Stock Shastra

One sector on which all sectors/industries are dependent on is the Power sector. No other sector/industry would be able to function without the power sector which fulfils their energy requirements.  The power sector plays a critical role in the economic progress of our country. Due to the fast-paced growth of India’s economy, the country’s energy demand has been growing continuously. To boost economic growth and human development, one of the Government of India’s top priorities is to provide all its citizens with reliable access to electricity by 2012.
With a mixed portfolio of sources for generation, the power sector comprises of companies like NTPC (the largest company in thermal power generation), NHPC (leader in Hydro power) etc. More so, the FDI inflow in this sector has been on the rise in the last 5 years.
So, how does the Indian Power sector actually work? What lies ahead for this sector? Also get [...]

Power Finance Corporation (PFC), a Nav Ratna PSU, specializes in financing power projects and is known to be the ‘Financial Backbone of the Power Sector’. It came out with its Initial Public Offer in 2007 and since then has reported robust growth in its financials. The company has now come out with a Follow-on Public Offer which will enable it to raise close to Rs. 3500 Cr. from the sale of fresh equity while the Government will raise close to Rs. 1100 Cr. from the sale of part of its stake in the company. The price band for this follow-on public offering has been fixed at Rs. 193 – 203.

PFC was recently classified as an Infrastructure Finance Company which gives it an operational edge over its competitors. While this augurs well for the company, certain concerns like rising interest rates and a concentrated loan book, yet remain.

So, considering these factors, does this ‘Financial backbone of the Power Sector’ provide a good investment opportunity?

The role that a Government plays in the development of the country is similar to that of a parent raising a child. The Government is responsible for the growth and development of the nation as well as for the welfare of the people. And the way this it achieves this is through the money that it spends i.e. Government Spending.
Government spending might not be a word that we are fully aware of but it can significantly alter the prospects of a particular sector and even the entire economy. Infact, it also helped revive our economy in 2008-09 after the sub-prime crisis led to a market crash.
So, how does the government spending impact the economy? Which sectors are benefited the most by higher spending? And how can we use this knowledge to make profitable investments?