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Power
Muted capacity addition of coverage universe
In YTD FY12 (April-May 2011), aggregate incremental capacity
addition was 1285 MW (800 MW in April- May 2010). Our coverage
universe has added 910 MW during this quarter. However, only 250
MW has been commercialised. The installed capacity currently
stands at 1,74,911 MW. For the rest of the year, we expect ~ 13500
MW of capacity addition taking the total capacity addition in the XIth
Five Year Plan to ~ 46000 MW (vs. original target of 72000 MW).
Electricity generation during April-May 2011 has increased by 8%
YoY. Average base deficit during April May 2011 was 7% (decline of
600 bps YoY) while average peak deficit was 10% (decline of 305
bps YoY)
Merchant power rates decline QoQ and YoY
Merchant power rates have declined ~18% QoQ and 38% YoY in
Q1FY12 (though traditionally the best quarter for merchant rates).
We expect companies with merchant power exposure (Lanco
Infratech, Tata Power) to report a realisation in the range of ~| 3.9-
4.2 Kwhr.
Firm global coal prices, Indonesian law – key headwinds for IPPs
During Q1FY12, international spot thermal coal prices (6700 kcal)
have declined by 7% QoQ ($120/tonne). However, a decline in
merchant prices and change in Indonesian law (with reference to
pricing of imported coal) would put profitability of merchant IPP
(based on imported coal) under pressure. Similarly, declining gas
output from Reliance (case in point: Lanco Infra) would mean lower
PLFs, going forward.
SEBs losses at ~| 80000 crore , tariff increase inevitable
As per the XIII Finance Commission, SEB’s losses have widened to |
80,319 crore (based on 2008-09 prices) from | 55,000 crore in FY09.
However, tariff hikes in states like MP, Bihar & proposed hike in Delhi
are a way forward unlike the bailout sought by Tamil Nadu SEB.
PAT, EBITDA to increase YoY, but decline on QoQ basis
From our coverage universe, we expect EBITDA margins to remain
stable QoQ (due to limited exposure of our coverage universe to
merchant power) but to decline marginally by 150 bps YoY. Higher
depreciation & interest cost of newly commissioned projects would
lead PAT margin contraction of 300 bps QoQ and 180 bps YoY
Company specific view
Company Remarks
NTPC We expect NTPC to sell ~51.2 BU in Q1FY12, a decline of 2.1% YoY mainly due to a
fall in production in its gas-based power plants. We expect realisation to be ~ |
2.64 per unit (based on grossing of tariff on pre-tax RoE of 23%). During the quarter,
the company had added 660 MW super critical power in Sipat
NHPC We expect NHPC to sell ~6289 MUs in Q1FY12 (14% growth YoY). We expect per
unit realisation to be | 1.85 per unit (same as Q1FY11). We estimate revenue
growth of 14% YoY and PAT growth of 7% (lower tax in Q1FY11)
Neyveli Lignite The company is expected to report topline growth of 1% and bottomline de-growth
of 13.5% YoY (higher depreciation and interest on 125 MW capacity addition),
respectively. The company is expected to sell ~4804 MUs, up 1% YoY. We have
built in a realisation rate of | 2.41/unit
JP Hydro We have built in sales of~1270 MUs in Q1FY12. We expect average realisation of
| 2.0 per unit. During the quarter, the company has commissioned first unit (250
MW) of Karcham Wangtoo. We expect revenue growth of 30% YoY and PAT growth
of 57% YoY due to capacity addition this quarter and extraordinary expense of | 10
crore in Q1FY11
PTC India We expect PTC to report trading volumes of 6966 MUs for Q1FY12E, implying a 22%
YoY growth. The trading margins are also expected to be at 5.4 paisa/unit in
Q1FY12E. We have built in average realisation of | 3.9 per unit in Q1FY12E
Lanco Infratech
**
The company has sold ~ 3200 MUs. We expect merchant power realisation to be |
3.9/kwhr (decline of 10% YoY). We expect revenue growth of 11% YoY due to Griffin
coal numbers. We expect EBITDA and PAT to decline by 13% (higher coal costs) and
40% (higher interest cost), respectively
Tata Power The company is expected to report topline de-growth of 4% on account of a decline
in generation (for 1580 MW) and bottomline growth of 44% YoY (higher tax rate in
Q1FY11), respectively. We expect coal realisation at $85/tonne in Bumi resources
with volume of 15.5 MT
Source: Company, ICICIdirect.com Research
**One offs like higher inter segment elimination; other income may impact PAT growth
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Power
Muted capacity addition of coverage universe
In YTD FY12 (April-May 2011), aggregate incremental capacity
addition was 1285 MW (800 MW in April- May 2010). Our coverage
universe has added 910 MW during this quarter. However, only 250
MW has been commercialised. The installed capacity currently
stands at 1,74,911 MW. For the rest of the year, we expect ~ 13500
MW of capacity addition taking the total capacity addition in the XIth
Five Year Plan to ~ 46000 MW (vs. original target of 72000 MW).
