Share price of Power lenders rallied on Monday on reports that the state government may take over the entire debt of power distribution companies.
Share price of Power lenders rallied on Monday on reports that the state government may take over the entire debt of power distribution companies.
Power Finance Corporation (PFC) and Rural Electrification (REC) gained 6.50 per cent and 3.67 per cent at Rs 240.70 and Rs 283.90, respectively.
Parag Jariwala, VP-institutional research, banking and financial services, Religare Capital Markets, said, “Restructured loans have risk weight of 125 per cent on banks. With state government guarantee, risk weight will fall to 20 per cent. PSU banks with higher exposure to SEBs and government owned infra lenders like REC and PFC will benefit the most. Among large PSU banks- Canara Bank, Bank of India have large exposures.”
Share price of Canara Bank and Bank of India were up 1.59 per cent and 2.23 per cent at Rs 283.85 and Rs 137.45, respectively.
Oriental Bank, Dena Bank and Andhra Bank also advanced 2.41 per cent, 0.88 per cent and 1.73 per cent, respectively.
According to market experts, financial restructuring may lead to upgrade of loans to standard category.
Source: Religare Capital Markets
| Subscribe To Our Free Newsletter |
