Not keen on power sector, stick to quality stocks like Tata Power and Power Grid: Gaurav Mehta

In a chat with ET Now, Gaurav Mehta, VP, Institutional Equities, Ambit Capital shares his views on the power space.

ET Now: How are you approaching the power sector now?

Gaurav Mehta: Power sector is a very complex sector. In the initial wave of euphoria, everything that had got beaten down in the previous downturn has participated. Now people will become lot more sector specific.

Coming specifically to power, we do not think that issues can be resolved over the next six-nine months. Our view on the sector is mixed. We are bias on Power Grid, but we continue to be very choosy on IPPs.

We continue to like the best quality IPPs like Tata Power. Overall, we are not very gung-ho on the sector. We do not think that things will get resolved in a hurry. Time works against the weaker companies because they are highly indebted and their interest frames will continue to be high.

Several of those indebted firms have also risen in the recent rally from the power sector. Those are plays that are best avoided. We will continue to stick with top quality even in the sector like Tata Power, Power Grid.