Key Points
Nikhil Nigania, Director, Bernstein, says in almost all power shortage cycles, ideally the guy who makes the most money is the person with the merchant power plant..
Nikhil Nigania: If we compare the last power cycle, which went on till 2012, versus the current cycle which started a year and a half back, the primary difference was last time there was consistent power shortage throughout the day because we did not have enough private sector participation..
For example, Jindal Steel and Power last time had a merchant plant, which came very early in the cycle, 2007-2008 and they were able to make the largest returns given they were early and there was a massive shortage and they had power prices as high as Rs.7-8 on the exchange back then..
But the point is that power stocks and I am talking purely in terms of shareholders right now, have made some phenomenal returns and yet you always question whether the price that you are paying right now, the valuation justifies the growth that these companies are going to post..
But when you talk about the sector as a whole, do you think that this is just the beginning of the upcycle or because, like I was reading the note that came in also, that you are still expecting the power shortage to continue this time in 2024 as well?.
