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FY11 result
Tata Power’s 4Q and FY11 operating performance was broadly in line
with our estimates though lower tax expense and strong performance of
power subsidiaries/JVs helped boost net profit. FY12 is key year for Tata
Power which will see commissioning of Maithon and two units of Mundra.
Tata Power may now have to procure 2.5mt coal for Mundra at market
prices, instead of fixed price, as per Indonesian government’s directive.
While the company has made a representation against this, we are taking
a cautious stance and factoring this in our estimates. We have also
lowered our coal sales volume estimates leading to 9-12% EPS cut for
FY12-13. TP cut to Rs1,410/sh.
Standalone numbers higher due to lower tax expenses
Tata Power 4Q standalone net profit at Rs2.7bn was boosted by lower tax
expenses due to higher tax free income; lower deferred tax and utilization of
MAT credit. Generation was down YoY in both Mumbai and outside Mumbai as
cheaper power was available for purchase and due to scheduled outage of
Jojobera Unit -4. Merchant sales (from Haldia and Unit-8) were down 2% YoY
(to 314 mkWh) and average tariff was in the range of Rs3.4-5.4/kWh.
14mt coal sales in 4Q; average realization of US$87/t
The Indonesian coal companies sold 14mt coal in 4Q which was below our
estimates though the realization jumped very sharply to US$87/t – up 19%
QoQ. For the full year the mining companies sold 58.8mt coal at an average
realization of US$76/t.
1st unit of Maithon/ Mundra to be commissioned by Jun/Sep 2011
1st unit of Maithon (2 x 525MW) project is expected to be commissioned by
June. The long term PPAs for this project are signed with DVC (300MW) which
commences on CoD date while the balance capacity (750MW) is tied up into
PPAs starting from April 2012 which gives Tata Power to sell power in the
short term market in the interim. Mundra UMPPs first unit of 800MW is
expected to commission in September though the transmission line being
setup by Powergrid is lagging behind.
Earnings cut by 9-12% for FY12-13. TP cut to Rs1,410/sh
Tata Power’s may have to procure 2.5mt of coal for Mundra at market price,
instead of a fixed price agreed upon at the time of purchase of stake in Bumi
mines, as per Indonesian government’s directive on price of coal traded. This
might increase cost of coal for Mundra by US$35/t for the 2.5mt of coal. We
have incorporated the higher coal price in our numbers and we have also cut
our coal mining volume assumption for FY12-13 which has resulted in 9-12%
earnings cut. Our new SOTP based target price is Rs1,410/sh.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
FY11 result
Tata Power’s 4Q and FY11 operating performance was broadly in line
with our estimates though lower tax expense and strong performance of
power subsidiaries/JVs helped boost net profit. FY12 is key year for Tata
Power which will see commissioning of Maithon and two units of Mundra.
Tata Power may now have to procure 2.5mt coal for Mundra at market
prices, instead of fixed price, as per Indonesian government’s directive.
While the company has made a representation against this, we are taking
a cautious stance and factoring this in our estimates. We have also
lowered our coal sales volume estimates leading to 9-12% EPS cut for
FY12-13. TP cut to Rs1,410/sh.
Standalone numbers higher due to lower tax expenses
Tata Power 4Q standalone net profit at Rs2.7bn was boosted by lower tax
expenses due to higher tax free income; lower deferred tax and utilization of
MAT credit. Generation was down YoY in both Mumbai and outside Mumbai as
cheaper power was available for purchase and due to scheduled outage of
Jojobera Unit -4. Merchant sales (from Haldia and Unit-8) were down 2% YoY
(to 314 mkWh) and average tariff was in the range of Rs3.4-5.4/kWh.
14mt coal sales in 4Q; average realization of US$87/t
The Indonesian coal companies sold 14mt coal in 4Q which was below our
estimates though the realization jumped very sharply to US$87/t – up 19%
QoQ. For the full year the mining companies sold 58.8mt coal at an average
realization of US$76/t.
1st unit of Maithon/ Mundra to be commissioned by Jun/Sep 2011
1st unit of Maithon (2 x 525MW) project is expected to be commissioned by
June. The long term PPAs for this project are signed with DVC (300MW) which
commences on CoD date while the balance capacity (750MW) is tied up into
PPAs starting from April 2012 which gives Tata Power to sell power in the
short term market in the interim. Mundra UMPPs first unit of 800MW is
expected to commission in September though the transmission line being
setup by Powergrid is lagging behind.
Earnings cut by 9-12% for FY12-13. TP cut to Rs1,410/sh
Tata Power’s may have to procure 2.5mt of coal for Mundra at market price,
instead of a fixed price agreed upon at the time of purchase of stake in Bumi
mines, as per Indonesian government’s directive on price of coal traded. This
might increase cost of coal for Mundra by US$35/t for the 2.5mt of coal. We
have incorporated the higher coal price in our numbers and we have also cut
our coal mining volume assumption for FY12-13 which has resulted in 9-12%
earnings cut. Our new SOTP based target price is Rs1,410/sh.
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