Inter RAO Gaining Most Since May on JPMorgan Call: Moscow Mover

OAO Inter RAO UES, Russia’s state-run electricity exporter, headed for its biggest advance since May after JPMorgan Chase & Co. raised the stock to the equivalent of buy.

Inter RAO rose 5.5 percent, the biggest increase in the 50-stock Micex Index (INDEXCF), to 0.78 kopeks by 4:34 p.m. in Moscow. The number of shares traded was equivalent to about 5.3 times the three-month daily average. Inter RAO is the third-worst performer on the Micex over the past 12 months, with a drop of 69 percent, according to data compiled by Bloomberg.

JPMorgan analysts, including Nadezhda Timokhova, lifted the stock to overweight, citing the shares’ underperformance and lower valuations in an e-mailed note dated yesterday. Inter RAO has declined after being removed from MSCI Inc.’s Russia index effective Nov. 27, while the MSCI Russia Utility index has slumped 52 percent this year on concern earnings will suffer from a tariff freeze imposed by the government next year.

“The overall negative news flow on the electric utilities sector this year related to the tariff freeze” resulted in “a considerable correction in utility names,” the JPMorgan analysts said in the report.

A potential acquisition by state-run OAO Rosneftegaz may lead to an improved in dividend policy, according to JPMorgan. Inter RAO trades at 4.2 times estimated earnings, which compares with 11 times for Enel SpA (ENEL), Italy’s largest utility.

To contact the reporter on this story: Ksenia Galouchko in Moscow at

To contact the editor responsible for this story: Wojciech Moskwa at

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