

Mehul Mukati of Emkay Share & Stock Brokers believes that the power sector will do well for the next few years on back of the demand from a power starved country like India.

Excerpts from CNBC-TV18's exclusive interview with Mehul Mukati:

Q: Could you take us through your expectations for the power sector and as it stand now with about seven mega power projects being rolled out and Tata power in particular?

A: We think that the power sector will do well in the next few years because India continues to be a power-starved country in light of which, we think the ultra-mega power projects are welcome, especially since they have finally taken-off. Two of them have already been announced and we expect another two to be announced in the current calendar year, with one in April-May and the other towards the end of the year.

Q: What is your sense, do you think NTPC 's tariff could come under closer scrutiny and BHE L would face more competition because of the ultra-mega power projects?

A: Yes in a sense what would happen is NTPC, it want face more scrutiny because being the largest power generator in the country, it will continue to do well and on the other hand GAIL is fully booked and it has large orders till now so in a sense it is not getting any ultra-mega project is not a negative though the upside may be a little lower for not getting these orders.

Q: What is the expectation you have from Tata Power in light of how the Mundra Power Project will translate into revenues?

A: We think Tata power will do well in the next few years even on the back of few projects it has, including the ultra-mega power projects. It has joint ventures with Damodar Valley Corporation for the Maithon Power Limited, where it is another 1000 megawatt expanding to 2000 at a later stage in the second phase.

In addition it is planning to have a project exclusively for the Delhi Distribution and all these are in fairly advance stages and on that basis these will do well.

Q: What is your expectation on earnings for Tata Power?

A: Last year, FY06, their earnings stood at Rs 31 and we think by FY08 it could go to Rs 45 or so, which is about 50%.

Q: Is that your best pick in the entire power space?

A: Yes, as of now Tata Power is the best pick.

Q: Any disclosures?

A: Our Emkay Shares & Stock Brokers or its clients may possess specific stocks.