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Power stocks rallied up to 13 per cent on BSE in otherwise weak trade on Thursday after Finance Minister Nirmala Sitharaman announced a much-awaited relief package for ailing power distributing companies. A part of Rs 20 lakh crore Atma Nirbhar Bharat Abhiyan package will provide a fresh loan of Rs 90,000 crore through PFC-REC to state-run power distribution companies (discoms) which will reduce receivables of electricity generation companies. In today’s trade REC share price fell 2.33 per cent to Rs 98.15, while Power Finance Corporation (PFC) shares dropped 2.17 per cent to Rs 87,65 apiece. However, other power stocks Adani Power share price rallied up to 13 per cent to Rs 36 apiece on BSE, Tata Power shares jumped 9.5 per cent to Rs 33.20 apiece, Reliance Infrastructure shares gained 5 per cent to Rs 18.15.

Similarly, shares of Jaiprakash Power Ventures, Reliance Power, K.P. Energy were up in the range of 3-5 per cent. While JSW Energy, Torrent Power, CESC, Green Power gained up to 3 per cent in the morning trade. However, Power Finance Corporation and PEC shares slipped over 2 per cent each to Rs 87.65 and Rs 98.15, respectively. In comparison, BSE Sensex was down 509 points or 1.59 per cent at 31,499.22. “Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) will infuse liquidity in the discoms to the extent of Rs 90,000 crore in two equal instalments. This amount will be used by discoms to pay their dues to transmission and generation firms,” FM Sitharaman said.

The government has also announced to give loans against state guarantees for the exclusive purpose of discharging liabilities of discoms to gencos. Also, discoms will provide the facility of digital payments to consumers. “For the DISCOMS, the amount may be small but useful for them as they can use the funds to pay the generators and transmission companies. The Rs 90,000 cr will be paid from reserves or alternatively borrowed from the market,” CARE Ratings said.

The loans will be secured against receivables and guaranteed by respective state governments. “However, since it comes with additional riders and conditions on digitization, reducing AT&C losses, etc., it is to be seen how much of this will be actually disbursed,” Emkay Global Financial Services said in its recent report. “Given the adequate capitalization levels of PFC/REC, the fiscal impact should be negligible,” it added.

“We welcome the reforms announced by the government around discoms as it ensures a steady flow of income. However, it just puts the burden on REC and PFC,” Amar Ambani, Senior President and Head of Research, YES Securities, said.

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The rally that pharmaceutical companies have witnessed on Dalal Street in the past few months has seen a lot of the stocks jump manifold, among these, Jubilant Life Sciences has recorded the second-best performance, up 83% from its recent low. The scrip traded at a 52-week-low value of Rs 234 per share on the last day of March and since then has been galloping northward, to now trade at Rs 482 apiece. What could further help Jubilant Life Sciences stock is the firm’s new deal with Gilead Sciences, which will see the pharma major register, manufacture and sell Gilead’s investigational drug, remdesivir, a potential therapy for coronavirus in 127 countries including India.

Jubilant Generics Limited, a subsidiary of Jubilant Life Sciences has entered into a non-exclusive license agreement with Gilead, the company said in a regulatory filing on Tuesday. Jubilant Life Sciences will now be able to register, manufacture and sell the drug, that is being touted as the potential therapy for coronavirus, in 127 countries. “Under the licensing agreement, Jubilant will have the right to receive a technology transfer of the Gilead manufacturing process to scale up production to enable expedited access of the medicine to Covid-19 patients upon approvals by regulatory authorities in respective countries,” it said.

The move, according to analysts, would help the stock. “It will work in favor of Jubilant Life Sciences, as technicals suggest a higher high higher low chart formation is in progress. It is strongly bullish. The next target will be 480-508,” Vishal Wagh, Research Head of Bonanza Portfolio told Financial Express online. Remdesivir, an investigation antiviral by Gilead has received an Emergency Use Authorization by the USFDA, which will help in a broader use of the drug on people suffering from coronavirus. “ The EUA is based on available data from two global clinical trials – US National Institute for Allergy and Infectious Diseases’ placebo-controlled Phase 3 study in patients with moderate to severe symptoms of COVID-19, and Gilead’s global Phase 3 study evaluating remdesivir in patients with severe disease,” Jubilant Life Sciences said.

Jubilant Life Sciences has a board approval to separate the Life Sciences Ingredients business. “The separate listing of Jubilant’s two business segments is expected to unlock value even as an NCLT approval and the demerger could now be delayed. With the pharma business expected to deliver steady growth and the LSI business expected to recover aided by an improved demand & pricing scenario for key products, the medium-term outlook remains positive,” said analysts at JM Financial with a buy rating on the stock and a target price of Rs 705 per share.

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