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H i g h e r t a x d e n t s p r o f i t a b i l i t y …
Robust sales growth on account of higher coal realisation ($95/ tonne v/s
our est. $85/tonne) leading to higher EBITDA, lower power purchase cost
for Mumbai operations (diversion for power supplied to R Infra for own
customers), higher deferred tax (commissioning of wind assets), higher
profits from NDPL (accounting on accrual basis) and higher tax outgo
(higher dividends from Bumi Resources) were key highlights of Tata
Power Q1FY12 results. We are concerned about economics of Mundhra
UMPP (on account of change in Indonesian law), recovery of tariff hike for
NDPL (debt increasing by ~ | 400 crore every quarter), amidst an
increase of 150 bps in regulated return for Mumbai generation assets. We
reduce our fair value per share from |1383 to |1257 and maintain our Buy
rating. Increase in international thermal coal price, allowance of a tariff
hike in Mundhra UMPP (in align to increase in coal costs) and
monetisation of its investments are the key risks to fair value. During the
quarter the company commissioned 525MW Maithon (Case 1: regulated
model). Current operational capacity of the company stands at 3,174MW
ƒ Other highlights during the quarter
Higher coal realisation propel coal business contribution to EBIT to
56% (Power business 47%) – highest in last quarter. EBIT margins
in coal business stands at 37%. The company during the quarter
has written off expenses worth | 77 crore on account of deferred
exploration costs in Arutmin. In NDPL, the increase debt level was
~ | 400 crore as compared to last quarter.
V a l u a t i o n
At the CMP of | 1122, the stock is trading at P/E of 11.8x and 10.9x FY12E
and FY13E EPS, respectively. Similarly, on P/B multiple the stock is
trading at 1.8x and 1.6x on its FY12E and FY13E Book value, respectively.
We have value to Mundhra UMPP at zero valuation and increase the cost
of equity of NDPL from 12% to 15 % (high accruals, pressure on cash
flows) and CoE of 13% on existing operational assets.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
H i g h e r t a x d e n t s p r o f i t a b i l i t y …
Robust sales growth on account of higher coal realisation ($95/ tonne v/s
our est. $85/tonne) leading to higher EBITDA, lower power purchase cost
for Mumbai operations (diversion for power supplied to R Infra for own
customers), higher deferred tax (commissioning of wind assets), higher
profits from NDPL (accounting on accrual basis) and higher tax outgo
(higher dividends from Bumi Resources) were key highlights of Tata
Power Q1FY12 results. We are concerned about economics of Mundhra
UMPP (on account of change in Indonesian law), recovery of tariff hike for
NDPL (debt increasing by ~ | 400 crore every quarter), amidst an
increase of 150 bps in regulated return for Mumbai generation assets. We
reduce our fair value per share from |1383 to |1257 and maintain our Buy
rating. Increase in international thermal coal price, allowance of a tariff
hike in Mundhra UMPP (in align to increase in coal costs) and
monetisation of its investments are the key risks to fair value. During the
quarter the company commissioned 525MW Maithon (Case 1: regulated
model). Current operational capacity of the company stands at 3,174MW
ƒ Other highlights during the quarter
Higher coal realisation propel coal business contribution to EBIT to
56% (Power business 47%) – highest in last quarter. EBIT margins
in coal business stands at 37%. The company during the quarter
has written off expenses worth | 77 crore on account of deferred
exploration costs in Arutmin. In NDPL, the increase debt level was
~ | 400 crore as compared to last quarter.
V a l u a t i o n
At the CMP of | 1122, the stock is trading at P/E of 11.8x and 10.9x FY12E
and FY13E EPS, respectively. Similarly, on P/B multiple the stock is
trading at 1.8x and 1.6x on its FY12E and FY13E Book value, respectively.
We have value to Mundhra UMPP at zero valuation and increase the cost
of equity of NDPL from 12% to 15 % (high accruals, pressure on cash
flows) and CoE of 13% on existing operational assets.
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