PFC, REC, Rel Infra gain after Delhi tariff hike

MUMBAI: Shares of power generation and distribution companies moved higher after three Delhi-based private distribution companies - Tata Delhi Power, BSES Rajdhani and BSES Yamuna - hiked the price of power for domestic use by a steep 24.15 percent after getting the go-ahead from the Delhi Electricity Regulatory Commission. The price of power for commercial use was hiked by 19.5 percent.

Some parts of Delhi have been facing power cuts for the past few days as state-run NHPC cut supply of 200MW to BSES Rajdhani Power for failing to pay dues of over Rs 225 crore. Other companies are also threatening to cut power supply.

“FY13 will be the year of big power tariff hikes which will allow state distribution companies to repair their balance sheets. The most recent Delhi tariff hike will support valuations of Reliance Infrastructure,” Bank of America Merrill Lynch said in a note.

The brokerage has a ‘buy’ on Reliance Infrastructure with a target price of Rs 1,045.

At 10:10 a.m., shares of Tata Power rose 2.83 percent, Reliance Power gained 1.03 percent, Torrent Power moved 1.58 percent higher, Reliance Infrastructure rallied 2.30 percent and NTPC moved up 1.63 percent

Power sector picks from Ashwani Gujral, Fund Manager at ashwanigujral.com

Buy Power Finance Corporation with a stop loss of Rs 162 for a target of Rs 180.

Buy Rural Electrification Corporation with a stop loss of Rs 176 for a target of Rs 190.

Buy Reliance Infrastructure with a stop loss of Rs 540 with a target of Rs 565.

Buy Tata Power with a stop loss of Rs 94 with a target of Rs 105.