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Increasing Bond Issues by Indian Companies
Jul 6, 2017

Indian companies raised a record US$ 46.5 in debt and equity in 2017, the highest amount in the last decade. 64% of these funds are from the financial sector. What is interesting is that the energy and power sector was the second highest in raising funds. Also, amongst the financial sector companies, Power finance corp. Ltd (PFC) which raised $ 3.5 billion was one of the largest fundraisers.

This can be one of the indicators of a major transformation in India's energy market. India has been reliant on traditional fossil fuels like coal, oil and gas for its energy requirement. Recent numbers indicate a shift in trend towards renewable energy. Share of renewable energy has grown to 17.4% in FY17. In fact, the addition of renewable energy capacity was more than traditional energy in FY17.

While this shift is good for players in the renewable energy space, traditional power companies like Coal India are suffering due to a decrease in demand. Its sales fell marginally in FY17 even as wage revision pulled down profits by 35%. The future prospects of higher realizations remain clouded as Coal India will have to supply coal to power plants having Power Purchase Agreement thereby curtailing sale through e-auctions. Moreover, the management also expects subdued demand for washed coal due to reluctance of power generators to pay for expensive washed coal.

Data Source: Thomson Reuters, Livemint

This Chart Of The Day was published in The 5 Minute WrapUp - Should You Take SBI Chief's Advice and Load up on SBI Shares?

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