Utilities -Mixed quarter says Indiabulls research

Power Utilities
Lower generation vs expectation (for NTPC, Tata Power) and weak merchant rates (due to good monsoons leading to better hydro generation) are the key highlights for the quarter. We prefer NTPC and Power Grid in the utilities space.

Adani Power
• Third unit of 330MW of Mundra I&II plant commissioned during 2QFY11. Blended PLF for Adani Power works out to 76%, due to stabilization phase of Unit-III (CoD August 2010) where PLF was 55%.
JSW Energy
• Ratnagiri Unit-I 300MW commissioned during 2QFY11. Expect EBITDA margins to be under pressure on account of lower PLF in some of the units due to technical issues and decline in merchant rates YoY.
NHPC
• Increase in generation (9.5% to ~7.2 BUs) on account of good monsoons and commissioning of Sewa II (120MW) during 2QFY11.
NTPC
• Low growth in generation volumes at 3.6% YoY to 52.2 BUs, largely led by fuel supply issues in certain key plants.
Power Grid
• Expect revenue of `20,292mn, up 19% YoY, and net profit of `6,793mn, up 57% YoY ( pre-exceptional).
Reliance Infrastructure
• MERC revoked the stay on RELI’s tariff hike, allowing it to uniformly hike tariff across segments. 3QFY11 earnings are likely to see prior-period sales being recognized on account of the lifting of the stay on tariff hikes.
Reliance Power
• Unit-II of Rosa-I (300MW) commenced operations in 2QFY11.
Tata Power
• Decrease in generation volumes on account of lower PLF in Trombay and other units. Earnings for the quarter likely to be impacted by lower generation in Trombay plant owing to unavailability of imported coal (due to the collision of two vessels near JNPT).