JSW Energy Q4FY11 Result Update; Fuel and realization risk remains; Maintain Reduce; Target: Rs 78 :: Emkay

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JSW Energy

Fuel and realization risk remains; Maintain Reduce

REDUCE

CMP: Rs 75                                        Target Price: Rs 78

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n     JSW Energy’s results were above estimates due to higher merchant realizations (Rs4.75/unit vs our assumption of Rs4.5/unit) due to presence in southern region;

n     For Q1FY12E, co. guided for Rs5/unit merchant realizations and lower from Q2FY12E. Expect southern region realizations to drop post elections and foresee risk of downgrade in our FY12E assumption of Rs4.5/unit (maintained as of now)

n     Mgmt guided for Ratnagiri (issues related to forest clearance for transmission) last two units commissioning by June 2011 and Barmer (issues on transfer price approval) by FY12E End

n     Reduce FY12E/FY13E earnings by 3%/7% on higher coal prices. Maintain Reduce; risky business model & open from both sides (fuel and off-take), Maintain PT of Rs78/share