PFC, REC stocks trip as talks on loan recasting of power discoms may be delayed

Shares of power finance companies tripped in early trade Wednesday, extending weakness for the second day as a media report quoting sources said the cabinet may not hold discussions on the issue of loan restructuring of power distribution companies today.Earlier there were talks that the Union Cabinet is likely to consider this week a proposal to recast Rs 4.3 lakh crore loans of nine state power distribution companies with a view to bring down their liabilities. On account of subsidised tariffs, the state electricity discoms are facing cash crunch and are incurring annual losses of about Rs 60,000 crore.[caption id="attachment_2458416" align="alignleft" width="380"] Reuters[/caption]Amid hopes the government may soon announce measures to recast loans of power distribution firms, listed power finance companies such as Power Finance Corp (PFC) and Rural Electrification Corp (REC) had rallied sharply in last few sessions.In the last five sessions before Tuesday, REC stock had jumped 13 percent in five sessions, while PFC counter spurted 10 percent on BSE.However, the optimism began to fade a day before amid indications the talks may not happen this week, with REC stock ending 4 percent lower and PFC sliding nearly 3% despite a recovery in the broader market.Extending the fall in today's early trades, Rural Electrification Corp stock lost another 2.3 percent to trade at Rs 274.25 while Power Finance Corp declined nearly 2 percent to Rs 240.Since power finance firms have huge exposure to power discom firms, markets were hoping that any quicker decision to recast loans could have offered some breather to the former.