Adopt wait-and-watch policy for power/metal stocks: Pankaj Pandey, ICICIdirect.com

In a chat with ET Now, Pankaj Pandey, Head-Research, ICICIdirect.com, shares his views on power/metal stocks. Excerpts:

ET Now: Power/metal companies are bidding for the coalmines. The bidding has been very aggressive and we have already seen the stock market verdict, for example, a CESC with the kind of aggressive bid that they put in but I saw across the board, almost everybody has been bidding fairly aggressive. What do you make of this pattern and what about specific impacts on stocks that you may be tracking in your house?

Pankaj Pandey: Largely, the companies have been quite aggressive in terms of bidding. One can look at this aggressive bidding from two parts. One, the companies which have signed PPAs will be impacted more. For example, we were expecting that under recovery for CESC on the fuel side could be somewhere about 30 to 40 paisa whereas, I think companies which have not signed PPAs, they would still try to figure out whether this cost can be passed on when they do the final signing in terms of PPA.

So as of now, it is still a wait and watch situation but we are still not chasing this sector because we still require a good amount of clarity as to how these companies would address the aggressive bidding which has happened because this reminds us in terms of the UMPP biddings which had happened in the past.