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Motilal Oswal Report
Power generators have been struggling with mounting receivables as over-dues from distribution companies continue to rise.
Against this backdrop, news flow over the relaxation of working capital (WC) limits for DISCOMs has led a run up in power stocks with expectation of possible easing of WC for generators too.
While positive, our interaction with rural electrification corporation (REC) suggests that the focus still remains on the initial Rs 900 billion package announced under the ‘Atmanirbhar' scheme.
WC funding over and above these levels will depend on multiple factors, despite the rise in borrowing limits.Nevertheless, we note that money has been flowing through from the Rs 900 billion package and is positive.
Within our coverage universe, stocks such as NTPC Ltd., JSW Energy Ltd., Tata Power Company Ltd. (in particular its renewable arm Tata Power Renewable Energy Ltd. ) and Coal India Ltd. could benefit if receivables normalize.
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