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Tata Power Co
F1Q12: Standalone Weak;
Coal Earnings Strong
Quick Comment – Impact on our views: Tata Power
reported F1Q12 adjusted standalone revenue of
Rs19.2bn (up 4% YoY), EBITDA of Rs4.3bn (down 2%
YoY), and adjusted profit of Rs2.9bn (up 32% YoY).
While profit beat our estimate of Rs2.8bn, the quality of
earnings was low as the company recognized Rs2.6bn
of other income as against our estimate of Rs1bn.
On a consolidated basis, revenue was Rs58.2bn (up
13% YoY), EBITDA was Rs14.4bn (up 38% YoY), and
adjusted profit was Rs3.6bn (up 5% YoY). While the coal
business delivered better operational numbers, it was
affected by higher interest expense. Hence, numbers
missed our profit estimate of Rs6.2bn and the
consensus estimate of Rs5.5bn.
Key developments: The company has written to the
Ministry of Power highlighting the risk faced by power
plants given the sharp increase in imported coal prices.
For the Mundra UMPP, the Indonesian authorities have
prevented the offtake of about 2.5 mtpa of coal at prices
lower than the benchmark price. As a result, this quantity
may see an upward revision of about US$30-40/ton. The
company is also evaluating options of sourcing lower-
quality coal from other sources to reduce its exposure to
higher-priced coal; however, this may lower the
efficiency of the plant. In addition, the company now
expects the transmission line to be ready by
mid-October 2011, and hence the first unit may be
commissioned four months after that.
Updates on projects under construction and in pipeline
are shown in Exhibits 4 and 5.
Investment thesis: While a better execution track
record sets the company apart from other developers,
we believe the overhang of higher losses in Mundra
UMPP and high leverage will affect the stock
performance. The stock is trading at 1.9x P/B and 9.3x
EV/EBITDA on our F2012 consolidated estimates. We
maintain our Equal-weight rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Power Co
F1Q12: Standalone Weak;
Coal Earnings Strong
Quick Comment – Impact on our views: Tata Power
reported F1Q12 adjusted standalone revenue of
Rs19.2bn (up 4% YoY), EBITDA of Rs4.3bn (down 2%
YoY), and adjusted profit of Rs2.9bn (up 32% YoY).
While profit beat our estimate of Rs2.8bn, the quality of
earnings was low as the company recognized Rs2.6bn
of other income as against our estimate of Rs1bn.
On a consolidated basis, revenue was Rs58.2bn (up
13% YoY), EBITDA was Rs14.4bn (up 38% YoY), and
adjusted profit was Rs3.6bn (up 5% YoY). While the coal
business delivered better operational numbers, it was
affected by higher interest expense. Hence, numbers
missed our profit estimate of Rs6.2bn and the
consensus estimate of Rs5.5bn.
Key developments: The company has written to the
Ministry of Power highlighting the risk faced by power
plants given the sharp increase in imported coal prices.
For the Mundra UMPP, the Indonesian authorities have
prevented the offtake of about 2.5 mtpa of coal at prices
lower than the benchmark price. As a result, this quantity
may see an upward revision of about US$30-40/ton. The
company is also evaluating options of sourcing lower-
quality coal from other sources to reduce its exposure to
higher-priced coal; however, this may lower the
efficiency of the plant. In addition, the company now
expects the transmission line to be ready by
mid-October 2011, and hence the first unit may be
commissioned four months after that.
Updates on projects under construction and in pipeline
are shown in Exhibits 4 and 5.
Investment thesis: While a better execution track
record sets the company apart from other developers,
we believe the overhang of higher losses in Mundra
UMPP and high leverage will affect the stock
performance. The stock is trading at 1.9x P/B and 9.3x
EV/EBITDA on our F2012 consolidated estimates. We
maintain our Equal-weight rating on the stock.
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