The Hindu Business Line : Investors remain bullish on power sector cos

Mumbai, Dec. 5 Power stocks have been attractive invetors’ interest of late. Marketmen believe that the long-term prospects of the power sector make them very lucrative.

The power sector on the whole has been doing rather well on the bourses, with many of the stocks touching 52-week highs in the past month including those of Areva T & D India Ltd, PowerGrid, Tata Power and Crompton Greaves.

“With a long-term view in mind, this sector has a lot of potential. This is mainly due to the infrastructure boom. Investors seem to be anticipating more happening in this sector and they have even discounted the cash flows for the next three to five years,” said Mr Vijay L. Bhambwani, CEO, BSPL India.

The opportunities in the sector are vast, believe analysts. “With the country’s GDP increasing at a rate of nine per cent, we need to up our generation capacity. By 2015, India is expected to have a capacity of 250 giga watts, whereas, now we have capacity of 123 giga watts,” said Mr P.R. Dilip, Managing Director of Impetus Wealth Management Ltd.

Capacity plan

In the Eleventh Five Year Plan, the Government plans to add more than 70,000 MW in capacity.

Everyone in the power sector could gain from this move believes Mr Gopal Agarwal, Senior Fund Manager, Mirae Assets Global. “Right from small contractors to transformer companies, all could reap the benefits,” he added.

Mr Dilip says that a lot of the bottlenecks that existed before have been done away with.

“The companies can now raise the capital that they require easier than what it was sometime back. Technology has also improved and the Government has relaxed certain policies. With the huge deficit in the country there is a lot potential for MNCs to invest in our country,” Mr Dilip said.

Scopes

“The global companies seem bullish about the scope in India. Siemens has inaugurated their its power transmission factory in Kalwa. The factory will be supplying large transformers to meet the demand for power transmission equipment in the country. Such ventures show that foreign companies are definitely interested in our power sector and have taken notice of its potential,” he added.

“With India developing at this rate, the demand for power will keep increasing and so will the deficit in the supply for power. So aggressive measures need to be taken to make sure that we bridge this gap because this sector is definitely one with huge potential,” said Mr S. Subramanian, Enam Securities Pvt Ltd.