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Utilities
Pre-Result Buys in Sector: JP Power
Pre-Result Underperform: Adani Power, Neyveli, NTPC
In the Utility sector, markets would be focused on extent of fall in merchant power
rates and progress on future plans such as expansion in generation capacity,
update on new IPP projects, impact of coal on PLFs and AT&C loss reduction in
New Delhi JVs of Reliance and Tata Power.
We expect the Indian Utility Sector, represented by Adani Power (APL), NTPC,
Reliance Infra, Tata Power, Neyveli, GIPCL and JP Power to report sales growth
of 20%YoY, EBITDA growth of +31%YoY and PAT growth of 22%YoY mainly led
by APL, GIPCL, JP Power and Tata Power – key driver coal not power.
Adani Power: We expect APL to report +56%YoY (flat QoQ) growth in
2QFY12 Rec. PAT led by 120%YoY (+3%QoQ) growth in generation on 2x
capacity (1.98GW vs 990MW). However, APL may disappoint markets on shutdown
in its 6th unit of 660MW (33% of capacity) in 2Q on commercial dispute
with GUVNL on its ability to sell merchant power ahead of PPA start date.
We expect NTPC’s 2QFY12 to report 15%YoY growth in rec. PAT on grossup
of tax at peak-rate v/s MAT last year and addition RoE on 2GW of
additional capacity. However, the generation fell by 2% during 2Q on
problems in plants like Kaniha, back-down by clients, fuel shortages and
annual maintenance shut downs. Fuel cost savings remain on-track in 2Q but
the sales from its high margin spot market may slow due to cap on realization
from UI market.
Reliance Infra: We expect a 12% growth in 2Q12 rec. PAT led by pick-up in
E&C business and higher treasury income of Rs589mn vs Rs42mn in 2Q10.
We expect 21%YoY growth in sales led by impact of new tariff offset by lower
electricity volume, high cost of power purchased and 60%YoY growth in E&C
revenues and flat EBITDA.
Tata Power: We expect Tata Power to witness recurring PAT (consol.)
growth of 40%YoY led by 10% higher coal volume and ASP growth of
30%YoY despite higher interest and depreciation.
Neyveli: Expect 2Q12 rec PAT to be flat on muted generation +2%YoY
despite capacity +5% on start of 2x125MW Barsingsar station.
GIPCL: We expect GIPCL to report 9x growth in Rec PAT led by incremental
RoE of commissioning of 2x125MW units of Surat Lignite II, which had
impacted profits last year due to technical faults.
JP Power: We expect JP Power to report 108%YoY growth in rec PAT on
84% growth in 2Q generation led by start of 4x300MW of Karcham Wangtoo
hydro project.
Reliance Infra remain our preferred pick in the sector based on inexpensive
valuations, expansion in its development portfolio & generating capacity,
distribution franchise and reduction in T&D losses at its Delhi JVs. Maintain
buy on JP Power, as the stock yet to factor-in improving execution of its
12GW pipeline and UPF on Neyveli and NTPC on continued delay in capex
& coal mines. Neutral on Tata Power and GIPCL.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Utilities
Pre-Result Buys in Sector: JP Power
Pre-Result Underperform: Adani Power, Neyveli, NTPC
In the Utility sector, markets would be focused on extent of fall in merchant power
rates and progress on future plans such as expansion in generation capacity,
update on new IPP projects, impact of coal on PLFs and AT&C loss reduction in
New Delhi JVs of Reliance and Tata Power.
We expect the Indian Utility Sector, represented by Adani Power (APL), NTPC,
Reliance Infra, Tata Power, Neyveli, GIPCL and JP Power to report sales growth
of 20%YoY, EBITDA growth of +31%YoY and PAT growth of 22%YoY mainly led
by APL, GIPCL, JP Power and Tata Power – key driver coal not power.
Adani Power: We expect APL to report +56%YoY (flat QoQ) growth in
2QFY12 Rec. PAT led by 120%YoY (+3%QoQ) growth in generation on 2x
capacity (1.98GW vs 990MW). However, APL may disappoint markets on shutdown
in its 6th unit of 660MW (33% of capacity) in 2Q on commercial dispute
with GUVNL on its ability to sell merchant power ahead of PPA start date.
We expect NTPC’s 2QFY12 to report 15%YoY growth in rec. PAT on grossup
of tax at peak-rate v/s MAT last year and addition RoE on 2GW of
additional capacity. However, the generation fell by 2% during 2Q on
problems in plants like Kaniha, back-down by clients, fuel shortages and
annual maintenance shut downs. Fuel cost savings remain on-track in 2Q but
the sales from its high margin spot market may slow due to cap on realization
from UI market.
Reliance Infra: We expect a 12% growth in 2Q12 rec. PAT led by pick-up in
E&C business and higher treasury income of Rs589mn vs Rs42mn in 2Q10.
We expect 21%YoY growth in sales led by impact of new tariff offset by lower
electricity volume, high cost of power purchased and 60%YoY growth in E&C
revenues and flat EBITDA.
Tata Power: We expect Tata Power to witness recurring PAT (consol.)
growth of 40%YoY led by 10% higher coal volume and ASP growth of
30%YoY despite higher interest and depreciation.
Neyveli: Expect 2Q12 rec PAT to be flat on muted generation +2%YoY
despite capacity +5% on start of 2x125MW Barsingsar station.
GIPCL: We expect GIPCL to report 9x growth in Rec PAT led by incremental
RoE of commissioning of 2x125MW units of Surat Lignite II, which had
impacted profits last year due to technical faults.
JP Power: We expect JP Power to report 108%YoY growth in rec PAT on
84% growth in 2Q generation led by start of 4x300MW of Karcham Wangtoo
hydro project.
Reliance Infra remain our preferred pick in the sector based on inexpensive
valuations, expansion in its development portfolio & generating capacity,
distribution franchise and reduction in T&D losses at its Delhi JVs. Maintain
buy on JP Power, as the stock yet to factor-in improving execution of its
12GW pipeline and UPF on Neyveli and NTPC on continued delay in capex
& coal mines. Neutral on Tata Power and GIPCL.
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