FIIs hike stake in power firms

The power companies have got a boost from foreign institutional investors (FIIs) during fourth quarter of the last fiscal.

Most of the power sector companies, both public sector and privately-held, have seen inflow of FII funding into them in the fourth quarter of 2011-12. FIIs holding in companies such as NTPC, NHPC, Tata Power and Reliance Power have gone up significantly in the quarter ending March 31, 2012 against the previous quarter that ended on December 2011.

However, there are two exceptions — Power Grid and Adani Power — where FII stake in fourth quarter have come down by 1.07 per cent and 8.28 per cent, respectively.

At the same time, foreign funds have made their way into power equipment maker BHEL and power project financer PFC too.


Industry watchers feel that power sector would continue to grow as demand picks up and issues such as shortage of coal are being gradually addressed. This trend is expected also in the first quarter of current fiscal that started on April 1.

India saw inflow of $ 6-7 billion funds from FIIs in January and February that pushed Nifty by around 22 per cent in these months, say industry trackers. Most of these funds have invested in companies that were earlier undermined but now have better outlook.

“In anticipation that in the next six months to one year, coal shortage problem would be sorted out and new capacities would come up, FIIs have been investing in power companies,” said Mr Kishor P. Ostwal, CMD, CNI Research.

Mr Ostwal said these two firms (Adani and Power Grid) may be an exception but in the overall scenario investors are bullish on power companies as there is lot of demand for electricity.

The Power Minister, Mr SushilKumar Shinde, told Business Line that power sector in India is growing at 8.5 per cent, which is one of the highest contributing sectors.

“Valuation of many power companies are at lowest levels for past few year. But, in the long-tern perspective, the power sector outlook is strong.

“At the beginning of this year, we saw more foreign investors investing into India. At the same time, all power companies’ head met Prime Minister. There is a feeling that Government will take steps to address challenges faced by the power developers,” said Mr Arvind Mahajan, Executive Director at KPMG.

Source: The Hindu



Executive at India Electron Exchange

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