Electric utilities stocks gain; Adani Power soars 20%, JSW Energy rises 14%

Shares of electric utilities companies were in focus with Adani Power and JSW Energy surging 20 per cent and 14 per cent, respectively, on the BSE on Thursday on the back of heavy volumes. CESC, NTPC, and Torrent Power were up in the range of 3 per cent to 4 per cent.

The S&P BSE Power index hit a 52-week high of 2,079, up 1.6 per cent, as compared to a 0.06 per cent rise in the S&P BSE Sensex at 03:15 pm.

In October, power generation grew 9.7 per cent year-on-year (YoY) to 116.6 billion units on the back of continued economic revival. On a month-on-month (MoM) basis, it was down 3.1 per cent as residential demand softened in the northern region with the onset of winter. Generation is likely to rise 7.9 per cent YoY in November 2020 to 109.5 billion, driven by increasing economic activity, according to Emkay Global Financial Services.

"Increased economic activity in the country led to an impressive recovery in power demand and generation, reversing the decline seen till August 2020. While overall demand and generation fell 8 per cent and 9 per cent YoY, respectively, in the April-September period (H1FY21), the trend reversed in September 2020 and we see a sustained improvement in H2FY21, driven by a further rebound in economic activity," the brokerage firm said in a power sector update.

The power ministry is also working on a series of major reforms, including the implementation of the Direct Benefit Transfer Scheme (DBT) across discoms and has also drafted a Standard Bidding Document (SBD) for the privatisation of state discoms, which will be the guiding document for states that want to offer their discoms to private companies.

Accordingly, states such as Rajasthan, MP, Kerala, and AP are working on the guidelines for implementing the proposed measures, which we believe will help in lowering discoms’ losses and improve their cash-flow situation, it said.

Among individual stocks, Adani Power was locked in the upper circuit of 20 per cent at Rs 54.15 on the back of a four-fold jump in trading volumes. The stock rallied 41 per cent in the past three trading days, from Rs 38.50 on Friday, November 27, 2020. A combined 71 million equity shares changed hands and there were pending buy orders for 3.8 million shares on the NSE and BSE.

Tata Power was up 2 per cent at Rs 69.65 after Coastal Gujarat Power Limited (CGPL), a wholly-owned subsidiary of the company, repaid Rs 1,500 crore of bank loans on Wednesday, December 2, 2020.

With this repayment and the earlier repayment of Rs 2,650 crore of bank loans made in October 2020, the entire bank loans of CGPL aggregating to Rs 4,150 crore, have been fully repaid. After this repayment, CGPL's long term debt comprises only Rs 3,940 crore of bonds and debentures.

This action is in line with the company's stated objective of repaying debt in CGPL to reduce the periodic debt servicing obligations of CGPL and thus make its operations more self-sustainable, it said.