Volatile Day for Tata Power, Adani Co on APTEL Or­der Con­fu­sion

The Economic Times - - Smart -

Mum­bai: Shares of Tata Power and Adani Power tum­bled on Thurs­day fol­low­ing the Ap­pel­late Tri­bunal for Elec­tric­ity’s (APTEL) or­der for com­pen­satory tar­iff for their In­done­sian coal-based power plants in Mun­dra. Their shares plunged 9% and 12%, re­spec­tively dur­ing the ses­sion on re­ports that APTEL has de­nied com­pen­satory tar­iff. How­ever, they re­cov­ered most of the early losses as clar­ity emerged that these com­pa­nies have been al­lowed to re­cover higher fuel costs from con­sumers of their Mun­dra power plants un­der the ‘force ma­jeure’ clause. This helped Tata Power and Adani Power trim losses but they still end- ed down 4.1% and 3.6%, re­spec­tively. APTEL has di­rected the CERC to work out the quan­tum of com­pen­satory re­lief on a ‘force ma­jeure’ ba­sis in three months. “As per man­age­ment (of Tata Power), af­ter CERC re­verts on this, APTEL may not do any fur­ther hear­ings and award the CT (com­pen­satory tar­iff)...APTEL’s rul­ing on CT is favourable,” JP Mor­gan said.

Other an­a­lysts were di­vided on the in­ter­pre­ta­tion of the or­der, but added that these stocks will re­main around cur­rent lev­els till there is fur­ther clar­ity on what com­po­nents will be cov­ered un­der ‘force ma­jeure’.

“Stock per­for­mance will be driven by the fact that whether the state elec­tric­ity boards go ahead and chal­lenge this in the Supreme Court or agree to or­der given by APTEL. If they chal­lenge it in SC, then the process will restart. Then SC will de­cide whether this is a force ma­jeure or not,” Harsh­vard­han Dole, VPin­sti­tu­tional eq­ui­ties at IIFL said.

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