Will these 17 power stocks gain muscle hereon?

Moneycontrol Bureau

The government's decision Friday to allow coal-fired power companies to pass on higher cost of imported coal to consumers, is prompting investors to relook their bets on the sector.

Sixteen of the 17 leading power generating companies have fallen between 2-51 percent so far this calendar. CESC has somewhat managed to stay an exception to the trend, gaining 5 percent during this period.

Supply shortage due to Coal India's inability to ramp up production forced power generating firms to function at half their capacity. The prolonged tussle between power companies and Coal India; and lack of clarity on policy front had led the power sector to underperform for a long time.

India's electricity generation is dominated by state-run NTPC and the stock was one of the few to have survived the carnage that its peers in the private sector have seen. Tata Power, which runs a large-scale power plant and supplies electricity to five states, however, fell 26 percent in the last six months. The biggest losers in the pack were JP Power Venture, Lanco Infratech and Indiabulls power, all of which have given up half of their gains since Januray 1.

Experts say power companies will see an improvement in their performance once tariffs are passed on to consumers. The finance minister has assured the hike would not be much, but power companies say it will depend on case-to-case basis. If all goes as planned, then power companies will see increased efficiency and stocks may finally see a pick-up.

Note: Power companies with market cap of Rs 1000 crore and above have been taken under consideration.

jhini.phira@network18online.com