The improved coal supplies further bode well. Coal stocks at power plants across the country have increased led by ramp-up in Coal India’s production, which had grown 14 per cent year-on-year in February. Not surprising the conventional electricity generation in the country had increased 10.4 per cent year-on-year in February’20 providing encouragement. It also marks the second straight month of demand uptick after four consecutive months of decline, say analysts. While the trend needs be watched, prospects for NTPC too have certainly improved. Analysts have also been expecting fixed cost under recoveries in second half to reduce to Rs 200 crore compared to Rs 450 crore in first half.
Compiled by BS Researcu Bureau
However, analysts say that Power Grid
may still be better placed compared to NTPC even though both see limited impact of Covid-19. Power Grid has the highest level of insulation as operational risk is lowest. Power Grid too had seen concerns on decline in consolidated capex and capitalisation play out, however these issues are behind now. While delays in Rs 9,000 crore Raigarh-Pugalur line capitalisation in FY20 (35-40 per cent of FY20 planned capitalisation) may lead to some earnings miss in FY20, analysts at Jefferies feel that FY21 should be largely unaffected. Overall, Power Grid is currently executing projects worth Rs 61,000 crore (Rs 48,000 crore is ongoing with regulated tariffs and Rs 13,000 crore is tariff-based competitive bidding) and analysts say that this gives enough visibility for Rs 12,000-15,000 crore annual capitalisation for the next 2-3 years.
Apart from these, both Power Grid and NTPC provide a high 6-7 per cent dividend yield which is an added positive.