There’s a noticeable dichotomy within power sector companies. While there is surplus capacity and low utilization of existing capacity among power generation firms, the stage is all set for revenue and order book growth for power transmission and distribution (T&D) firms. Analysts from the sector are hopeful that the draft National Electricity Plan (December 2016), which signals a sizeable Rs2.6 trillion investment into building T&D networks between 2017 and 2022, should open avenues for firms in this business. In any case, after some sluggishness until fiscal year 2015, domestic T&D orders started to pick up. It was after the FY08-09 downturn that some of these firms battled losses and were also caught in a debt trap. However, stringent cost management has now brought large-sized companies back on to the profit track. Some firms have struck a meaningful geographic balance to diversify risks. Some others are restructuring businesses to improve profitability. No doubt, T&D stocks in the entire power sector are to investors what roads are in the infrastructure universe.

(Live Mint)