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