Govt's land acquisition policy positive for power: Angel

Angel Broking has come out with its earnings estimates on power sector for December quarter FY13. If the government continues with measures such as Captive Coal Allocation Policy and Land Acquisition Policy, it will be positive for the sector in the medium to long term.

During April-November 2012, the overall power generation in India rose by 4.6% yoy to 607BU; aided by a 13.7% yoy increase in installed capacity to 210,937MW.

During this period, thermal power generation grew by 9.0% yoy to 495BU while hydro power generation declined by14.5% yoy to 86.0BU. The decline in hydro power generation is due to decline of water in reservoirs feeding hydroelectric stations. Nuclear power generation posted a growth of 3.7% yoy to 22.0BU.

During 8MFY2013, 9,839 MW of capacity was added compared to targeted capacity of 9862 MW. The bulk of the capacity addition (~5565MW) was done by private companies. During the last few years, private power companies have made robust capacity additions.

The Planning Commission has set a power capacity addition target of 88,425MW for the current Five-Year Plan period ending March, 2017 to bridge the widening demand-supply gap for electricity. However, we believe the target is over-ambitious in the wake of multiple headwinds facing the power sector such as domestic fuel availability issues, land acquisition delays etc.

The power sector is currently facing many headwinds such as fuel shortage, delay in land acquisition and environmental clearances among others which is reflected in the underperformance of BSE power index to Sensex.

The government has shown its intent on reforms with restructuring
 plans for SEBs and setting up of Cabinet Committee on Investment to fast track projects. If the government continues with measures such as Captive Coal

Allocation Policy and Land Acquisition Policy, it will be positive for the sector in the medium to long term. We maintain our Accumulate view on GIPCL and remain Neutral on NTPC.

	Net Sales (Rs cr)		Net Profit  (Rs cr)
	3QFY13E	% chg	3QFY13E	% chg
GIPCL	361	-7	34	101.3
NTPC	16,712	9	2,592	21.7

 

 

 

 

 

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