Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Power (TTPW.BO)
Not Too Much Growth In 9MFY11
3QFY11 Recurring PAT flat YoY — Tata Power’s 3QFY11 Recurring PAT at
Rs4.1bn was flat YoY as the 49% YoY growth in coal SPVs EBIT was muted by (1)
16% YoY decline in parent EBIT on limited sales growth and 34% YoY decline in
merchant prices; (2) a weak quarter for subsidiaries NDPL, Powerlinks and Tata
Power Trading; and (3) higher effective tax rates in the quarter.
9MFY11 Recurring PAT also flat YoY — 9mFY11 Recurring PAT at Rs11.8bn was
also largely flat YoY (1) as Tata Power was unable to sell 200MW that should have
come free from the regulatory sale to R-Infra in the merchant markets and (2) 4%
decline in coal SPV volumes (due to rains in Indonesia) neutralized the 17% YoY
increase in coal ASP (coal EBIT growth was 21% YoY).
Mundra UMPP update — This is progressing as per schedule, with EPC activities
in full swing. Overall project progress achieved is 71%. Unit 1 TG and auxiliary
equipment pre-commissioning activities are progressing as per schedule. Unit 2
boiler hydro test was completed. Equipment and piping erection is in progress. TG
box-up was completed and HP piping is in progress. Unit 3 TG has been delivered
and erection started. Erection of boiler pressure parts for Units 4 and 5 is
progressing well. Unit 1 is expected to be commissioned by September 2011.
Maithon update — The project Is also progressing well and has achieved 92%
completion. Unit 1 boiler light-up has been completed and Unit 1 is expected to be
synchronized with oil by February 2011 and coal synchronization is expected
within a month thereafter.
Mumbai retail business update — The retail customer base in Mumbai crossed
the 100K mark in December 2010. The company’s consumer mix at present
comprises of 78% residential, 5% industrial and 17% commercial.
Recurring PAT flat YoY in 3Q FY11 and 9M FY11
Tata Power’s 3QFY11 Recurring PAT at Rs4.1bn was flat YoY as the 49%
YoY growth in coal SPVs EBIT was muted by (1) 16% YoY decline in parent
EBIT on limited sales growth and 34% YoY decline in merchant prices; (2) a
weak quarter for subsidiaries NDPL, Powerlinks and Tata Power Trading;
and (3) higher effective tax rates in the quarter.
9MFY11 Recurring PAT at Rs11.8bn was also largely flat YoY (1) as Tata
Power was unable to sell 200MW that should have come free from the
regulatory sale to R-Infra in the merchant markets and (2) a 4% decline in
coal SPV volumes (due to rains in Indonesia) neutralized the 17% YoY
increase in coal ASP (coal EBIT growth was 21% YoY).
Performance of key subsidiaries
NDPL: The company posted sales of Rs8.1bn in 3QFY11 which is flat YoY.
The PAT at Rs347.8mn was down 49% YoY due to lower AT&C incentives
accrued during the quarter. However, on a YTD basis, the AT&C incentives
are higher than the previous year.
Powerlinks: The company posted sales at Rs734.8mn, which was up 2%
YoY. PAT at Rs279.8mn was down 19% YoY due to reversal in the previous
year of a deferred tax provision.
Tata Power Trading: TPTCL traded a total of 730 mus during the quarter as
compared to 1083 mus last year. PAT was Rs71mn as against Rs14.8mn
last year, primarily due to a poor merchant market and power rates.
Conference Call Takeaways
Mundra UMPP: Progressing as per schedule with EPC activities in full
swing. Overall project progress achieved is 71%. Unit 1 TG and auxiliary
equipments pre-commissioning activities are progressing as per schedule.
Unit 2 boiler hydro test was completed. Equipment and piping erection is in
progress. TG box-up was completed and HP piping is in progress. Unit 3 TG
has been delivered and erection started. Erection of boiler pressure parts for
Units 4 and 5 is progressing well. The first unit is expected to be
commissioned by September 2011.
Maithon: Also progressing well and has achieved 92% completion. Unit 1
boiler light-up has been completed and Unit 1 is expected to be
synchronized with oil by February 2011 and coal synchronization is expected
within a month thereafter.
