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India Equity Research Reports, IPO and Stock News
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• With improving market sentiment, past underperformers like Lanco
and JPVL have rallied. However concerns on fuel availabilty and
funding might limit sustained outperformance, in our view. The recent
CEA ‘advisory’ to all IPPs to incorporate flexible boiler design to blend
30% imported/high GCV coal underscores the gravity of domestic coal
shortages. Defensives like NTPC, TPWR and PWGR marginally
underperformed the market despite giving absolute returns. Our top picks
are TPWR and PWGR (less affected by fuel concerns) and Adani
(execution strength).
• Power demand growth weakened in March: at 5.6% yoy, growth has
fallen sharply. Feb had lower growth, at 8%. Feb/Mar-10 were
exceptionally strong and could be due to the high base effect, in our view.
• Forward rates indicate a pick up in bilateral contract prices through
May; our FY12E average merchant price of Rs4/unit appears to
within range: Based on the forward curve, March appears to be a better
month with bilateral rates averaging Rs4.36 vs. Rs4.24 in Feb. New
forward contracts remained in contango; suggest a seasonal pick up
(Rs4.6-4.8) through May 2011, and thereafter softer rates with the
commencement of monsoon. Our FY12 merchant power forecast of
Rs4/KWH for FY12, is 16.6% below the YTD bilateral contract rate
• FY11 cap-add final scorecard: 12.1GW - 57% of target; private IPPs
outshone govt peers, meeting 77% of their target: NTPC notably
accelerated, adding 2GW in March. Private IPP slip-ups are mainly
attributable to Lanco (Udupi, Anpara) and JSW (Ratnagiri, Barmer).
• RELI continued to see disappointing verdicts from regulator: MERC
recently directed RELI to honor its 3-year PPA (May ’11 onwards) to buy
260MW from KSK Energy at Rs4.85. RELI wanted to cancel this PPA
given the uncertainty over the renewal of its Mumbai distribution license.
MERC had rejected RELI’s application to extend its license which expires
in August ’11, opening it up to competitive bidding
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
• With improving market sentiment, past underperformers like Lanco
and JPVL have rallied. However concerns on fuel availabilty and
funding might limit sustained outperformance, in our view. The recent
CEA ‘advisory’ to all IPPs to incorporate flexible boiler design to blend
30% imported/high GCV coal underscores the gravity of domestic coal
shortages. Defensives like NTPC, TPWR and PWGR marginally
underperformed the market despite giving absolute returns. Our top picks
are TPWR and PWGR (less affected by fuel concerns) and Adani
(execution strength).
• Power demand growth weakened in March: at 5.6% yoy, growth has
fallen sharply. Feb had lower growth, at 8%. Feb/Mar-10 were
exceptionally strong and could be due to the high base effect, in our view.
• Forward rates indicate a pick up in bilateral contract prices through
May; our FY12E average merchant price of Rs4/unit appears to
within range: Based on the forward curve, March appears to be a better
month with bilateral rates averaging Rs4.36 vs. Rs4.24 in Feb. New
forward contracts remained in contango; suggest a seasonal pick up
(Rs4.6-4.8) through May 2011, and thereafter softer rates with the
commencement of monsoon. Our FY12 merchant power forecast of
Rs4/KWH for FY12, is 16.6% below the YTD bilateral contract rate
• FY11 cap-add final scorecard: 12.1GW - 57% of target; private IPPs
outshone govt peers, meeting 77% of their target: NTPC notably
accelerated, adding 2GW in March. Private IPP slip-ups are mainly
attributable to Lanco (Udupi, Anpara) and JSW (Ratnagiri, Barmer).
• RELI continued to see disappointing verdicts from regulator: MERC
recently directed RELI to honor its 3-year PPA (May ’11 onwards) to buy
260MW from KSK Energy at Rs4.85. RELI wanted to cancel this PPA
given the uncertainty over the renewal of its Mumbai distribution license.
MERC had rejected RELI’s application to extend its license which expires
in August ’11, opening it up to competitive bidding
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