Liquidity support brings a fresh lease of life for NTPC, Power Grid stocks
NTPC Ltd and Power Grid Corp. of India Ltd added as much as Rs25000 crore, or $3.33 billion, to their market cap, after the companies reported strong operating performance for the June quarter. Profits grew in the range of 18-20%, adjusted for the one-time rebates given to power distribution companies (discoms).
Importantly, their receivables situation improved, allaying some of the concerns investors had.
Receivables from discoms had spiked immediately after the covid-19 outbreak, tightening the liquidity situation for the two companies. Dues outstanding for more than 45 days tripled at Power Grid. Similarly, NTPC saw a sizable rise in receivables. But the trend reversed in July, with states availing the central government’s liquidity support scheme. Outstanding dues dropped 16% in July, from end-June levels for Power Grid. NTPC’s receivables declined by about 11% in July.
