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UBS Investment Research
Adani Power
Q1 FY12 results: below UBS estimates
„ Event: Q1 results below UBS estimates, significant miss vs consensus
In Q1 FY12, Adani Power reported revenue of Rs8.19bn +132% YoY (UBS
estimate Rs8bn and consensus Rs10.9bn). EBITDA was Rs4.1bn +92% YoY (UBS
estimate Rs4.5bn and consensus Rs6.5bn). PAT was Rs1.77bn +55% YoY (UBS
estimate Rs2.5bn and consensus Rs3.3bn). The results are below UBS estimates
and also significantly below consensus estimates. Operationally, we think the key
reason is lower per unit realisation (Rs2.82/unit). We also believe that consensus
estimates might have not factored in the planned maintenance shutdown.
„ Impact: planned shutdown hits generation, PLF 74% vs 80% in Q1 FY11
Adani Power reported increased generation, with gross generation increasing 177%
YoY to 3.19bn units. This quarter, the average Plant Load Factor (PLF) was 74%
compared to 80% in Q1 FY11. This is due to the planned maintenance shutdown
and therefore not a cause for worry, in our view. We also think that results are not
very relevant at this stage as the entire capacity has not yet become operational.
„ Action: we are negative on the stock due to significant risks
We like the company for its strong execution, but believe there are risks including:
1) a decline in merchant tariffs; and 2) no fuel price escalation clause in its longterm power purchase agreements (PPAs) with customers.
„ Valuation: maintain Sell rating and price target of Rs110.00
We derive our price target using a plant-by-plant DCF assuming COE of 13.1% for
under construction projects and 11.6% for operational projects. We currently value
6,600MW capacity (4,620MW of Mundra and 1,980MW of Tiroda)
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Adani Power
Q1 FY12 results: below UBS estimates
„ Event: Q1 results below UBS estimates, significant miss vs consensus
In Q1 FY12, Adani Power reported revenue of Rs8.19bn +132% YoY (UBS
estimate Rs8bn and consensus Rs10.9bn). EBITDA was Rs4.1bn +92% YoY (UBS
estimate Rs4.5bn and consensus Rs6.5bn). PAT was Rs1.77bn +55% YoY (UBS
estimate Rs2.5bn and consensus Rs3.3bn). The results are below UBS estimates
and also significantly below consensus estimates. Operationally, we think the key
reason is lower per unit realisation (Rs2.82/unit). We also believe that consensus
estimates might have not factored in the planned maintenance shutdown.
„ Impact: planned shutdown hits generation, PLF 74% vs 80% in Q1 FY11
Adani Power reported increased generation, with gross generation increasing 177%
YoY to 3.19bn units. This quarter, the average Plant Load Factor (PLF) was 74%
compared to 80% in Q1 FY11. This is due to the planned maintenance shutdown
and therefore not a cause for worry, in our view. We also think that results are not
very relevant at this stage as the entire capacity has not yet become operational.
„ Action: we are negative on the stock due to significant risks
We like the company for its strong execution, but believe there are risks including:
1) a decline in merchant tariffs; and 2) no fuel price escalation clause in its longterm power purchase agreements (PPAs) with customers.
„ Valuation: maintain Sell rating and price target of Rs110.00
We derive our price target using a plant-by-plant DCF assuming COE of 13.1% for
under construction projects and 11.6% for operational projects. We currently value
6,600MW capacity (4,620MW of Mundra and 1,980MW of Tiroda)
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