Adani Power, BHEL shares rise up to 4% on thermal project deal

Shares of state-owned engineering firm Bharat Heavy Electricals Ltd (BHEL) and Adani Power, a subsidiary of Gautam Adani-led Adani Group, climbed up to 4% in early trade on Thursday after they inked a deal for a thermal project. In an exchange filing overnight, BHEL said it received an order worth ₹4,000 crore from Adani Power for setting up the 2x800 MW thermal power plant at Raigarh, Chhattisgarh.

As per the deal, BHEL will supply equipment (boiler, turbine, generator) to Adani Power and supervise erection & commissioning for a 2x800 MW power project based on supercritical technology at Raigarh Phase II, Chhattisgarh.

The boiler and turbine generator will be manufactured at BHEL’s Trichy and Haridwar plants, respectively, the release notes.

Reacting to the news, shares of BHEL opened higher at ₹252, up 3.7% against the previous closing price of ₹242.90 on the BSE. In the first hour of trade so far, the PSU stock gained as much as 4.3% to hit a high of ₹253.35, while the market capitalistion rose to ₹86,375 crore.

In a similar trend, Adani Power share price climbed 2% to touch a high of ₹527, while the market cap increased to ₹2.03 lakh crore. The power heavyweight opened 1% higher at ₹521.95 compared to Wednesday’s closing price of ₹516.55.

Meanwhile, the equity benchmark Sensex was trading 0.72% higher at 73,520, and the NSE Nifty was at 22,230, up by 106.65 points.

In a separate release on March 27, Adani Power said that its wholly owned subsidiary, Mahan Energen Limited (MEL), entered into a 20-year long-term power purchase agreement for 500 MW with Reliance Industries, under the captive user policy as defined under the Electricity Rules, 2005. The deal is subject to requisite regulatory approvals.

As per the release, one unit of 600 MW capacity of MEL’s Mahan thermal power plant, out of its aggregate operating and upcoming capacity of 2,800 MW, will be designated as the captive unit for this purpose.

To avail the benefit of this policy, RIL will hold a 26% ownership stake in the captive unit in proportion to the total capacity of the power plant. It will accordingly invest in 5 crore equity shares of MEL, aggregating to ₹50 crore for the proportionate ownership stake.

In another exchange filing, Adani Power informed regarding the consortium financing arrangement of ₹19,700 crore. “Consequent to the enhancement in the credit rating of Adani Power to AA-, which followed the amalgamation of its six special purpose vehicles (SPVs) with itself, the company has consolidated the standalone term loan facilities of the SPVs into a single long-term rupee term loan facility of ₹19,700 crore under a consortium financing arrangement comprising eight lenders.”

The revised arrangement will allow the company to benefit from uniform terms and greater financial flexibility in addition to reducing the effective rate of interest, it added.

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