IEL: The partnership with The Royal Government of Bhutan (RGoB) is
progressing well. Major ordering for the project has been completed. All
statutory clearances, land, water and environment clearances have been
received and PPA for the entire quantum of power has been signed for the
project. Civil works are in progress and around 1.3 kms of tunnelling has
been completed. Work has also commenced on other fronts viz. de-silter,
surge shaft, weir, etc. Infrastructure activities like the approach road, bridges,
construction power, etc. have been completed. The first unit is targeted to be
commissioned by March 2013.
1600 MW Coastal Maharashtra Project: All statutory clearances required to
start the project implementation are in place. Disbursement of compensation
to land owners is in progress by Raigad District Authorities and 45% of
private land has been covered to date. Activities pertaining to site-enabling
works have been identified and are being addressed. Specifications for
boundary walls, site grading, roads and drains are under preparation.
660 MW Naraj Marthapur, Orissa: The environment clearance has been
recommended by MoEF, subject to clearance from National Board of Wild
Life (NBWL) for which the process is on. All the balance clearances for the
project have been obtained. Land acquisition is currently in progress. Out of
the total 990 acres of land, payment for over 600 acres of land has been
completed. The entire land acquisition process, including the forest land, is
expected to be completed by April 2011. The company has been allotted the
Mandakini coal block located in the Angul district of Orissa, along with
Monnet Ispat and Energy Limited, and Jindal Photo Limited, which will feed
coal to the plant.
Tiruldih Power Project, Jharkhand (3 X 660 MW): The process of land
acquisition for the project is in progress and is expected to be completed by
March 2012. In principle, clearance has been received from Railways for
transportation of coal from Tubed Coal Block. Tubed Coal Block has been
jointly allotted to Tata Power and Hindalco in Jharkhand.
Satpura CBM Block: Tata Power, along with its consortium partner Arrow
Energy, has been awarded the Satpura CBM block in Madhya Pradesh
during the CBM IV bidding round.
Wind Power: Tata Power has an installed capacity of 228MW. The company
has placed an order for 150 MW additional wind capacity to be set up in
Maharashtra and Tamil Nadu.
Solar Power: The Company has signed a PPA with Gujarat Urja Vikas
Nigam to develop a 25MW solar photovoltaic project at Mithapur in Gujarat.
The Company is also implementing a 3 MW solar photo-voltaic plant at
Mulshi which will be one of the largest grid connected plants in Maharashtra.
The plant is expected to be commissioned by end Feb.
Geothermal Power: Tata Power led a consortium comprising of Tata Power
(47.50%), Origin Energy Limited (47.50%) and PT Supraco Indonesia (5%)
which won the bid for the Sorik Marapi geothermal project in Northern
Sumatra, Indonesia. The Sorik Marapi project is estimated to support the
development of approximately 240MW of geothermal generation capacity.
Tata Power
Valuation
Our Rs1,550 target price is based on a sum-of-the-parts approach: 1) The
parent business is valued using DCF as of March-2011E, using a WACC of
12.3% (risk free rate of 8.5%, market risk premium of 6%, beta of 1.06, D/E of
67%); 2) Tata Power's 51% stake in NDPL is valued at 2.5x FY12E P/BV; 3)
Tata Power's stake in Powerlinks is valued at 1.5x FY12E P/BV; 4) Holdings in
Tata Teleservices (Maharashtra) and VSNL are valued at a 20% discount to the
market price prices; 5) Stake in Tata Teleservices is valued at a 30% discount to
the NTT Docomo valuations; 6) Mundra UMPP using FCFE and Cost of Equity
= 12.5%; 7) The Maithon project is valued like Mundra UMPP; and 8) 30%
stake in KPC and Arutmin coal mines at FCFE and CoE = 14%.
Risks
Our quantitative risk-rating system, which tracks 260-day historical share price
volatility, assigns a Low Risk rating to Tata Power. Key downside risks to our
target price include: 1) Unfavorable judgement in the MERC order petition and
standby charges case vs. R-Infra could hit the financials; 2) Power sector is
gradually liberalizing, but regulatory and tariff structures still evolving.
Companies in the sector are vulnerable to delays, mid-term corrections and
dramatic policy changes; under the existing system, litigation following discord
may be time-consuming, and a lack of precedents adds to uncertainty; 3)
Delays and cost escalation in capacity expansion and an unfavorable interest
rate environment; 4) The nature of the Asian coal market means an inability to
fill orders or expand capacity in Indonesian coal mines will have a material
impact on profitability, as will regional coal prices; and 5) Coal mines rely
heavily on contract miners; changing relations could materially affect
operations.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Power (TTPW.BO)
Not Too Much Growth In 9MFY11
3QFY11 Recurring PAT flat YoY — Tata Power’s 3QFY11 Recurring PAT at
Rs4.1bn was flat YoY as the 49% YoY growth in coal SPVs EBIT was muted by (1)
16% YoY decline in parent EBIT on limited sales growth and 34% YoY decline in
merchant prices; (2) a weak quarter for subsidiaries NDPL, Powerlinks and Tata
Power Trading; and (3) higher effective tax rates in the quarter.
