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• Private IPPs (e.g.: Lanco, RPWR, JSWE, Adani) underperformed
the sharply falling market, amidst concerns of inflation and rising
interest rates. In our view a combination of high leverage and potential
operating risks (e.g.: execution delays, low PLF due to fuel
unavailability, unpredictable merchant prices) would continue to make
this sector vulnerable to earnings risks. We retain our preference for
fuel-immune defensives (e.g.: TPWR and Powergrid) which have infact
held up strongly against the recent market onslaught.
• April PLF data suggests contrast in IPPs'fuel management. Sharp
MoM improvement: i) JSWE (Barmer), ii) GVK and GMR’s gas based
plants. Sharp MoM deterioration: i) Adani Mundra PLF down to 81%
from 87%, ii) NTPC coal PLF down to 94% from 83%. Continued strong
performers: i) RPWR (Rosa), ii) JSWE (Vijaynagar, Ratnagiri)
Continued weak performers: i) Lanco (Amarkantak, Udupi, ii) NTPC gas
• Re-visiting our power capacity addition estimates for 12th plan, in the
light of a recent statement by MoEF Jairam Ramesh, on the
“ecological impossibility of 100GW capacity addition in 12th plan”:
Based on our comprehensive exercise of a bottom-up totaling of all stated
plans across major IPPs, we estimate that all power producers intend to
add around 150GW of power during FY13-17. However, we build in
100GW for 12th plan, translating into a haircut of around 30% and this is
unchanged. In our view, Ramesh’s statement is a pointer to on-the-ground
execution difficulties that IPPs shall continue to face. Lower-than-expected
capacity addition would expand the power deficit (currently at 11%) and
theoretically build a case for stronger power prices – however, given our
view that the government bodies will continue to play an active role in
power pricing, we think execution delays will do more harm than good.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
• Private IPPs (e.g.: Lanco, RPWR, JSWE, Adani) underperformed
the sharply falling market, amidst concerns of inflation and rising
interest rates. In our view a combination of high leverage and potential
operating risks (e.g.: execution delays, low PLF due to fuel
unavailability, unpredictable merchant prices) would continue to make
this sector vulnerable to earnings risks. We retain our preference for
fuel-immune defensives (e.g.: TPWR and Powergrid) which have infact
held up strongly against the recent market onslaught.
• April PLF data suggests contrast in IPPs'fuel management. Sharp
MoM improvement: i) JSWE (Barmer), ii) GVK and GMR’s gas based
plants. Sharp MoM deterioration: i) Adani Mundra PLF down to 81%
from 87%, ii) NTPC coal PLF down to 94% from 83%. Continued strong
performers: i) RPWR (Rosa), ii) JSWE (Vijaynagar, Ratnagiri)
Continued weak performers: i) Lanco (Amarkantak, Udupi, ii) NTPC gas
• Re-visiting our power capacity addition estimates for 12th plan, in the
light of a recent statement by MoEF Jairam Ramesh, on the
“ecological impossibility of 100GW capacity addition in 12th plan”:
Based on our comprehensive exercise of a bottom-up totaling of all stated
plans across major IPPs, we estimate that all power producers intend to
add around 150GW of power during FY13-17. However, we build in
100GW for 12th plan, translating into a haircut of around 30% and this is
unchanged. In our view, Ramesh’s statement is a pointer to on-the-ground
execution difficulties that IPPs shall continue to face. Lower-than-expected
capacity addition would expand the power deficit (currently at 11%) and
theoretically build a case for stronger power prices – however, given our
view that the government bodies will continue to play an active role in
power pricing, we think execution delays will do more harm than good.
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