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GIPCL– 2QFY2011 Result Update
Angel Broking maintains an Buy on GIPCL with a Target Price of Rs135.
GIPCL posted 23% yoy improvement in net profit to `15cr for 2QFY2011,
primarily due to lower tax expense resulting from the tax refunds received for the
earlier years and booked during the quarter. The company had a net tax credit of
`10cr during 2QFY2011 as against `8cr of tax expenses recorded in 2QFY2010.
Going ahead, we expect the newly commissioned 250MW Surat Lignite Power
Plant (SLPP) units 3&4 to record higher PLF’s resulting in growth in total sales
volumes. We maintain a Buy on the stock.
Top-line up by a moderate 4.6%: Top-line grew by a modest 4.6% yoy to `214cr
as the SLPP 3&4 units reported lower PLF’s and hence did not contribute majorly
to top-line. Out interactions with management indicated that these units were in
stabilisation phase during 2QFY2011 and currently are reporting higher PLF’s.
The tariff per unit of power was also lower in 2QFY2011 on account of the
decline in gas prices, which is a pass-on. OPMs declined by 173bp yoy to 20.5%
due to higher fuel and staff costs. However, bottom-line moved up 23% yoy to
`15.3cr, aided by lower tax expenses.
Outlook and Valuation: We expect the company’s top-line and bottom-line to
log CAGR of 22.6% and 34.9% over FY2010-12, respectively. RoE is expected to
improve from 8.8% in FY2010 to 13.8% in FY2012 following commissioning of
new plants. At the CMP of `114, the stock is trading at 1.2x P/BV and EV/MW of
`3.5cr on FY2012E estimates, which we believe is attractive compared to peers.
We maintain a Buy on the stock, with a Target Price of `135.
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