Mumbai: India’s power sector could see “tougher times ahead” due to depleting inventory of key raw material coal, forcing several power stations to operate at extremely low stock levels, brokerage CLSA said in a note on Monday.
As many as 29 power stations, of the 86 coal-based power projects in India, are currently operating with less than 4 days coal stock and 44 with less than 7 days stock, CLSA said, adding it was “underweight” on the sector.
India’s power supply situation will improve in the next four-five days as coal supply to power plants is slowly picking up, power minister Sushil Kumar Shinde said on Friday.
Coal production in India has been impacted by heavy rains in Orissa and strikes in Singareni Collieries Company Ltd, which contributes to nearly 10% of India’s coal production.
Coal India , the world’s biggest coal miner, produced 8% less in the September quarter while despatches fell 5% on year.
“The coal despatch by road is likely to be impacted in third quarter as well given the damage to haul roads because of the heavy rains,” CLSA said.
Due to a coal shortage, CLSA expects merchant tariffs to “shoot up” in the interim, benefitting Jindal Steel and Power , JSW Energy , Lanco Infratech and Adani Power .
CLSA pegged Power Grid as the “safest play” in the sector, followed by NTPC and Tata Power . “Avoid all others,” it added.