Mumbai: Government`s ongoing massive capacity addition in power sector through large-scale spending and the growing role of private players in the segment would make power-firms attractive for investors, analysts said today.
"The government spending in this sector is huge as it has identified power as a key focus area. Government has earmarked over 30 per cent of budgeted infrastructure spending, around Rs 6,665 billion, in the 11th plan in the power sector," Religare Capital Markets, Institutional Equity sales president Vipul Sanghvi told reporters here.
Government spending and huge supply shortage in the sector coupled with fast execution of projects would improve its growth prospects in the next few years, they said.
"India is going to face peak power shortfall for the next 3-5 years which creates a massive opportunity in power sector. The execution of projects is also picking up fast," Research Assistant Vice President at Religare Kunal Sheth said.
Positive factors such as Government spending, participation of private sector in execution of projects in the next five-year plan are expected to offer at least 25 per cent return to investors, they said.
The sector overall, including the sub segments of equipment suppliers and balance of power companies is going to see buoyant times for next 3-5 years in terms of order books, analysts said.
In private sector, the control over fuel supply will play a key part. Companies which have fuel supply tie-ups or control over captive mines, are attractive for investors, they said.