November 16, 2017 / 5:23 AM / 2 months ago

BUZZ-India's CESC falls; regulator rejecting power purchase deal a setback - Nomura

** Shares of power utility CESC Ltd fall as much as 3.3 pct to 982 rupees

** Uttar Pradesh Electricity Regulator (UPERC) rejecting the 200 megawatt (MW) power purchase agreement (PPA) between CESC’s unit, Dhariwal Infrastructure Ltd (DIL), and Noida Power Co (NPC) is a “setback”, Nomura analysts say

** DIL and NPC signed the long-term PPA in Q2, targeting supply from a largely idling 300 MW unit - Nomura

** If the 300 MW unit remains idle for another 3 years, the CESC stock fair value would drop by 3-4 pct, Nomura says

** “We think UPERC’s non-approval of the PPA with NPC is certainly a setback, and it diminishes the earnings turnaround visibility of the project”

** Of the 23 analysts covering the stock, 19 rate it “buy”, 3 “hold” and 1 “sell”; median PT is 1,094.5 rupees - Thomson Reuters data

** Nomura maintains “neutral” rating and 948 rupees PT on stock

** CESC’s shares have risen 59 pct this year, as of Wednesday’s close

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