Power companies can offer 15-20% return: Deven Choksey

In a chat with ET Now, Deven Choksey, MD, KR Choksey Securities shares his views on power space, NTPC.

ET Now: Would you have a view on NTPC as well since we are talking about the power space, we have been saying this pretty much daily that from the power basket this one has been rising slowly and steadily. We have spoken more perhaps about Tata Power, Adani Power are the momentum ones but this one has had a steady rise NPTC your call?

Deven Choksey: Well I would remain positive. In power generation companies if the fuel linkage issue is getting sorted out, which in all likelihood will, and along with that the tariff pricing issue also gets sorted out, which should happen over a period of time with the policy coming up for the new government, many of the power generating companies which are probably quoting currently at a valuation and they were distinctly quoting below the valuation at which the replacement cost would be. But today they have come up to a level at which they are still quoting below the market valuation of their replacement capacity that one would create into the power segment. Given the kind of status with some of the companies particularly the Adani Power or Tata Power where the plants are relatively new, in such situation even NTPC, some of the units are new. The valuations rerating has to take place and that is what I believe that some of the power generating companies in the near term could give superlative return. But may be over a period of time, we would get moderate to somewhere around 15% to 20% but certainly one could argue for 15% to 20% kind of a return out of some of these power generating companies.