<article>Rural Electrification Corp. and Power Finance Corp. are among the worst performers in an index of India’s top 100 companies this year. Analysts say the lenders’ shares are cheap for good reasons.</article>

Rural Electrification Corp. and Power Finance Corp. are among the worst performers in an index of India’s top 100 companies this year. Analysts say the lenders’ shares are cheap for good reasons.
The government-ordered restraint on lending to loss-making power distributors has marred the outlook for the state financiers, accelerating a slide that’s put their shares on course for a third month of losses. Jefferies on Wednesday cut its fiscal 2019-20 earnings estimates by more than 25 percent for Power Finance and by over 8 percent for Rural Electrification.
“Medium- to long-term outlook is challenging as existing receivables are stuck” with state distributors, said Deven Choksey, managing director at K.R. Choksey Shares &amp; Securities Pvt. The shares may have fallen too far but “there’s no clarity at present and so it is futile to put money in them. It will be a blind bet,” he said.
Power Minister R.K. Singh on Feb. 8 asked Rural Electrification and Power Finance to not give loans to distribution companies unless they come up with a plan to reduce losses. That’s not going to be easy as “state government’s finances are in a bad shape,&#8221; said Chokkalingam G, managing director at Equinomics Research &amp; Advisory Pvt. “They will have to make additional provisions.”
Also read:
<a style="color: #ff0000;" href="https://www.dealstreetasia.com/stories/liberty-house-bid-bhushan-power-92824/">Liberty House submits last-minute bid for India’s Bhushan Power</a>
<a style="color: #ff0000;" href="https://www.dealstreetasia.com/stories/clp-india-arm-essel-infraprojects-power-transmission-92898/">CLP India said to be eyeing Essel Infraprojects’ power transmission biz</a>
Bloomberg

The government-ordered restraint on lending to loss-making power distributors has marred the outlook for the state financiers.

India's power lenders' shares are cheap and for good reason

Bring stories like this into your inbox every day.

Sign up for our newsletter - The Daily Brief

India's power lenders' shares are cheap and for good reason

Start your deal-making journey now!

Bring stories like this into your inbox every day.

Sign up for our newsletter - The Daily Brief