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India Equity Research Reports, IPO and Stock News
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More pain ahead
The impact of disappointing domestic coal production over last 18 months
is evident in poor generation data of new projects. 16 out of 19 coal
based projects commissioned since Apr’10 have PLF’s below 75%
(national average). Apart from coal shortages, strong hydro and nuclear
power generation (up 20-53% YoY) have also contributed to this. NTPC’s
YTD generation is down 1.8% YoY while overall thermal generation is up
5.7% YoY helped by 32% increase in pvt sector capacity. With another
22GW coal based capacity (14GW based on CIL’s linkage - will require
59mtpa coal) getting commissioned over next 12 months we see risk to
earnings estimates of power utilities if the current utilization rates are to
be extrapolated.
PLF of most projects commissioned over last 12 months is down
q We have analysed the performance of all coal based power projects commissioned
over last 14 months – none of these projects have a firm FSA (fuel supply
agreement) with Coal India.
q 16 out of 19 coal based projects commissioned since April 2010 have PLF’s below
75% - which is the national average.
q Apart from coal shortages, for some of the projects the lower PLF is also due to lack
of transmission infrastructure, lower demand schedule from the procurers, strong
hydro/nuclear generation and longer stabilization period of the new units.
q Underperformance of the power stations is across public and private sectors.
q 4GW of imported coal based projects performance has also been affected by lower
demand and transmission constraints.
Hydro and nuclear generation up sharply YTD
q Hydro and nuclear power generation is up by 20.4% and 53.3% respectively over
Apr – Aug period in 2011.
q The overall increase in generation has been 9.4% over the same period with
nuclear and hydro contributing to 50% of the total.
q Thermal generation has grown at a relatively lower pace at 5.7%. Overall
monitored thermal capacity (MW) has registered a growth of 11.6% YoY YTD.
NTPC’s performance has been poor
q It is interesting to note that while thermal generation had registered a growth of
5.7% YTD, NTPC’s power generation has been down 1.8% over the same period.
q On a consolidated basis, the generation is flat for NTPC.
q Lower generation by NTPC should be seen in the light of strong hydro and nuclear
power performance YTD and also 32% increase in installed capacity base of private
sector thermal projects.
q Performance of its power projects which have recently commissioned has also been
poor – especially Jhajjar (Indira Gandhi power project) and Simhadri.
q While Farakka and Kahalgaon had faced coal related issues even in FY11 it seems
like the problem is now more wide spread for NTPC.
22GW coal based capacity to be commissioned over next 12m
q ~22GW coal based capacity is currently under construction which is expected to be
commissioned over next 12 months.
q 14.4GW of this is based on domestic coal – mostly linked with Coal India’s
production. Once fully ramped up the total coal requirement for this capacity would
be ~59mtpa (@75% PLF). We expect Coal India’s despatches to increase by 48mt
over FY11-13. Thus the balance requirement needs to be imported or the assets
are likely to be underutilized.
q 5GW capacity is expected to come up on imported coal – Adani’s 1,980MW, Tata’s
1,600MW, JSW 300MW and Essar Power 1,200MW.
q Our preference in the sector is for Powergrid, NTPC and Tata Power.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
More pain ahead
The impact of disappointing domestic coal production over last 18 months
is evident in poor generation data of new projects. 16 out of 19 coal
based projects commissioned since Apr’10 have PLF’s below 75%
(national average). Apart from coal shortages, strong hydro and nuclear
power generation (up 20-53% YoY) have also contributed to this. NTPC’s
YTD generation is down 1.8% YoY while overall thermal generation is up
5.7% YoY helped by 32% increase in pvt sector capacity. With another
22GW coal based capacity (14GW based on CIL’s linkage - will require
59mtpa coal) getting commissioned over next 12 months we see risk to
earnings estimates of power utilities if the current utilization rates are to
be extrapolated.
PLF of most projects commissioned over last 12 months is down
q We have analysed the performance of all coal based power projects commissioned
over last 14 months – none of these projects have a firm FSA (fuel supply
agreement) with Coal India.
q 16 out of 19 coal based projects commissioned since April 2010 have PLF’s below
75% - which is the national average.
q Apart from coal shortages, for some of the projects the lower PLF is also due to lack
of transmission infrastructure, lower demand schedule from the procurers, strong
hydro/nuclear generation and longer stabilization period of the new units.
q Underperformance of the power stations is across public and private sectors.
q 4GW of imported coal based projects performance has also been affected by lower
demand and transmission constraints.
Hydro and nuclear generation up sharply YTD
q Hydro and nuclear power generation is up by 20.4% and 53.3% respectively over
Apr – Aug period in 2011.
q The overall increase in generation has been 9.4% over the same period with
nuclear and hydro contributing to 50% of the total.
q Thermal generation has grown at a relatively lower pace at 5.7%. Overall
monitored thermal capacity (MW) has registered a growth of 11.6% YoY YTD.
NTPC’s performance has been poor
q It is interesting to note that while thermal generation had registered a growth of
5.7% YTD, NTPC’s power generation has been down 1.8% over the same period.
q On a consolidated basis, the generation is flat for NTPC.
q Lower generation by NTPC should be seen in the light of strong hydro and nuclear
power performance YTD and also 32% increase in installed capacity base of private
sector thermal projects.
q Performance of its power projects which have recently commissioned has also been
poor – especially Jhajjar (Indira Gandhi power project) and Simhadri.
q While Farakka and Kahalgaon had faced coal related issues even in FY11 it seems
like the problem is now more wide spread for NTPC.
22GW coal based capacity to be commissioned over next 12m
q ~22GW coal based capacity is currently under construction which is expected to be
commissioned over next 12 months.
q 14.4GW of this is based on domestic coal – mostly linked with Coal India’s
production. Once fully ramped up the total coal requirement for this capacity would
be ~59mtpa (@75% PLF). We expect Coal India’s despatches to increase by 48mt
over FY11-13. Thus the balance requirement needs to be imported or the assets
are likely to be underutilized.
q 5GW capacity is expected to come up on imported coal – Adani’s 1,980MW, Tata’s
1,600MW, JSW 300MW and Essar Power 1,200MW.
q Our preference in the sector is for Powergrid, NTPC and Tata Power.
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