The Supreme Court (SC) ruling on April 11 that power generation companies will not get any compensatory tariff to cover the surge in imported coal prices has given a jolt to power stocks. While Adani Power has lost 29% of its market value, Tata Power has erased 7.75% of its m-cap.
Adani Power and Tata Power were seeking compensatory tariff on grounds that regulatory changes in Indonesia in 2010 led to an increase in Indonesian coal prices, adversely affecting their coal sourcing costs. After almost a decade-long tussle, the Central Electricity Regulatory Commission (CERC) came out with a compensation formula in December 2016 that allowed the companies to recover the increase in costs. But the apex court's ruling has now nullified that order.
The impact is likely to be more adverse for Adani Power which has been recogni