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UBS Investment Research
Adani Power
3Q FY11: Execution on track
Lower realisation at Rs2.93/unit for the quarter
Adani Power has reported revenues of Rs5bn and PAT of Rs1.1bn for 3QFY11.
The PAT is lower than UBS-e due to lower revenue (UBS-e Rs6.3bn) and high tax
rate (38% for 3Q vs 2Q 14%). Adani Power’s EBITDA margin was at 54% lower
than UBS-e of 65% due to higher fuel cost as a percentage. The realisation for 3Q
FY11 is Rs2.93/unit which indicates that short-term tariffs were lower. The
company has realised Rs3.9/unit for their merchant capacity.
Rs188mn revenue for 9M to be recognised after GERC confirmation
From September 2010, the company has been paying Rs100 per 1,000Kwh of
energy removed from SEZ as custom duty. This should be recoverable from
GUVNL as this charge has come due to change of law. The company says that they
will recognise this as revenue only after getting final confirmation from GERC.
The impact of this levy on sales was of Rs155m for 3Q and Rs188m for 9M.
Adani power synchronised 660MW supercritical unit in December 2010
In December, Adani Power synchronized its first super-critical unit of 660MW and
the company expects to commission entire 4,620MW in Mundra by FY12. The
company also commissioned the sub-critical unit 4 of (330MW) in the quarter. On
a long-term basis, the company maintains target of 15,000MW by FY16/17. We
believe the execution is on track for the company.
Valuation: maintain Buy rating and price target of Rs160
We derive our price target using a plant-by-plant DCF assuming COE of 13.0% for
under construction projects and 11.5% for operational projects.
Adani Power
Adani Power is part of the Adani Group. With 6,600MW commissioned/under
construction and 3,300MW under development, Adani Power targets becoming
one of the largest private sector power generation companies in India by FY15
when we expect it will possess significant capacity. We believe the company has
significant non-replicable strengths due to fuel availability and competitive
pricing, good execution, and attractive tariffs from long-term PPAs and
merchant power.
Statement of Risk
We believe the key downside risks for the power business including for Adani
Power are: 1) availability or pricing of imported coal; 2) slower-than-expected
progress in the execution of projects; 3) no project wins; 4) a sharp decline in
merchant tariffs; and 5) performance issues with Chinese equipments.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Adani Power
3Q FY11: Execution on track
Lower realisation at Rs2.93/unit for the quarter
Adani Power has reported revenues of Rs5bn and PAT of Rs1.1bn for 3QFY11.
The PAT is lower than UBS-e due to lower revenue (UBS-e Rs6.3bn) and high tax
rate (38% for 3Q vs 2Q 14%). Adani Power’s EBITDA margin was at 54% lower
than UBS-e of 65% due to higher fuel cost as a percentage. The realisation for 3Q
FY11 is Rs2.93/unit which indicates that short-term tariffs were lower. The
company has realised Rs3.9/unit for their merchant capacity.
Rs188mn revenue for 9M to be recognised after GERC confirmation
From September 2010, the company has been paying Rs100 per 1,000Kwh of
energy removed from SEZ as custom duty. This should be recoverable from
GUVNL as this charge has come due to change of law. The company says that they
will recognise this as revenue only after getting final confirmation from GERC.
The impact of this levy on sales was of Rs155m for 3Q and Rs188m for 9M.
Adani power synchronised 660MW supercritical unit in December 2010
In December, Adani Power synchronized its first super-critical unit of 660MW and
the company expects to commission entire 4,620MW in Mundra by FY12. The
company also commissioned the sub-critical unit 4 of (330MW) in the quarter. On
a long-term basis, the company maintains target of 15,000MW by FY16/17. We
believe the execution is on track for the company.
Valuation: maintain Buy rating and price target of Rs160
We derive our price target using a plant-by-plant DCF assuming COE of 13.0% for
under construction projects and 11.5% for operational projects.
Adani Power
Adani Power is part of the Adani Group. With 6,600MW commissioned/under
construction and 3,300MW under development, Adani Power targets becoming
one of the largest private sector power generation companies in India by FY15
when we expect it will possess significant capacity. We believe the company has
significant non-replicable strengths due to fuel availability and competitive
pricing, good execution, and attractive tariffs from long-term PPAs and
merchant power.
Statement of Risk
We believe the key downside risks for the power business including for Adani
Power are: 1) availability or pricing of imported coal; 2) slower-than-expected
progress in the execution of projects; 3) no project wins; 4) a sharp decline in
merchant tariffs; and 5) performance issues with Chinese equipments.
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