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Adani results well below consensus: Adani Power reported PAT of
Rs1.8B, 7% below our estimate but well below consensus.
Disappointment was led by a weak PLF on account of maintenance
shutdowns. EBITDA was 23% lower than our estimates as well due to
(1) lower PLF driving reduced merchant volume, under-recovery of
fixed costs and higher fuel cost/per unit, and (2) a lower merchant rate
due to exposure to the UI market. We think there could be downward
pressure on street estimates, which could have an impact on stock
performance in the near term.
Lower PLF and merchant rate drives weak results: Net sales were
down 4% qoq and 10% below our estimate as average tariffs declined by
10% qoq to Rs2.82/unit driven by: (1) <80% PLF translating into underrecovery
of fixed charges by ~Rs0.2-0.3/unit from the PPA tariff of
Rs2.8; (2) avg merchant rate of Rs3.6/unit down by 21% qoq with
exposure to UI (Rs.4.4/unit for bilateral, Rs3/unit for UI); and (3)
merchant sales volume only 9.3% of the total since Adani had to meet
PPA commitments first given lower PLF.
A 74% PLF (vs 89% in 4Q) was in line with our expectations, but
could persist through the next 2Qs: PLF was low on account of: (1)
planned outage of 20 days for Unit 1 of 330MW for annual maintenance;
and (2) shutdown of Unit 5 of 660MW for 15 days to synchronize the
forthcoming Unit 6. Management guided to Units 2&3 also undergoing
annual maintenance in 2Q and possibly Unit 4 in 3Q which would
impact PLFs in FY12. Fuel cost of Rs1.15/unit was up 22% qoq and 8%
yoy as PLF declined. Also auxillary consumption was high at 9.2%.
Linkage coal a question mark: Adani has not received a single MT of
linkage coal for blending with Indonesian coal for its operating units so
far. While these could be fully supported by Bunyu, a problem can oocur
when Mundra IV (1.98GW) and Tiroda 1 (1.98GW) start getting
commissioned this year onwards. With Bunyu's production capacity
being capped at 10-11mtpa, PLFs and/or fuel costs could be at risk.
Management remains confident of getting domestic coal and is not
putting projects on hold.
Aggressive accounting with respect to recognition of custom duty in
tariff: Adani recognized ~Rs263MM of revenue i.e Rs0.09/unit in lieu
of custom duty which is pending GERC approval.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Adani results well below consensus: Adani Power reported PAT of
Rs1.8B, 7% below our estimate but well below consensus.
Disappointment was led by a weak PLF on account of maintenance
shutdowns. EBITDA was 23% lower than our estimates as well due to
(1) lower PLF driving reduced merchant volume, under-recovery of
fixed costs and higher fuel cost/per unit, and (2) a lower merchant rate
due to exposure to the UI market. We think there could be downward
pressure on street estimates, which could have an impact on stock
performance in the near term.
Lower PLF and merchant rate drives weak results: Net sales were
down 4% qoq and 10% below our estimate as average tariffs declined by
10% qoq to Rs2.82/unit driven by: (1) <80% PLF translating into underrecovery
of fixed charges by ~Rs0.2-0.3/unit from the PPA tariff of
Rs2.8; (2) avg merchant rate of Rs3.6/unit down by 21% qoq with
exposure to UI (Rs.4.4/unit for bilateral, Rs3/unit for UI); and (3)
merchant sales volume only 9.3% of the total since Adani had to meet
PPA commitments first given lower PLF.
A 74% PLF (vs 89% in 4Q) was in line with our expectations, but
could persist through the next 2Qs: PLF was low on account of: (1)
planned outage of 20 days for Unit 1 of 330MW for annual maintenance;
and (2) shutdown of Unit 5 of 660MW for 15 days to synchronize the
forthcoming Unit 6. Management guided to Units 2&3 also undergoing
annual maintenance in 2Q and possibly Unit 4 in 3Q which would
impact PLFs in FY12. Fuel cost of Rs1.15/unit was up 22% qoq and 8%
yoy as PLF declined. Also auxillary consumption was high at 9.2%.
Linkage coal a question mark: Adani has not received a single MT of
linkage coal for blending with Indonesian coal for its operating units so
far. While these could be fully supported by Bunyu, a problem can oocur
when Mundra IV (1.98GW) and Tiroda 1 (1.98GW) start getting
commissioned this year onwards. With Bunyu's production capacity
being capped at 10-11mtpa, PLFs and/or fuel costs could be at risk.
Management remains confident of getting domestic coal and is not
putting projects on hold.
Aggressive accounting with respect to recognition of custom duty in
tariff: Adani recognized ~Rs263MM of revenue i.e Rs0.09/unit in lieu
of custom duty which is pending GERC approval.
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