Rs 90,000 cr discom package: Street anxious over impact on PFC and REC

While state government guarantee offers comfort, operational inefficiency may continue to impact debt servicing ability of electricity distributors, say experts; the two stocks are down 10-13 per cent

The central government’s Rs 90,000-crore stimulus to help power distribution companies (discoms) clear dues may trip the two state-owned financiers for the sector — Power Finance Corporation (PFC) and REC — which have been asked to give the loans.

While the package is aimed at easing the working capital pressures of discoms and power generation companies, the Street feels PFC and REC have been forced to carry the burden, and has punished the two stocks. Prices are down 10-13 per cent since May 13 since the stimulus announcement. This is more than twice the 3.7 per cent fall in Sensex