Credit Suisse upgrades Coal India, NTPC to ‘outperform’ from ‘neutral’

By: | Updated: October 6, 2015 4:46 PM

Credit Suisse has upgraded Coal India, NTPC stocks to "outperform" from "neutral" on power distributors' restructuring.

Credit SuisseCredit Suisse has upgraded Coal India, NTPC stocks to “outperform” from “neutral” on power distributors’ restructuring. (Reuters)

Credit Suisse has upgraded Coal India, NTPC stocks to “outperform” from “neutral” on power distributors’ restructuring.

At 9.55 am, Coal India shares were trading 2.35 per cent up at Rs 337.25. NTPC shares were up 0.04 per cent at Rs 127.45. Coal India shares closed 4.02 per cent up at Rs 342.75. Share price of NTPC closed 1.30 per cent down at Rs 125.75.

Analysts Neelkanth Mishra, Ravi Shankar and Prateek Singh said that state electricity board (SEB) problem resolution may remove a big overhang, which would make the valuations now attractive.

Receding risk of contagion from SEBs credit worthiness will help NTPC, analysts Lokesh Garg and Vaibhav Jain said.

According to a PTI report on Monday, the government is working on debt recast of state power distribution companies to improve the deteriorating financial health of the discoms that are also responsible for rising bad loans of public sector banks.

“We are working very closely with the Power Ministry and also the affected 8 stressed states,” Finance Secretary Ratan P Watal told reporters on Monday.

According to sources, the Union Cabinet is likely to consider this week a proposal to recast Rs 4.3 lakh crore loans of nine state power distribution companies with a view to bring down their liabilities.

The total loans to the discoms in the nine states — Uttar Pradesh, Tamil Nadu, Telangana, Rajasthan, Madhya Pradesh and Jharkhand — add up to Rs 4.3 lakh crore, sources said.

According to analysts, financial restructuring may lead to upgrade of loans to standard categoryand state government guarantee may also reduce the risk weightage of the loans.

With PTI and Reuters inputs

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