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JSW Energy Limited
F4Q11 Results In-Line with
Estimates
Quick Comment: JSW Energy reported F4Q11
consolidated revenue of Rs14.5 bn (up 84% YoY),
EBITDA of Rs4.6 bn (up 37% YoY) and adjusted net
profit of Rs2.3 bn (down 15% YoY) which is in-line with
our estimate. Revenue was higher than our estimate
primarily due to the inclusion of power trading revenues
of over Rs880 mn which however, has a negligible
contribution to profitability. EBITDA margins were at
31.7% (down almost 11 ppt YoY) primarily due to high
fuel cost – fuel cost was Rs2.8/unit in Q4. The company
expects fuel costs to remain between Rs2.6-2.8/unit in
F2012 as well. The company reported F2011 revenue of
Rs42.9 bn and adjusted profit of Rs8.7 bn.
What's new: Key developments during the quarter were
as follows:
• The Vijayanagar plant achieved a PLF of 99.49%
while the Ratnagiri plant operated at a PLF of
82.44%, achieving stabilized operations as the
quarter progressed. The two units of Barmer
operated at an average PLF of 64.24%.
• The net generation was 3,012 MU, of which 67%
was sold in the short-term market and the balance
through long-term contracts.
• Merchant realization was Rs4.71/unit in Q4 and
Rs4.95/unit for F2011. Management expects
merchant realization to be Rs4.5-4.75/unit in F2012.
Impact on views: We believe risks associated with fuel
sourcing will continue to impact the financial
performance of JSW Energy. While capacity addition
and larger merchant volumes in F2012 may drive
revenue growth, we believe EBITDA will be impacted
due to higher fuel cost if imported spot coal prices
remain or trend higher from current levels. We maintain
our Underweight rating on the stock.
Key Highlights:
• The company received 250,000 to 300,000 tons of coal
from Indonesia in F4Q11. It expects to import 3.5 to 4.5 mt
of coal from Indonesia in F2012 at prices ranging between
US$50-100/t FOB. The calorific value of coal too would
range between 3,900 to 5,000 kcal/kg. None of this coal
will be from the Sungai Belati mine.
• During F4Q11, SACMH commenced production and
mined 140,069 tons of raw coal from the existing block.
Work has commenced for opening up the second block.
The company expects to receive 1 mt in F2012 from
SACMH (South Africa) and this coal maybe largely used
for the Ratnagiri I plant.
• In F4Q11, the FOB price of coal used for the Vijayanagar
plants was US$110/t while for Ratnagiri it ranged between
US$62-110/t.
• CIC Energy: The transaction closing date has been
extended to May 31. The company has the option to
terminate the transaction if all condition precedents are not
fulfilled.
• The company is scouting for additional coal mines as well
to meet its short and medium term requirements.
• 1200 MW Ratnagiri project: The synchronization of unit 3
is expected anytime now and the company expects to
commission unit 4 by June 2011. The total capex until
March 2011 was Rs49 bn.
• 1080 MW Barmer Project: Unit 3 is likely to be
commissioned in May 2011 and unit 4 by June 2011. The
subsequent 4 units are expected to be commissioned by
Dec 2011. The total capex until March 2011 was Rs 57 bn.
The company is still awaiting approval to set up 270 MW of
Barmer II.
• Barmer Lignite Mining Company: Mine development
activities are progressing well at Kapurdi and 50 mn cum
of over burden removal took place during the quarter. The
first lignite is likely to be extracted by end May 2011. The
company is awaiting regulatory approval for transfer
pricing of lignite to the Barmer plant. The entire
consideration amount of Rs7.1 bn for the land acquisition
of Jalipa mines was deposited and land is expected to be
in possession by June 2011. The total capex until March
2011 was Rs8.1 bn.
• 240 MW Kutehr Project: The company has executed the
implementation agreement with the Govt of Himachal
Pradesh and forest clearance is expected in a month.
Total capex till March 2011 was Rs1.2 bn.
• Expansion of Vijayanagar plant (660 MW): DPR is
under preparation and geo-technical survey is in progress.
• 1320 MW Chhattisgarh project: The public hearing is
complete and the company now awaits MoEF clearance.
257 acres of land has been acquired and a PPA has been
signed with the Government of Chhattisgarh for 35% of the
power. The total capex until March 2011 was Rs520 mn.
• 1620 MW West Bengal project: The tendering process
for BTG equipment for 300 MW is being finalized and initial
project related activities have commenced. The total
capex until March 2011 was Rs590 mn.
• 3200 MW Ratnagiri project: Substantial land is in
possession and the company is now obtaining necessary
approvals. However, there are no plans to commence any
further activities.
• Jaigad Power Transmission: The 110 km Jaigad –
Karad line is expected to be commissioned by end May
2011. The total capex until March 2011 was Rs4.9 bn.
• Realization during the quarter and F2011 are below. The
company will mostly be selling merchant units to
Karnataka, Maharashtra, Andhra Pradesh and Tamil Nadu.
We believe bulk of the merchant volumes will be to
Karnataka (on 3 to 6 month contracts) and Maharashtra
(contract up to April 2012).
Company Description
JSW Energy Limited is a power generation company with an
installed capacity of 1,730 MW as of March 2011. The company
has 1,410 MW under construction and 8,910 MW in the planning
stages. JSW Energy is a part of the JSW Group that has
interests in steel and ports. Promoters own 76.7% of the equity.
