Motilal Oswal: Reforms Critical To Address Utilities Sector; Cash Flow Issues Intensify

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.The utilities sector is grappling with issues pertaining to mounting receivables, a fact, which is being continuously highlighted by incremental data. As of May-end, outstanding over-dues to generators (based on government data) was approximately 20% higher (versus that at end-March 20). Note that at end-FY20, receivables were already highly elevated.Further, the audited numbers for distribution companies as provided by the Power Finance Corporation highlights the ongoing system inefficiencies. In this context, the Rs 900 billion relief package for discoms though much needed may actually do little to solve the problem if incremental dues crop up.Companies within our utilities universe remain attractive; however, the ongoing losses at discoms are a point of concern. Unless discoms turn profitable, issues pertaining to delayed payments and curtailed demand could continue. This in turn would be a key overhang for the generation sector. discoms are in a circular loop due to their weak financial health, in our view. Addressing operational issues of these discoms, thus, is of great urgent importance..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint. .Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Motilal Oswal: Reforms Critical To Address Utilities Sector; Cash Flow Issues Intensify

Motilal Oswal: Reforms Critical To Address Utilities Sector; Cash Flow Issues Intensify

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