Central Electricity Regulatory Commission (CERC) has finally released the final
regulations on the Power Tariff Regulation for FY2020-24. Final regulations favor
promoting the economical drivers in the sector and has put to rest all the fears like
regulated ROE being reduced for the sector by 1% amongst others. These regulations
shall come into force on April 1, 2019, and unless reviewed earlier or extended by the
commission, shall remain in force for a period of five years from FY2020-24. These
regulations will be positive for the power sector and will benefit NTPC as the main
concerns that the draft paper raised have been put to rest by the final regulation. Thus,
while we are cautious on the power sector given the various concerns, we maintain our
BUY on NTPC as the stock provides a good opportunity; given its profitability is
better insulated to industry dynamics. In addition, the stock at current valuations
discount most of the concerns
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