Power stocks hardly electrifying as investors unplug
Power stocks have put up a disappointing show since the last Budget, with many losing between 3 and 46 per cent of their value. And this is in line with the financial performance of the companies. While most grew revenues during the half-year ended September 2014, this did not translate into higher profits. Some have posted losses, at the net level.
The uncertainty caused by coal block de-allocations in September 2014 turned out to be the biggest overhang on the sector last year. The subsequent enactment of an Ordinance and commencement of coal block auctions, however, brought some clarity, stemming the sharp slide.
Apart from dealing with the cancellation of their coal blocks, though non-operational in many cases, power producers have also had to grapple with a shortfall in coal supplies from Coal India. Reduced demand from the financially weak State distribution utilities also constrained generation.