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Adani Power (ADAN.BO)
Buy Equity Research
In line with expectations: Short-term exposure may decline in FY12
What surprised us
Adani Power reported FY11 PBT of Rs8.1 bn, in line with our estimates,
although reported PAT of Rs5.1 bn was lower than GS and Bloomberg
consensus of Rs6.5 bn due to deferred taxes on account of additional
depreciation (effective tax rate was 37% vs 19.5% estimate). The fuel costs
for 4QFY11 of Rs1.01/kwh (on net generation), which implies about
US$44/ton delivered cost at Mundra plant, was in line with management
guidance. The PLF for 4QFY11 is 89% vs 81% yoy.
The company stated that it has received a letter of intent from one of the
north Indian states to sell 600MW (net) at Rs4.7/kwh (average) for one year
starting June 2011. If Adani were to win the bid, we think it would: 1) help
in reducing its short-term exposure for FY12E to 44% (from 66% earlier),
and 2) present an upside risk of 9% to our FY12E EPS, as we currently
assume the realizations for the short-term market at Rs4/kwh.
What to do with the stock
We maintain our Buy rating on Adani Power and our 12-m SOTP-based TP
of Rs135 implying potential upside of 23%. We revise our FY11E EPS to
reflect reported results and fine-tune our FY12E/FY13E estimates. While
execution of Adani Power is impressive, we believe visibility on domestic
fuel supplies, particularly for Tiroda, would be the key driver for the stock.
We assume 50% of the coal requirement would be substituted by e-auction
or imported coal for Tiroda. Key risks remain greater than expected decline
in short-term power rates and higher fuel costs
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Adani Power (ADAN.BO)
Buy Equity Research
In line with expectations: Short-term exposure may decline in FY12
What surprised us
Adani Power reported FY11 PBT of Rs8.1 bn, in line with our estimates,
although reported PAT of Rs5.1 bn was lower than GS and Bloomberg
consensus of Rs6.5 bn due to deferred taxes on account of additional
depreciation (effective tax rate was 37% vs 19.5% estimate). The fuel costs
for 4QFY11 of Rs1.01/kwh (on net generation), which implies about
US$44/ton delivered cost at Mundra plant, was in line with management
guidance. The PLF for 4QFY11 is 89% vs 81% yoy.
The company stated that it has received a letter of intent from one of the
north Indian states to sell 600MW (net) at Rs4.7/kwh (average) for one year
starting June 2011. If Adani were to win the bid, we think it would: 1) help
in reducing its short-term exposure for FY12E to 44% (from 66% earlier),
and 2) present an upside risk of 9% to our FY12E EPS, as we currently
assume the realizations for the short-term market at Rs4/kwh.
What to do with the stock
We maintain our Buy rating on Adani Power and our 12-m SOTP-based TP
of Rs135 implying potential upside of 23%. We revise our FY11E EPS to
reflect reported results and fine-tune our FY12E/FY13E estimates. While
execution of Adani Power is impressive, we believe visibility on domestic
fuel supplies, particularly for Tiroda, would be the key driver for the stock.
We assume 50% of the coal requirement would be substituted by e-auction
or imported coal for Tiroda. Key risks remain greater than expected decline
in short-term power rates and higher fuel costs
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