New Delhi: Power stocks led by Reliance Power, Tata Power, NTPC gained ground on Tuesday. This was due to a strong 5.2 per cent monthly jump in overall power generation in India in May 2012 over the same month last year. Overall decline in coal prices and stable prices limit the downside.
Reliance Power rose 1.8 per cent while Tata Power gained 1 per cent on Tuesday. Power stocks have been beaten down over the past one year. The BSE Power index fell 25 per cent while the BSE Sensex is down only 7.8 per cent.
Here are reasons why they gained:
Overall power generation: India’s power generation grew 5.2 per cent in May 2012. The growth in power generation through coal offset the decline in gas and hydro-based generation. While coal generation increased 13%, gas and hydro power reported a decline of 16% and 13%, respectively.
Key companies: NTPC’s total generation increased 11 per cent and was driven by 10.9 per cent growth in coal generation and 11.8 per cent growth in its gas-based plants (mainly due to lower annual base). Tata power reported 52.7 per cent growth in generation, fuelled by the commissioning of Mundra’s first 800-MW unit. Adani and JSW’s strong generation growth was driven by capacity additions. Companies with gas-based plants, such as GMR and GVK, continued to see declines due to gas supply constraints. Shares of the two companies fell on Tuesday.
Plant load factors: Overall plant load factors or PLFs declined significantly to 53 per cent (59 per cent last year). While PLFs at coal-based plant declined to 70.1 per cent from 75.0 per cent annually as capacity additions far outpaced increase in the coal production. Gas-based PLFs declined to 51 per cent from 64 per cent due to declining output from KG Basin.
Coal production/prices: Coal-supply position was stable in comparison to the previous month with 29 out of 89 plants facing sub-critical inventory levels (against 24 plants last year). Although international coal prices fell 31 per cent, landed costs are down only 15 per cent due to the rupee depreciation.
Capacity: The month of May 2012 saw an addition of 1,342MW surpassed the monthly target of 285MW. In 2012 so far, the total addition was 3,102MW against the target of 945MW. In the 11th Plan (2007-2012), the industry achieved 86% of its targeted capacity, adding approximately 67.5GW (including approximately 17GW renewable) against the targeted 78GW. Currently, all-India installed capacity is about 203 GW
(based on a research report by BRICS Securities)
Reliance Power rose 1.8 per cent while Tata Power gained 1 per cent on Tuesday. Power stocks have been beaten down over the past one year. The BSE Power index fell 25 per cent while the BSE Sensex is down only 7.8 per cent.
Here are reasons why they gained:
Overall power generation: India’s power generation grew 5.2 per cent in May 2012. The growth in power generation through coal offset the decline in gas and hydro-based generation. While coal generation increased 13%, gas and hydro power reported a decline of 16% and 13%, respectively.
Key companies: NTPC’s total generation increased 11 per cent and was driven by 10.9 per cent growth in coal generation and 11.8 per cent growth in its gas-based plants (mainly due to lower annual base). Tata power reported 52.7 per cent growth in generation, fuelled by the commissioning of Mundra’s first 800-MW unit. Adani and JSW’s strong generation growth was driven by capacity additions. Companies with gas-based plants, such as GMR and GVK, continued to see declines due to gas supply constraints. Shares of the two companies fell on Tuesday.
Plant load factors: Overall plant load factors or PLFs declined significantly to 53 per cent (59 per cent last year). While PLFs at coal-based plant declined to 70.1 per cent from 75.0 per cent annually as capacity additions far outpaced increase in the coal production. Gas-based PLFs declined to 51 per cent from 64 per cent due to declining output from KG Basin.
Coal production/prices: Coal-supply position was stable in comparison to the previous month with 29 out of 89 plants facing sub-critical inventory levels (against 24 plants last year). Although international coal prices fell 31 per cent, landed costs are down only 15 per cent due to the rupee depreciation.
Capacity: The month of May 2012 saw an addition of 1,342MW surpassed the monthly target of 285MW. In 2012 so far, the total addition was 3,102MW against the target of 945MW. In the 11th Plan (2007-2012), the industry achieved 86% of its targeted capacity, adding approximately 67.5GW (including approximately 17GW renewable) against the targeted 78GW. Currently, all-India installed capacity is about 203 GW
(based on a research report by BRICS Securities)