9MFY11 Recurring PAT also flat YoY — 9mFY11 Recurring PAT at Rs11.8bn was
also largely flat YoY (1) as Tata Power was unable to sell 200MW that should have
come free from the regulatory sale to R-Infra in the merchant markets and (2) 4%
decline in coal SPV volumes (due to rains in Indonesia) neutralized the 17% YoY
increase in coal ASP (coal EBIT growth was 21% YoY).
Mundra UMPP update — This is progressing as per schedule, with EPC activities
in full swing. Overall project progress achieved is 71%. Unit 1 TG and auxiliary
equipment pre-commissioning activities are progressing as per schedule. Unit 2
boiler hydro test was completed. Equipment and piping erection is in progress. TG
box-up was completed and HP piping is in progress. Unit 3 TG has been delivered
and erection started. Erection of boiler pressure parts for Units 4 and 5 is
progressing well. Unit 1 is expected to be commissioned by September 2011.
Maithon update — The project Is also progressing well and has achieved 92%
completion. Unit 1 boiler light-up has been completed and Unit 1 is expected to be
synchronized with oil by February 2011 and coal synchronization is expected
within a month thereafter.
Mumbai retail business update — The retail customer base in Mumbai crossed
the 100K mark in December 2010. The company’s consumer mix at present
comprises of 78% residential, 5% industrial and 17% commercial.
Recurring PAT flat YoY in 3Q FY11 and 9M FY11
Tata Power’s 3QFY11 Recurring PAT at Rs4.1bn was flat YoY as the 49%
YoY growth in coal SPVs EBIT was muted by (1) 16% YoY decline in parent
EBIT on limited sales growth and 34% YoY decline in merchant prices; (2) a
weak quarter for subsidiaries NDPL, Powerlinks and Tata Power Trading;
and (3) higher effective tax rates in the quarter.
9MFY11 Recurring PAT at Rs11.8bn was also largely flat YoY (1) as Tata
Power was unable to sell 200MW that should have come free from the
regulatory sale to R-Infra in the merchant markets and (2) a 4% decline in
coal SPV volumes (due to rains in Indonesia) neutralized the 17% YoY
increase in coal ASP (coal EBIT growth was 21% YoY).
Performance of key subsidiaries
NDPL: The company posted sales of Rs8.1bn in 3QFY11 which is flat YoY.
The PAT at Rs347.8mn was down 49% YoY due to lower AT&C incentives
accrued during the quarter. However, on a YTD basis, the AT&C incentives
are higher than the previous year.
Powerlinks: The company posted sales at Rs734.8mn, which was up 2%
YoY. PAT at Rs279.8mn was down 19% YoY due to reversal in the previous
year of a deferred tax provision.
Tata Power Trading: TPTCL traded a total of 730 mus during the quarter as
compared to 1083 mus last year. PAT was Rs71mn as against Rs14.8mn
last year, primarily due to a poor merchant market and power rates.
Conference Call Takeaways
Mundra UMPP: Progressing as per schedule with EPC activities in full
swing. Overall project progress achieved is 71%. Unit 1 TG and auxiliary
equipments pre-commissioning activities are progressing as per schedule.
Unit 2 boiler hydro test was completed. Equipment and piping erection is in
progress. TG box-up was completed and HP piping is in progress. Unit 3 TG
has been delivered and erection started. Erection of boiler pressure parts for
Units 4 and 5 is progressing well. The first unit is expected to be
commissioned by September 2011.
Maithon: Also progressing well and has achieved 92% completion. Unit 1
boiler light-up has been completed and Unit 1 is expected to be
synchronized with oil by February 2011 and coal synchronization is expected
within a month thereafter.
