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We expect a sales growth of 18% for our Utilities and Infra coverage universe mainly aided
by higher revenues from NTPC, Power Grid and Lanco Infratech. We expect profit to degrow
by ~6% YoY) mainly on account of NTPC and GMR Infra. Excluding them both, profit
is expected to grow by ~12%. Power Grid and Lanco Infratech are expected to register
earnings growth in excess of 20%. These two stocks remain our top picks as well.
Power Grid
In 1HFY11 and FY10, the company has commissioned transmission projects worth INR87bn
(INR36bn in FY10 and INR51bn in 1HFY11). We expect company to reap the benefits of
higher commissioning and expect to report revenue of INR22.3bn and PAT of INR6bn, a
YoY growth of ~46% and 22%, respectively.
Lanco Infratech
We estimate 33% growth in revenues led by growth in power segment. Over the last year,
Lanco has commissioned Kondapalli II (366MW) and Amarkantak (600MW). It is operating
~660MW of merchant power plant which will result in higher earnings growth. We estimate
EBITDA to grow by 80% YoY to INR5.4bn. However, PAT is expected to grow by ~20% only
due to change in depreciation accounting (higher depreciation as WDV methodology used
for its newly commissioned power plants). In 2QFY11, EPC revenue was subdued as some
projects booking were not done. Due to merchant units having higher PLF and also as we
expect some revenue pick up in the quarter over 2Q, we estimate higher profits.
NTPC
In 3QFY11, we expect NTPC to report revenue and net profit of INR135bn and INR20.7bn.
The growth in revenue would be due to commissioning of Dadri (980MW) and Korba (500MW)
over the last one year. Generation on a YoY has been flat (although capacity has increased)
mainly due to lower generation from gas units. We estimate a profit de-growth of 12% due to
change in revenue gross up on MAT during current year compared to corporate tax last year.
Navabharat Ventures
We estimate the company to post profit of INR849m as against 1,322m in 3QFY10. Over the
last one year, merchant prices have come down significantly from average of INR5-5.5 to
INR4-4.5 per unit. In 2QFY11, it had reported earnings of INR847m due to the same.
PTC
We expect PTC to report higher revenue due to increased sale of units but lower sales
realisation aided by lower merchant prices in 3Q. We estimate 20% increase in number of
units sold and a decrease of 15% in the sales realisation per unit. Consequently, we expect
increase of 2% in revenue to INR17.3bn. However, profitability is based on number of units
sold for the company, and hence, we expect PTC to report profit of INR247m (60% YoY).
Reliance Infrastructure
The company is expected to report revenue of INR23.7bn (up 4% YoY) and PAT of INR2.9bn
(up 5% YoY), which would be flat compared to 3QFY10. Revenue from EPC business is
expected to grow by 25%, whereas revenue from power business is expected to be less on
account of lower power purchase cost.
CESC
We expect CESC to report revenue of INR9.4bn (up 17% YoY), mainly on account of addition
of 250MW power plant in 4QFY10 and increase in tariff in FY11. However, revenue will
decrease by 15% QoQ due to expected lower demand of electricity during winter in Kolkata
License Area. We expect company to report a PAT of INR1bn in this quarter.
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