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http://content.icicidirect.com/mailimages/ICICIdirect_TataPower_Q3FY12.pdf
O n e - o f f s d e n t r e p o r t e d P A T …
Tata Power reported sales, which were marginally higher than estimates
aided by higher coal realisation in Bumi Resources. However, deferred
stripping cost charges of | 649 crore, adoption of AS11 accounting
standards (leading to forex gain of ~| 387 crore) and impairment of | 162
crore of Mundhra led to a reported PAT of | 262 crore. Higher stripping
cost led to a decline of 22.5% in PBIT margins of the coal business.
Adjusted profit in the quarter was ~| 520 crore, which was higher than
our estimates of | 325 crore. We maintain our HOLD rating on the stock
as we are concerned about tariff revisions in Mundra in addition to further
impairment on Mundhra (if coal costs go up) and lower PLFs at Maithon
power plant. Key risks to our call is 1) Decline in international thermal coal
price (reversal of impairment) 2) allowance of a tariff hike in Mundhra
UMPP and 3) monetisation of its investments are the key risks to fair
value.
ƒ Other highlights during quarter and update on Mundra
Standalone PAT was up 174% YoY primarily due to higher fuel
costs (pass through) and gain on foreign exchange (| 274 crore).
The company has commissioned the first unit in Mundra - 800 MW.
It made an additional impairment of | 162 crore because in Q2FY12
(previous quarter), the company had not recognised the forex
losses on Mundhra. The interest costs were higher by 27.2% QoQ
primarily due to commissioning of Maithon Power, interest on
short-term loans for NDPL (to fund gap actual tariff hike vs. allowed
tariff hike), interest in coal SPVs and capitalisation of ships in Trust
Energy.
V a l u a t i o n
At the CMP of | 108, the stock is trading at P/E of 23.1x and 18.5x FY12E
and FY13E EPS, respectively. Similarly, on P/BV multiple, the stock is
trading at 1.9x and 1.7x FY13E, respectively. We have revised our target
price from | 96 to |108 based on higher coal earnings and revised
valuation of Mundra UMPP.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_TataPower_Q3FY12.pdf
O n e - o f f s d e n t r e p o r t e d P A T …
Tata Power reported sales, which were marginally higher than estimates
aided by higher coal realisation in Bumi Resources. However, deferred
stripping cost charges of | 649 crore, adoption of AS11 accounting
standards (leading to forex gain of ~| 387 crore) and impairment of | 162
crore of Mundhra led to a reported PAT of | 262 crore. Higher stripping
cost led to a decline of 22.5% in PBIT margins of the coal business.
Adjusted profit in the quarter was ~| 520 crore, which was higher than
our estimates of | 325 crore. We maintain our HOLD rating on the stock
as we are concerned about tariff revisions in Mundra in addition to further
impairment on Mundhra (if coal costs go up) and lower PLFs at Maithon
power plant. Key risks to our call is 1) Decline in international thermal coal
price (reversal of impairment) 2) allowance of a tariff hike in Mundhra
UMPP and 3) monetisation of its investments are the key risks to fair
value.
ƒ Other highlights during quarter and update on Mundra
Standalone PAT was up 174% YoY primarily due to higher fuel
costs (pass through) and gain on foreign exchange (| 274 crore).
The company has commissioned the first unit in Mundra - 800 MW.
It made an additional impairment of | 162 crore because in Q2FY12
(previous quarter), the company had not recognised the forex
losses on Mundhra. The interest costs were higher by 27.2% QoQ
primarily due to commissioning of Maithon Power, interest on
short-term loans for NDPL (to fund gap actual tariff hike vs. allowed
tariff hike), interest in coal SPVs and capitalisation of ships in Trust
Energy.
V a l u a t i o n
At the CMP of | 108, the stock is trading at P/E of 23.1x and 18.5x FY12E
and FY13E EPS, respectively. Similarly, on P/BV multiple, the stock is
trading at 1.9x and 1.7x FY13E, respectively. We have revised our target
price from | 96 to |108 based on higher coal earnings and revised
valuation of Mundra UMPP.
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