NTPC, Neyveli to benefit from new tariff norms: Ambit

The new tariff norms for power companies will greatly benefit central utilities, including NTPC, Neyveli Lignite and PowerGrid, according to a report by Ambit Capital.

“The immediate beneficiaries would be NTPC, Neyveli Lignite and Powergrid in the listed space. We reiterate our buy recommendation on NTPC with a target price of Rs 217, and a further upward bias,” the Ambit report said.

According to Ambit, Tata Power and Reliance Infrastructure would not immediately benefit from these new regulations as they are covered by the regulations of the Maharashtra Electricity Regulatory Commission (MERC). Having said that, the brokerage believes that all the state electricity regulatory commissions would follow suit, and use these regulations are model guidelines.

“Each state has a different time line, and that for Maharashtra is 2007/08 to 2009/10. Similarly, the benefits for Torrent Power would accrue later as the timeline followed in Gujarat is 2008/09 to 20010/11. However, it is possible that given the new regulations by CERC, the state commissions may follow sooner, rather than later,” adds the report.