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'Indian power

sector a haven

for investors'

BOMBAY: With the continuing power shortages and higher tariff rates, the overall power scenario in India is likely to remain bleak even as power stocks emerge as major defensive plays, James Capel B&K said in its sector update report released on Friday.

The study expects a substantial increase in prices of key infrastructure inputs in the post-election scenario making this sector a safe haven to investors, it said.

The increase in administered prices is likely to depress earnings growth for the corporate sector in 1996/97, James Capel B&K said.

"Increasing blackouts offer tremendous opportunities in power generation and more importantly in distribution, as the loss-making state electricity boards consider revamping their operations and even look at total privatisation (for example in Orissa", analyst Avadhoot Sabnis said.

The report issued a buy recommendation on BSES Ltd and Tata Electric Companies, while it recommended a "sell on strength" on CESC Ltd.

"The importance of the overall power picture for the licensees lies in the availability of growth prospects and the favourable policy changes", the study said.-Reuter