Tata Power, Reliance Infra slip on talks of power tariff cut; but experts remain bullish

NEW DELHI: Shares of power producers like Tata Power and Reliance Infrastructure slipped over 1 per cent on reports that Maharashtra is planning to cut tariffs by around 15 per cent.

Tata Power, which was among the top losers on the BSE Sensex, slipped as much as 2.5 per cent, while Reliance Infrastructure dropped 1.2 per cent.

Prithviraj Chavan government is all set to cut power tariff in the state by about 15 per cent on the recommendation of a group of ministers. State industries minister Narayan Rane told ET the decision will be announced in the next eight days.

The group of ministers set up by the government under Narayan Rane recommended that electricity tariff for agriculture and small industries be cut by 10-15 per cent.

ET has learned this decision will be extended to Mumbai city and suburbs too, by January end.

The cut will only be for farmers, domestic consumers and small businesses consuming less than 500 units a month.

Tata Power closed 2.5 per cent lower at Rs 81.90, while Reliance Infrastructure Ltd ended 0.4 per cent down to Rs 411.10.

However, most analysts are positive on power sector and they see most of the stocks bouncing back 12-18 months.

“As of now, things are very much against the power sector and not many are ready to wager money on this particular sector. There were hopes, but the recent developments in this sector are not very conducive for somebody to go and buy into power stocks,” said Mehraboon Irani, Principal & Head-Private Client Group Business, Nirmal Bang Securities in an interview with ET Now.

“At least I believe that somewhere down the line power stocks will give returns to those who are patient and ready to buy time,” he added.

Irani is of the view that for the long-term investor, they need to look at least a couple of decent stocks like Tata Power, at least from a 12 to 15-18 months' perspective.