IEL: The partnership with The Royal Government of Bhutan (RGoB) is
progressing well. Major ordering for the project has been completed. All
statutory clearances, land, water and environment clearances have been
received and PPA for the entire quantum of power has been signed for the
project. Civil works are in progress and around 1.3 kms of tunnelling has
been completed. Work has also commenced on other fronts viz. de-silter,
surge shaft, weir, etc. Infrastructure activities like the approach road, bridges,
construction power, etc. have been completed. The first unit is targeted to be
commissioned by March 2013.
1600 MW Coastal Maharashtra Project: All statutory clearances required to
start the project implementation are in place. Disbursement of compensation
to land owners is in progress by Raigad District Authorities and 45% of
private land has been covered to date. Activities pertaining to site-enabling
works have been identified and are being addressed. Specifications for
boundary walls, site grading, roads and drains are under preparation.
660 MW Naraj Marthapur, Orissa: The environment clearance has been
recommended by MoEF, subject to clearance from National Board of Wild
Life (NBWL) for which the process is on. All the balance clearances for the
project have been obtained. Land acquisition is currently in progress. Out of
the total 990 acres of land, payment for over 600 acres of land has been
completed. The entire land acquisition process, including the forest land, is
expected to be completed by April 2011. The company has been allotted the
Mandakini coal block located in the Angul district of Orissa, along with
Monnet Ispat and Energy Limited, and Jindal Photo Limited, which will feed
coal to the plant.
Tiruldih Power Project, Jharkhand (3 X 660 MW): The process of land
acquisition for the project is in progress and is expected to be completed by
March 2012. In principle, clearance has been received from Railways for
transportation of coal from Tubed Coal Block. Tubed Coal Block has been
jointly allotted to Tata Power and Hindalco in Jharkhand.
Satpura CBM Block: Tata Power, along with its consortium partner Arrow
Energy, has been awarded the Satpura CBM block in Madhya Pradesh
during the CBM IV bidding round.
Wind Power: Tata Power has an installed capacity of 228MW. The company
has placed an order for 150 MW additional wind capacity to be set up in
Maharashtra and Tamil Nadu.
Solar Power: The Company has signed a PPA with Gujarat Urja Vikas
Nigam to develop a 25MW solar photovoltaic project at Mithapur in Gujarat.
The Company is also implementing a 3 MW solar photo-voltaic plant at
Mulshi which will be one of the largest grid connected plants in Maharashtra.
The plant is expected to be commissioned by end Feb.
Geothermal Power: Tata Power led a consortium comprising of Tata Power
(47.50%), Origin Energy Limited (47.50%) and PT Supraco Indonesia (5%)
which won the bid for the Sorik Marapi geothermal project in Northern
Sumatra, Indonesia. The Sorik Marapi project is estimated to support the
development of approximately 240MW of geothermal generation capacity.
Tata Power
Valuation
Our Rs1,550 target price is based on a sum-of-the-parts approach: 1) The
parent business is valued using DCF as of March-2011E, using a WACC of
12.3% (risk free rate of 8.5%, market risk premium of 6%, beta of 1.06, D/E of
67%); 2) Tata Power's 51% stake in NDPL is valued at 2.5x FY12E P/BV; 3)
Tata Power's stake in Powerlinks is valued at 1.5x FY12E P/BV; 4) Holdings in
Tata Teleservices (Maharashtra) and VSNL are valued at a 20% discount to the
market price prices; 5) Stake in Tata Teleservices is valued at a 30% discount to
the NTT Docomo valuations; 6) Mundra UMPP using FCFE and Cost of Equity
= 12.5%; 7) The Maithon project is valued like Mundra UMPP; and 8) 30%
stake in KPC and Arutmin coal mines at FCFE and CoE = 14%.
Risks
Our quantitative risk-rating system, which tracks 260-day historical share price
volatility, assigns a Low Risk rating to Tata Power. Key downside risks to our
target price include: 1) Unfavorable judgement in the MERC order petition and
standby charges case vs. R-Infra could hit the financials; 2) Power sector is
gradually liberalizing, but regulatory and tariff structures still evolving.
Companies in the sector are vulnerable to delays, mid-term corrections and
dramatic policy changes; under the existing system, litigation following discord
may be time-consuming, and a lack of precedents adds to uncertainty; 3)
Delays and cost escalation in capacity expansion and an unfavorable interest
rate environment; 4) The nature of the Asian coal market means an inability to
fill orders or expand capacity in Indonesian coal mines will have a material
impact on profitability, as will regional coal prices; and 5) Coal mines rely
heavily on contract miners; changing relations could materially affect
operations.
No comments:
Post a Comment