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India Equity Research Reports, IPO and Stock News
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H i g h e r o t h e r i n c o m e , l o w e r i n t e r e s t m a s k
m u t e d e a r n i n g s …
Muted sales growth (that were in line with estimates), lower raw material
costs (despite increase of 1.2% in generation), higher employee expense
(which dented operating margins), higher other income and lower interest
cost (in spite of 125 MW of capacity addition) were key highlights of
Neyveli Lignite’s Q1FY12 results. While we like the regulated nature of its
business (with no merchant power exposure), sluggish capacity addition
(coupled with delays) is a worrying factor for the stock in addition to the
proposed disinvestment by the government (93.56% stake). Valuations at
FY13E P/BV of 1.2x (cheaper than NTPC – 1.8x) are justified given the
company’s history of capacity addition miss and disinvestment overhang
on the stock.
ƒ Generation of 4,804 million units, PLF of 87.91%
In Q1FY12, the generation stood at 4804 million units (MU) (down
6.7% QoQ, up 1.2% YoY). PLFs for the quarter stood at 87.91%,
increase of 81 bps YoY and decline of 557 bps QoQ. Interest income
of | 138.09 crore for the difference between the billing rate and
finalised rate from 01-04-2009 has been included in other income. In
addition, sales worth | 54.59 crore were deducted from this
quarter’s sales (as this is the difference between estimated & actual
tariff approved by CERC with respect to thermal power station II).
ƒ Capacity addition of 250 MW in FY12, 1250 MW in FY13
In FY12, we expect capacity addition of the first unit (250 MW) of
Neyveli TPS – II to come in Q3FY12 (the entire project of 500 MW
has slipped from the Xth Five Year Plan). In FY13, we expect the
company to add 1250 MW of incremental capacity.
V a l u a t i o n
At the CMP of | 100, the stock is trading at P/E of 16.3x and 14.8x on
FY12E and FY13E EPS, respectively. Similarly, on P/BV multiple, the stock
is trading at 1.3x and 1.2x FY13E, respectively. Capacity will be the likely
trigger for a re-rating which we believe is some time away. Hence
maintain Hold with a Target price of | 104
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
H i g h e r o t h e r i n c o m e , l o w e r i n t e r e s t m a s k
m u t e d e a r n i n g s …
Muted sales growth (that were in line with estimates), lower raw material
costs (despite increase of 1.2% in generation), higher employee expense
(which dented operating margins), higher other income and lower interest
cost (in spite of 125 MW of capacity addition) were key highlights of
Neyveli Lignite’s Q1FY12 results. While we like the regulated nature of its
business (with no merchant power exposure), sluggish capacity addition
(coupled with delays) is a worrying factor for the stock in addition to the
proposed disinvestment by the government (93.56% stake). Valuations at
FY13E P/BV of 1.2x (cheaper than NTPC – 1.8x) are justified given the
company’s history of capacity addition miss and disinvestment overhang
on the stock.
ƒ Generation of 4,804 million units, PLF of 87.91%
In Q1FY12, the generation stood at 4804 million units (MU) (down
6.7% QoQ, up 1.2% YoY). PLFs for the quarter stood at 87.91%,
increase of 81 bps YoY and decline of 557 bps QoQ. Interest income
of | 138.09 crore for the difference between the billing rate and
finalised rate from 01-04-2009 has been included in other income. In
addition, sales worth | 54.59 crore were deducted from this
quarter’s sales (as this is the difference between estimated & actual
tariff approved by CERC with respect to thermal power station II).
ƒ Capacity addition of 250 MW in FY12, 1250 MW in FY13
In FY12, we expect capacity addition of the first unit (250 MW) of
Neyveli TPS – II to come in Q3FY12 (the entire project of 500 MW
has slipped from the Xth Five Year Plan). In FY13, we expect the
company to add 1250 MW of incremental capacity.
V a l u a t i o n
At the CMP of | 100, the stock is trading at P/E of 16.3x and 14.8x on
FY12E and FY13E EPS, respectively. Similarly, on P/BV multiple, the stock
is trading at 1.3x and 1.2x FY13E, respectively. Capacity will be the likely
trigger for a re-rating which we believe is some time away. Hence
maintain Hold with a Target price of | 104
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