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Jaiprakash Power Ventures Ltd
Neutral
JAPR.BO, JPVL IN
Mar-q results: Business as usual, but PPA uncertainty
on Karcham Wangtoo remains
• Mar-q result update: JPVL adjusted PAT of Rs172mn (-72% YoY) was
below estimate (Rs202mn, -67% YoY) mainly on account of higher than
estimated interest cost during the quarter. The sharp dip in profits was due
to interest on corporate level debt raised by securitization of receivables of
operating capacity, to fund equity requirement of under construction
projects. At EBITDA level results for 700MW operating hydro projects was
broadly in-line. JPVL reported EBITDA of Rs1.44bn (-5% YoY) vs. our
est. of Rs1.37bn.
• FY11 PLF for run-of-river projects healthy, but it’s business as usual:
Baspa-II (300MW) operated at 56% PLF during FY11 vs. 49.6% in FY10;
this is the highest recorded level of power generation since CoD in Jun-
2003. Vishnuprayag (400MW) PLF for FY11 was up ~130bps to 57.7%.
However higher PLF does not impact profitability, given assured return
model (16% return on invested equity) and availability linked incentives
(~2% additional RoIE above 96% PAF).
• Karcham Wangtoo Unit-I (250MW) synchronized on 13th May, 2011.
We were factoring in commencement of operations of unit-I in end-April.
We have delayed CoD of entire 1000MW by 1month to end-Aug-11,
reducing FY12 EPS est. by ~3.2%.
• Uncertainty surrounding Karcham PPA remains: 704MW PPA with
PTC is still under litigation. There are 3 potential outcomes: (a) Negative:
Partial cost overruns are approved. 10% lower project cost approval would
reduce FY12E PAT by ~14%, (b) Base case: Full project cost approved,
neutral for estimates, currently priced-in by markets, in our view, (c)
Positive: Higher proportion of merchant sales allowed. If 100% generation
is sold at ST rate of Rs4, there is upside risk to our FY12 estimates.
• Maintain Neutral: Our Mar-12 SOP PT of Rs46 (vs. Rs44 earlier) factors
in Rs8 debit (vs. Rs10 earlier) to account for corporate level-debt and the
net-NPV of equity funding gap (adjusted for sale of treasury shares). A
return of risk appetite for IPPs is a potential +ive trigger, improvement in
coal visibility is also SOP accretive – 10% higher PLF (from ~75% base
case) would result in ~Rs10 upside to our PT.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jaiprakash Power Ventures Ltd
Neutral
JAPR.BO, JPVL IN
Mar-q results: Business as usual, but PPA uncertainty
on Karcham Wangtoo remains
• Mar-q result update: JPVL adjusted PAT of Rs172mn (-72% YoY) was
below estimate (Rs202mn, -67% YoY) mainly on account of higher than
estimated interest cost during the quarter. The sharp dip in profits was due
to interest on corporate level debt raised by securitization of receivables of
operating capacity, to fund equity requirement of under construction
projects. At EBITDA level results for 700MW operating hydro projects was
broadly in-line. JPVL reported EBITDA of Rs1.44bn (-5% YoY) vs. our
est. of Rs1.37bn.
• FY11 PLF for run-of-river projects healthy, but it’s business as usual:
Baspa-II (300MW) operated at 56% PLF during FY11 vs. 49.6% in FY10;
this is the highest recorded level of power generation since CoD in Jun-
2003. Vishnuprayag (400MW) PLF for FY11 was up ~130bps to 57.7%.
However higher PLF does not impact profitability, given assured return
model (16% return on invested equity) and availability linked incentives
(~2% additional RoIE above 96% PAF).
• Karcham Wangtoo Unit-I (250MW) synchronized on 13th May, 2011.
We were factoring in commencement of operations of unit-I in end-April.
We have delayed CoD of entire 1000MW by 1month to end-Aug-11,
reducing FY12 EPS est. by ~3.2%.
• Uncertainty surrounding Karcham PPA remains: 704MW PPA with
PTC is still under litigation. There are 3 potential outcomes: (a) Negative:
Partial cost overruns are approved. 10% lower project cost approval would
reduce FY12E PAT by ~14%, (b) Base case: Full project cost approved,
neutral for estimates, currently priced-in by markets, in our view, (c)
Positive: Higher proportion of merchant sales allowed. If 100% generation
is sold at ST rate of Rs4, there is upside risk to our FY12 estimates.
• Maintain Neutral: Our Mar-12 SOP PT of Rs46 (vs. Rs44 earlier) factors
in Rs8 debit (vs. Rs10 earlier) to account for corporate level-debt and the
net-NPV of equity funding gap (adjusted for sale of treasury shares). A
return of risk appetite for IPPs is a potential +ive trigger, improvement in
coal visibility is also SOP accretive – 10% higher PLF (from ~75% base
case) would result in ~Rs10 upside to our PT.
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