Power demand recovered significantly in Q2FY21 resulting in improved thermal PLFs and subsequently higher offtake from Coal India (CIL). H1FY21 generation was lower, only 8.7% y-o-y (vs -16.4% in Q1FY21) and thermal PLFs improved 300bps from Q1FY21 to 49.6%. Peak demand reached 176.6GW on 18th Sep’20 (lower only 3.9% from FY20 levels of 183.8GW). This resulted in CIL registering 9.6% y-o-y growth in Q2FY21.
Opening up of the economy helped improve collections for discoms and further disbursal through PFC/REC scheme is expected to ease the receivables situation in coming months. This, combined with two other eagerly awaited developments – passing of Electricity Amendment Act and National Tariff Policy – are expected to result in sector re-rating. NTPC and Coal India are our top picks in the sector.
