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We hosted the management of Lanco Infra in our Access India conference.
Key takeaways from the meetings were similar to ones stated in post-results
conference call as-
* Currently, Lanco has a capacity of 4.4GW and expect to reach a capacity
of 9.4GW by FY15. In FY13, the company is not adding any capacity.
* Out of the existing 4400MW, 760Mw is available for merchant sale. However,
Lanco will look to convert them to PPA in due course.
* Kondapalli Ph-3 open cycle will be commissioned by March'12. But the
company said that the plant may not operate for one year on account of gas
issues and the interest cost will be added to the project cost during this
period. Gas reallocation from other sectors is expected to operationalise the
project.
* Udupi U#1 has stabilized and it is currently operating over 90% PLF for
last 3 months. For U#2, the company expects the transmission line to be
commissioned by Jul-Aug'12 post which commercial generation from U#1
can also commence.
* Anpara project has started commercial operation and Lanco has signed
PPA with TN to sell 100MW for a period of 5 years for tariffs upwards of
INR4/kWh.
* Lanco management believes that the current PPA structure is risky and
hence, they are not signing any fixed case I bidding. The company is awaiting
modified case I bidding from government which allows fuel as full passthrough.
* Lanco cited that the SEBs are slow in signing PPA and have resorted to
load shedding to reduce supply as they are strapped for cash. Next year
tariff rates are expected to be higher as the tariff revision are happening and
the power purchase is also expected to rise.
* Lanco is planning to raise $600 to 750mn through private equity (equivalent
to 25% stake in ~9000Mw portfolio) and the entire fund would be used
for further investments in power business.
* The company has a gross debt of INR330bn with average cost of 11.5%
and a debt:equity of 4x. Higher debt has been attributed to coal assets purchased
with 100% debt. Total debt under power business is ~INR220bn.
We have a Buy rating with INR25/sh target price.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We hosted the management of Lanco Infra in our Access India conference.
Key takeaways from the meetings were similar to ones stated in post-results
conference call as-
* Currently, Lanco has a capacity of 4.4GW and expect to reach a capacity
of 9.4GW by FY15. In FY13, the company is not adding any capacity.
* Out of the existing 4400MW, 760Mw is available for merchant sale. However,
Lanco will look to convert them to PPA in due course.
* Kondapalli Ph-3 open cycle will be commissioned by March'12. But the
company said that the plant may not operate for one year on account of gas
issues and the interest cost will be added to the project cost during this
period. Gas reallocation from other sectors is expected to operationalise the
project.
* Udupi U#1 has stabilized and it is currently operating over 90% PLF for
last 3 months. For U#2, the company expects the transmission line to be
commissioned by Jul-Aug'12 post which commercial generation from U#1
can also commence.
* Anpara project has started commercial operation and Lanco has signed
PPA with TN to sell 100MW for a period of 5 years for tariffs upwards of
INR4/kWh.
* Lanco management believes that the current PPA structure is risky and
hence, they are not signing any fixed case I bidding. The company is awaiting
modified case I bidding from government which allows fuel as full passthrough.
* Lanco cited that the SEBs are slow in signing PPA and have resorted to
load shedding to reduce supply as they are strapped for cash. Next year
tariff rates are expected to be higher as the tariff revision are happening and
the power purchase is also expected to rise.
* Lanco is planning to raise $600 to 750mn through private equity (equivalent
to 25% stake in ~9000Mw portfolio) and the entire fund would be used
for further investments in power business.
* The company has a gross debt of INR330bn with average cost of 11.5%
and a debt:equity of 4x. Higher debt has been attributed to coal assets purchased
with 100% debt. Total debt under power business is ~INR220bn.
We have a Buy rating with INR25/sh target price.
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