Tata Power, Adani Power shares soar on CERC ruling

Tata Power, Adani Power shares soar on CERC ruling

Shares of Tata Power and Adani Power enjoyed significant gains in early morning trade on Monday after they were granted compensatory tariff hikes by the Central Electricity Regulatory Commission (CERC).

The CERC allowed Tata Power to hike tariffs and receive compensation so that it could make up for losses that it incurred at its Gujarat-based Mundra plant.

The regulator said Tata Power should be allowed to get back Rs 330 crore for the financial year 2013-14. It also allowed the company to hike tariff by Rs 0.524 per unit for the current financial year for power generated at its Mundra plant.

Commenting on the ruling, Rupesh Sankhe of Karvy Stock Broking said, "The compensatory tariff will give Tata Power an 11-12 per cent post-tax Return on Equity (ROE) and from valuations perspective, it's a big positive for Tata Power."

The power-sector regulator also granted compensatory tariff increase to Adani Power.

As of 09.30 a. m. on Monday, stock in Tata Power traded 5.5 per cent higher at Rs 83.15 per share on the National Stock Exchange. Adani Power shares traded at Rs 36.95 apiece, up 1.4 per cent.

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