Tata Power rose the most among utilities, ending at nearly 9%, followed by NTPC, Power Grid, BHEL, Torrent Power, Adani Power and Siemens, which rose between 2% and 7%. Power Grid and Torrent Power hit all-time highs.
Tata Power is a potential candidate for inclusion in the MSCI standard index as part of the semi-annual review of the index in November. If the stock goes above โน 170, it will be eligible for November listing. That could lead to a $ 150 million entry into the stock, Edelweiss Alternative Research said.
A recent report from Citigroup India said that MSCI India Utilities' one-year forward P / E is extremely low, trading at a discount of around 50% to MSCI India against a historical average discount of around 22%. Power Grid, NTPC and CESC are Citi's best options.
"We have seen the rotation of the sector and this was not a sector that had moved. There has been talk of electricity reform for some time, but the biggest challenge for the distribution sector is effective implementation, since energy is also a state issue, "said Pankaj. Pandey, head of research at ICICIdirect.
The electricity reform bill aims to reform the sector. The bill seeks to withdraw the power distribution license, lower barriers to entry for private actors, which would ultimately allow consumers to choose between multiple providers.
Shares of Power Grid, NTPC and Tata Power have gained 37-96%, while JSW Energy is up 475% for the year. While some of these stocks have outperformed benchmarks, banking and IT stocks have rallied more than most of these utility stocks.
Swarnim Maheshwari, vice president of institutional equities at Edelweiss Securities, said the energy sector is gaining as energy demand is improving, the sector is available at attractive valuations and "major reforms such as the Sector Scheme have already begun. of Renewed Distribution and the Electricity Amendment Bill, which when passed, could be a huge game changer. "