India Utilities
Industry View: In-Line
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
JSW Energy Limited
F4Q11 Results In-Line with
Estimates
Quick Comment: JSW Energy reported F4Q11
consolidated revenue of Rs14.5 bn (up 84% YoY),
EBITDA of Rs4.6 bn (up 37% YoY) and adjusted net
profit of Rs2.3 bn (down 15% YoY) which is in-line with
our estimate. Revenue was higher than our estimate
primarily due to the inclusion of power trading revenues
of over Rs880 mn which however, has a negligible
contribution to profitability. EBITDA margins were at
31.7% (down almost 11 ppt YoY) primarily due to high
fuel cost – fuel cost was Rs2.8/unit in Q4. The company
expects fuel costs to remain between Rs2.6-2.8/unit in
F2012 as well. The company reported F2011 revenue of
Rs42.9 bn and adjusted profit of Rs8.7 bn.
What's new: Key developments during the quarter were
as follows:
• The Vijayanagar plant achieved a PLF of 99.49%
while the Ratnagiri plant operated at a PLF of
82.44%, achieving stabilized operations as the
quarter progressed. The two units of Barmer
operated at an average PLF of 64.24%.
• The net generation was 3,012 MU, of which 67%
was sold in the short-term market and the balance
through long-term contracts.
• Merchant realization was Rs4.71/unit in Q4 and
Rs4.95/unit for F2011. Management expects
merchant realization to be Rs4.5-4.75/unit in F2012.
Impact on views: We believe risks associated with fuel
sourcing will continue to impact the financial
performance of JSW Energy. While capacity addition
and larger merchant volumes in F2012 may drive
revenue growth, we believe EBITDA will be impacted
due to higher fuel cost if imported spot coal prices
remain or trend higher from current levels. We maintain
our Underweight rating on the stock.
Key Highlights:
• The company received 250,000 to 300,000 tons of coal
from Indonesia in F4Q11. It expects to import 3.5 to 4.5 mt
of coal from Indonesia in F2012 at prices ranging between
US$50-100/t FOB. The calorific value of coal too would
range between 3,900 to 5,000 kcal/kg. None of this coal
will be from the Sungai Belati mine.
• During F4Q11, SACMH commenced production and
mined 140,069 tons of raw coal from the existing block.
Work has commenced for opening up the second block.
The company expects to receive 1 mt in F2012 from
SACMH (South Africa) and this coal maybe largely used
for the Ratnagiri I plant.
• In F4Q11, the FOB price of coal used for the Vijayanagar
plants was US$110/t while for Ratnagiri it ranged between
US$62-110/t.
• CIC Energy: The transaction closing date has been
extended to May 31. The company has the option to
terminate the transaction if all condition precedents are not
fulfilled.
• The company is scouting for additional coal mines as well
to meet its short and medium term requirements.
• 1200 MW Ratnagiri project: The synchronization of unit 3
is expected anytime now and the company expects to
commission unit 4 by June 2011. The total capex until
March 2011 was Rs49 bn.
• 1080 MW Barmer Project: Unit 3 is likely to be
commissioned in May 2011 and unit 4 by June 2011. The
subsequent 4 units are expected to be commissioned by
Dec 2011. The total capex until March 2011 was Rs 57 bn.
The company is still awaiting approval to set up 270 MW of
Barmer II.
• Barmer Lignite Mining Company: Mine development
activities are progressing well at Kapurdi and 50 mn cum
of over burden removal took place during the quarter. The
first lignite is likely to be extracted by end May 2011. The
company is awaiting regulatory approval for transfer
pricing of lignite to the Barmer plant. The entire
consideration amount of Rs7.1 bn for the land acquisition
of Jalipa mines was deposited and land is expected to be
in possession by June 2011. The total capex until March
2011 was Rs8.1 bn.
• 240 MW Kutehr Project: The company has executed the
implementation agreement with the Govt of Himachal
Pradesh and forest clearance is expected in a month.
Total capex till March 2011 was Rs1.2 bn.
• Expansion of Vijayanagar plant (660 MW): DPR is
under preparation and geo-technical survey is in progress.
• 1320 MW Chhattisgarh project: The public hearing is
complete and the company now awaits MoEF clearance.
257 acres of land has been acquired and a PPA has been
signed with the Government of Chhattisgarh for 35% of the
power. The total capex until March 2011 was Rs520 mn.
• 1620 MW West Bengal project: The tendering process
for BTG equipment for 300 MW is being finalized and initial
project related activities have commenced. The total
capex until March 2011 was Rs590 mn.
• 3200 MW Ratnagiri project: Substantial land is in
possession and the company is now obtaining necessary
approvals. However, there are no plans to commence any
further activities.
• Jaigad Power Transmission: The 110 km Jaigad –
Karad line is expected to be commissioned by end May
2011. The total capex until March 2011 was Rs4.9 bn.
• Realization during the quarter and F2011 are below. The
company will mostly be selling merchant units to
Karnataka, Maharashtra, Andhra Pradesh and Tamil Nadu.
We believe bulk of the merchant volumes will be to
Karnataka (on 3 to 6 month contracts) and Maharashtra
(contract up to April 2012).
Company Description
JSW Energy Limited is a power generation company with an
installed capacity of 1,730 MW as of March 2011. The company
has 1,410 MW under construction and 8,910 MW in the planning
stages. JSW Energy is a part of the JSW Group that has
interests in steel and ports. Promoters own 76.7% of the equity.
India Utilities
Industry View: In-Line
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