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¾ 2Q12 APAT of Rs362mn (down 59% yoy) is below est. on low
merchant realizations (Rs3.3/unit vs. Rs3.7/unit expected),
lower PLF (82% vs. 87% expected) and lower MAT credit
(Rs15mn vs. Rs150mn expected)
¾ Contract with TISCO to start from mid 3Q - to provide some
hedge for falling power profitability but insufficient. We
increase our fuel cost & reduce tariff assumptions – earnings
cut of 49%/32% in FY12E/FY13E
¾ Zambia coal trading to start from 4Q12 and to reach 1mnMT
in FY14E. 64MW COD still pending - expected in 4Q.
Indonesian investment safe, NBVL to get 20% offtake also
¾ Though NBVL is affected by all power sector concerns but is
better placed in terms of fuel security (washery rejects and
Zambia hedge) and offtake (natural hedge - ferro alloys).
Maintain Accumulate
Higher fuel cost and lower realizations impact performance
2Q12 APAT reported at Rs 362mn, down 59% yoy and below our estimates largely on
account of depressed operating margins (17.4%, declined by 1,741bps yoy) and higher
tax provisioning (due to lower MAT credit of Rs 15mn versus our estimate of Rs150mn).
Net revenues declined by 10% yoy to Rs 2.6bn, below our estimates due to lower PLF
in power (82% vs est of 87%) and lower merchant realization (Rs3.3/unit vs est of
Rs3.7/unit). 2Q12 EPS stands at Rs4.1/share on adjusted basis. Consequently we
have revised our earnings estimates downward by 49%/32% for FY12E/FY13E
respectively.
Ferro chrome deal with TISCO from 3Q to support profitability partly
Management has indicated the TISCO deal to get operationalise from mid 3Q12. NBVL
will supply 35000MT p.a. of Ferro chrome for 3 yrs. NBVL would bill 20-25MW of captive
power requirement for the project at Rs4.9/unit. This is likely to provide some hedge
against falling profitability of NBVL but would be insufficient, in our view to cover
increase in overall operational cost.
64MW power plant and Zambian coal operations from 4Q12
The 64MW plant is still awaiting forest clearance and the management has guided for
COD in 4Q12 now. Further, Zambian coal trading operations also to start by 4Q12 and
to reach 1mn MT by FY14E.
Maintain Accumulate; better placed with natural hedge & fuel security
The deal with TISCO will provide some hedge to its power business (in terms of offtake)
along with captive consumption for Ferro alloys. Also it has better fuel security with its
part dependence on washery rejects vs. coal linkages from coal India. Stock is currently
trading at 5.7xFY13E EPS, 0.6xFY13E book. Maintain Accumulate with revised TP of
Rs210/Share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
¾ 2Q12 APAT of Rs362mn (down 59% yoy) is below est. on low
merchant realizations (Rs3.3/unit vs. Rs3.7/unit expected),
lower PLF (82% vs. 87% expected) and lower MAT credit
(Rs15mn vs. Rs150mn expected)
¾ Contract with TISCO to start from mid 3Q - to provide some
hedge for falling power profitability but insufficient. We
increase our fuel cost & reduce tariff assumptions – earnings
cut of 49%/32% in FY12E/FY13E
¾ Zambia coal trading to start from 4Q12 and to reach 1mnMT
in FY14E. 64MW COD still pending - expected in 4Q.
Indonesian investment safe, NBVL to get 20% offtake also
¾ Though NBVL is affected by all power sector concerns but is
better placed in terms of fuel security (washery rejects and
Zambia hedge) and offtake (natural hedge - ferro alloys).
Maintain Accumulate
Higher fuel cost and lower realizations impact performance
2Q12 APAT reported at Rs 362mn, down 59% yoy and below our estimates largely on
account of depressed operating margins (17.4%, declined by 1,741bps yoy) and higher
tax provisioning (due to lower MAT credit of Rs 15mn versus our estimate of Rs150mn).
Net revenues declined by 10% yoy to Rs 2.6bn, below our estimates due to lower PLF
in power (82% vs est of 87%) and lower merchant realization (Rs3.3/unit vs est of
Rs3.7/unit). 2Q12 EPS stands at Rs4.1/share on adjusted basis. Consequently we
have revised our earnings estimates downward by 49%/32% for FY12E/FY13E
respectively.
Ferro chrome deal with TISCO from 3Q to support profitability partly
Management has indicated the TISCO deal to get operationalise from mid 3Q12. NBVL
will supply 35000MT p.a. of Ferro chrome for 3 yrs. NBVL would bill 20-25MW of captive
power requirement for the project at Rs4.9/unit. This is likely to provide some hedge
against falling profitability of NBVL but would be insufficient, in our view to cover
increase in overall operational cost.
64MW power plant and Zambian coal operations from 4Q12
The 64MW plant is still awaiting forest clearance and the management has guided for
COD in 4Q12 now. Further, Zambian coal trading operations also to start by 4Q12 and
to reach 1mn MT by FY14E.
Maintain Accumulate; better placed with natural hedge & fuel security
The deal with TISCO will provide some hedge to its power business (in terms of offtake)
along with captive consumption for Ferro alloys. Also it has better fuel security with its
part dependence on washery rejects vs. coal linkages from coal India. Stock is currently
trading at 5.7xFY13E EPS, 0.6xFY13E book. Maintain Accumulate with revised TP of
Rs210/Share.
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