JSW Energy Reported Loss; Maintain Reduce REDUCE ::Emkay

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JSW Energy

Reported Loss; Maintain Reduce

REDUCE

CMP: Rs50                                        Target Price: Rs46

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n     2Q12 loss after tax of Rs1.1bn is attributed to forex loss of Rs778mn (buyers credit on imported coal) and poor operational performance – due to Barmer and Vijayanagar.

n     Barmer plant did not operate in 2Q leading to huge under-recoveries (Rs590mn) & lower PLF (72%/74%) at Vijayanagar Ratnagiri (due to lower demand) added to the problems.

n     Avg realizations stood at Rs4.2/unit, significantly lower qoq and yoy at Rs4.7 and Rs4.6/unit. Fuel cost further increased to Rs3.3/unit from Rs2.9/unit qoq and Rs2.8/unit yoy

n     Huge cut in FY12E/FY13E earnings by 60%/26% on no profit from Barmer, higher fuel cost and lower PLF/merchant tariffs. Maintain Reduce; risky business model - open from both sides (fuel and off-take). Cut target price to Rs46/share