Power - Discom liquidity infusion scheme ends FY21 with disbursal of >Rs750bn - ICICI Securities

Additional disbursals totalling Rs295bn in the past two months through the PFC/REC Aatmanirbhar scheme to infuse liquidity into discoms have taken total disbursal in FY21 to Rs755.6bn. Further, loan sanctions have now reached Rs1.35trn, an increase of Rs105bn during the same period under UDAY limit relaxation, key beneficiaries being UP, Rajasthan and Andhra Pradesh. Additional disbursals have been mainly to UP, Telangana, TN and Bihar. This has resulted in clearing of dues of CPSU gencos, transcos and Coal India. Given many SEBs are comfortable with the conditions laid out to avail tranche-II loans, disbursals are expected Q1FY22 onwards. NTPC, Coal India and NHPC remain our top picks in PSU space in the sector.

- Loan sanctions cross Rs1.35trn for the scheme: Till 31st Mar'21, PFC/REC has sanctioned loans totalling Rs1,355bn through the Aatmanirbhar scheme to infuse liquidity into discoms, witnessing an increase of Rs105bn mainly under UDAY limit relaxation. Primary beneficiaries of the increased sanctions are - UP (Rs65bn by PFC), Rajasthan (Rs24.7bn by PFC) and Andhra Pradesh (Rs8.9bn by PFC and Rs6.5bn by REC).

- FY21 disbursals reach Rs756bn: Since our last update on 20th Jan'21, PFC and REC have cumulatively disbursed Rs295bn (Rs149bn by PFC and Rs146bn by REC) to close the year with total Rs755.6bn of disbursal to state discoms under the scheme. Primary beneficiaries in the past two months have been UP (Rs105bn), Telangana, Rs63bn), Tamil Nadu (Rs36bn) and Bihar (Rs17.5bn).

- Disbursements ease receivables concerns for CPSUs: The latest round of disbursements under the package have significantly helped to infuse liquidity into the value chain and clear overdue of CPSU gencos, transcos, Coal India and IPPs, easing systemic stress and receivable-related concerns. We estimate FY21-end receivables of most CPSUs to be at or below FY20 levels. Coal India's receivable may, however, be higher than last year as its dues are from state gencos, which is likely to be liquidated by Q1FY22 as coal demand picks up during summers. We believe tranche-II disbursal should start Q1FY22 onwards, given many SEBs are comfortable with the conditions required to avail the same. Tamil Nadu is expected to avail a large chunk of tranche-II in Q1FY22 itself.

Source : Equity Bulls

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