REC bucks trend on buzz TNEB looking to up tariff

Rural Electrification Corporation jumped 3.77% at Rs 188.50 at 13:47 IST on BSE, extending Monday's 2.02% rise triggered by reports that Tamil Nadu Electricity Board has sought the regulator's approval to increase tariffs by 38%.

Meanwhile, the BSE Sensex was up 238.02 points, or 1.49%, to 16,184.12.

On BSE, 2.18 lakh shares were traded in the counter as against an average daily volume of 3.19 lakh shares in the past one quarter.

The stock hit a high of Rs 189.60 and a low of Rs 181.30 so far during the day. The stock had hit a 52-week low of Rs 155 on 4 October 2011. The stock had hit a 52-week high of Rs 364.90 on 1 December 2010.



Shares of Rural Electrification Corporation (REC) had risen 2.02% to Rs 181.65 on Monday, 21 November 2011. The stock is up 5.87% in the preceding two sessions from a recent low of Rs 178.05 on 18 November 2011.

The stock had outperformed the market over the past one month until 21 November 2011, gaining 5.70% compared with the Sensex's 5% decline. The scrip had also outperformed the market in past one quarter, rising 5.37% as against 1.21% slide in the Sensex.

The large-cap state-run lender to power projects has an equity capital of Rs 987.46 crore. Face value per share is Rs 10.

State-run REC provides financial assistance to state electricity boards, state government departments and rural electric cooperatives for rural electrification projects.

REC had extended financial assistance to the Tamil Nadu Electricity Board (TNEB) for augmenting the latter's power generation capacity as well as strengthen its transmission and distribution network.

Media reports stated that a tariff hike by TNEB will improve its deteriorating financial health. According to reports, TNEB had accumulated losses of Rs 40700 crore as of March 2011, due to several years of no tariff increase.

Meanwhile, REC announced after market hours on Friday (18 November 2011) that its wholly-owned subsidiary, REC Transmission Projects Company (RECTPCL) has been appointed by the central government to act as bid process coordinator for a transmission project in Andhra Pradesh.

RECTPCL would act as the coordinator for transmission project namely Package C: Evacuation System for Vizag-Vemagiri Projects-Hinduja (1040 MW): Transmission Scheme (a) Generation switchyard-Vemagiri-II Pooling Station 400 kV D/C (Quad) line; and (b) Khamam (new) - N' Sagar 400 kV D/C line.

In a regulatory filing, REC said its subsidiary is in the process of incorporating a Special Purpose Vehicle (SPV) for the project. The proposal to set up the SPV was approved by the REC board during their meeting held on 10 November 2011.

REC's net profit rose 0.8% to Rs 622.87 crore on 26.6% growth in operating income to Rs 2552.44 crore in Q2 September 2011 over Q2 September 2010.

Government holds 66.8% stake in REC (as on 30 September 2011).