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India Equity Research Reports, IPO and Stock News
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3Q12 PAT at Rs595mn – ahead of expectations driven by
higher income from sale of VERs (Rs292mn) and higher
merchant realizations (Rs4.7/unit) from Karcham
¾ Issues/overhang on JPVL - (1) huge funding gap for equity inv
and to repay corporate debt, (2) uncertainty on Karcham
offtake, (3) fuel availability and (4) captive mine under no-go
¾ Issues addressed - (1) few projects on hold - lower funding &
fuel needs, (2) high court’s order on Karcham & healthy
internal accruals - easing of cash flows, (3) forest clearance
of Nigrie mine in few mths & (4) use of captive coal for Bina
¾ Upgraded the stock to Buy post last qtr, it has outperformed
nifty by 23% since. Do not see upside from these levels
unless clarity emerges on (1) funding NCD repayment, (2)
forest clearance for Dongri-tal II & (3) use of captive coal in
Bina
Better than expected quarter on higher VERs and merchant rates
JPVL’s 3Q12 results have surprised us with PAT reported at Rs595mn against our
estimate of Rs317mn. The performance is driven by (1) higher revenues booked from
sale of Verified Emission Reductions (Rs292mn,+30% yoy) and (2) better merchant
realizations at Karcham (Rs4.7/unit). Net revenues grew by 162% to Rs3.7bn while
gross generation volumes grew by 75% to 1.2BU. EBITDA margins have improved by
648bps yoy to 90%, though declined by 362bps sequentially.
Fine tuned our estimates, revise FY12E/FY13E EPS by -0.9%/-1.1%
We have done some fine tuning of our numbers to incorporate better than expected
realizations at Karcham during FY12E, higher revenues from VER and lower other
income. Consequently we revise our FY12E/FY13E EPS by -0.9%/-1.1% respectively.
Many issues addressed; clarity on a few yet to emerge
Many of the issues faced by JPVL have been addressed with (1) Offtake at Karcham
after favorable HC order (though SC case pending); (2) management putting on hold all
the under development projects (Karchana, Lower Siyang etc) resulting into limited
funding and fuel requirement, (3) Govt’s softened stance on no-go and forest approvals.
However we would like to wait for further clarity over 1) funding for NCD bullet payment
in Feb 2013, 2) forest clearance for Dongri Tal II mine and 3) approval for use of captive
coal mine for Bina, to blend with linkage coal. One more big risk that we see is, in case
HP levies water cess – Karcham being a merchant power plant would be impacted
severely. However, as of now there is no indication/proposa
Clarity awaited over funding and coal
We believe that the stock is fairly valued at CMP, factoring in current operational and under
construction projects along with upsides from the issues that are being addressed recently
like HC order providing clarity over Karcham offtake (pending before SC) and funding
concern for capex has eased out after management putting under-development projects on
hold. However, we believe that JPVL will require equity infusion of at least Rs10bn for
repayment of NCDs as BS will be under stretch with D/E expected to increase over 5 times
by FY13E. Moreover JPVL is waiting for forest clearance for Dongri Tal-II and approval to
use excess coal for Bina. Thus, in our view, further clarity is required to emerge over these
issues to trigger any further upside in the stock. After the recent run-up, we downgrade the
stock from Buy to Hold with TP of Rs45 (no revision).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
3Q12 PAT at Rs595mn – ahead of expectations driven by
higher income from sale of VERs (Rs292mn) and higher
merchant realizations (Rs4.7/unit) from Karcham
¾ Issues/overhang on JPVL - (1) huge funding gap for equity inv
and to repay corporate debt, (2) uncertainty on Karcham
offtake, (3) fuel availability and (4) captive mine under no-go
¾ Issues addressed - (1) few projects on hold - lower funding &
fuel needs, (2) high court’s order on Karcham & healthy
internal accruals - easing of cash flows, (3) forest clearance
of Nigrie mine in few mths & (4) use of captive coal for Bina
¾ Upgraded the stock to Buy post last qtr, it has outperformed
nifty by 23% since. Do not see upside from these levels
unless clarity emerges on (1) funding NCD repayment, (2)
forest clearance for Dongri-tal II & (3) use of captive coal in
Bina
Better than expected quarter on higher VERs and merchant rates
JPVL’s 3Q12 results have surprised us with PAT reported at Rs595mn against our
estimate of Rs317mn. The performance is driven by (1) higher revenues booked from
sale of Verified Emission Reductions (Rs292mn,+30% yoy) and (2) better merchant
realizations at Karcham (Rs4.7/unit). Net revenues grew by 162% to Rs3.7bn while
gross generation volumes grew by 75% to 1.2BU. EBITDA margins have improved by
648bps yoy to 90%, though declined by 362bps sequentially.
Fine tuned our estimates, revise FY12E/FY13E EPS by -0.9%/-1.1%
We have done some fine tuning of our numbers to incorporate better than expected
realizations at Karcham during FY12E, higher revenues from VER and lower other
income. Consequently we revise our FY12E/FY13E EPS by -0.9%/-1.1% respectively.
Many issues addressed; clarity on a few yet to emerge
Many of the issues faced by JPVL have been addressed with (1) Offtake at Karcham
after favorable HC order (though SC case pending); (2) management putting on hold all
the under development projects (Karchana, Lower Siyang etc) resulting into limited
funding and fuel requirement, (3) Govt’s softened stance on no-go and forest approvals.
However we would like to wait for further clarity over 1) funding for NCD bullet payment
in Feb 2013, 2) forest clearance for Dongri Tal II mine and 3) approval for use of captive
coal mine for Bina, to blend with linkage coal. One more big risk that we see is, in case
HP levies water cess – Karcham being a merchant power plant would be impacted
severely. However, as of now there is no indication/proposa
Clarity awaited over funding and coal
We believe that the stock is fairly valued at CMP, factoring in current operational and under
construction projects along with upsides from the issues that are being addressed recently
like HC order providing clarity over Karcham offtake (pending before SC) and funding
concern for capex has eased out after management putting under-development projects on
hold. However, we believe that JPVL will require equity infusion of at least Rs10bn for
repayment of NCDs as BS will be under stretch with D/E expected to increase over 5 times
by FY13E. Moreover JPVL is waiting for forest clearance for Dongri Tal-II and approval to
use excess coal for Bina. Thus, in our view, further clarity is required to emerge over these
issues to trigger any further upside in the stock. After the recent run-up, we downgrade the
stock from Buy to Hold with TP of Rs45 (no revision).
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