Stay away from power generating companies: Choksey

Deven Choksey, MD of KR Choksey Shares & Securities told CNBC-TV18, "In ideal situation, one would think of accumulating National Thermal Power Corporation (NTPC) but the fact is that there is lack of clarity. The return is coming down as far as NTPC is concerned under the Central Electricity Regulatory Commission (CERC) order. In such situation if the company is getting incentivise for the better efficiency and better utilisation of the plant, in this case, with this order probably that ratio is coming down to just 15.5 percent RoC. So in that case, what you are not likely to see is a kind of an incentive going to the generating companies for the efficiency under which they are operating. NTPC is certainly likely to get victim of it."

"If they end up scoring against more than 20 percent, they end up getting RoE of only less than 20 percent, which is where the negativism is. Though they are quoting below book value, I would still think that till the time clarity emerges, safe to stay away from generating companies,” he added.