Electricity generation during April-May 2011 has increased by 8%
YoY. Average base deficit during April May 2011 was 7% (decline of
600 bps YoY) while average peak deficit was 10% (decline of 305
bps YoY)
Merchant power rates decline QoQ and YoY
Merchant power rates have declined ~18% QoQ and 38% YoY in
Q1FY12 (though traditionally the best quarter for merchant rates).
We expect companies with merchant power exposure (Lanco
Infratech, Tata Power) to report a realisation in the range of ~| 3.9-
4.2 Kwhr.
Firm global coal prices, Indonesian law – key headwinds for IPPs
During Q1FY12, international spot thermal coal prices (6700 kcal)
have declined by 7% QoQ ($120/tonne). However, a decline in
merchant prices and change in Indonesian law (with reference to
pricing of imported coal) would put profitability of merchant IPP
(based on imported coal) under pressure. Similarly, declining gas
output from Reliance (case in point: Lanco Infra) would mean lower
PLFs, going forward.
SEBs losses at ~| 80000 crore , tariff increase inevitable
As per the XIII Finance Commission, SEB’s losses have widened to |
80,319 crore (based on 2008-09 prices) from | 55,000 crore in FY09.
However, tariff hikes in states like MP, Bihar & proposed hike in Delhi
are a way forward unlike the bailout sought by Tamil Nadu SEB.
PAT, EBITDA to increase YoY, but decline on QoQ basis
From our coverage universe, we expect EBITDA margins to remain
stable QoQ (due to limited exposure of our coverage universe to
merchant power) but to decline marginally by 150 bps YoY. Higher
depreciation & interest cost of newly commissioned projects would
lead PAT margin contraction of 300 bps QoQ and 180 bps YoY
Company specific view
Company Remarks
NTPC We expect NTPC to sell ~51.2 BU in Q1FY12, a decline of 2.1% YoY mainly due to a
fall in production in its gas-based power plants. We expect realisation to be ~ |
2.64 per unit (based on grossing of tariff on pre-tax RoE of 23%). During the quarter,
the company had added 660 MW super critical power in Sipat
NHPC We expect NHPC to sell ~6289 MUs in Q1FY12 (14% growth YoY). We expect per
unit realisation to be | 1.85 per unit (same as Q1FY11). We estimate revenue
growth of 14% YoY and PAT growth of 7% (lower tax in Q1FY11)
Neyveli Lignite The company is expected to report topline growth of 1% and bottomline de-growth
of 13.5% YoY (higher depreciation and interest on 125 MW capacity addition),
respectively. The company is expected to sell ~4804 MUs, up 1% YoY. We have
built in a realisation rate of | 2.41/unit
JP Hydro We have built in sales of~1270 MUs in Q1FY12. We expect average realisation of
| 2.0 per unit. During the quarter, the company has commissioned first unit (250
MW) of Karcham Wangtoo. We expect revenue growth of 30% YoY and PAT growth
of 57% YoY due to capacity addition this quarter and extraordinary expense of | 10
crore in Q1FY11
PTC India We expect PTC to report trading volumes of 6966 MUs for Q1FY12E, implying a 22%
YoY growth. The trading margins are also expected to be at 5.4 paisa/unit in
Q1FY12E. We have built in average realisation of | 3.9 per unit in Q1FY12E
Lanco Infratech
**
The company has sold ~ 3200 MUs. We expect merchant power realisation to be |
3.9/kwhr (decline of 10% YoY). We expect revenue growth of 11% YoY due to Griffin
coal numbers. We expect EBITDA and PAT to decline by 13% (higher coal costs) and
40% (higher interest cost), respectively
Tata Power The company is expected to report topline de-growth of 4% on account of a decline
in generation (for 1580 MW) and bottomline growth of 44% YoY (higher tax rate in
Q1FY11), respectively. We expect coal realisation at $85/tonne in Bumi resources
with volume of 15.5 MT
Source: Company, ICICIdirect.com Research
**One offs like higher inter segment elimination; other income may impact PAT growth
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