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M u n d r a i m p a i r m e n t a g a i n … .
Mundra impairment (| 815 crore) mainly on account of a change in
exchange assumption, higher power purchase costs in NDPL (resulting in
| 664 crore higher power sales), truing up adjustments under multi year
tariffs (MYT) in standalone numbers (resulting in higher power standalone
sales), losses in the Mundra SPV and forex loss of | 165 crore were the
highlights of Tata Power’s Q4FY12 numbers. As a result of impairment on
Mundra, the company reported a net loss of | 628 crore. Adjusted profit
for the quarter was ~ | 548 crore. We maintain our HOLD rating on the
stock as: 1) the company is incurring ~60 paisa/unit loss in Mundra 2) no
significant profitable capacity addition in till FY14 3) higher tax rates (in
the absence of merger between Indonesian subsidiaries & Mundra UMPP)
and 4) overhang of 20% export tax on coal by Indonesia government - if
implemented will erode the profitability of Bumi Resources.
ƒ Other highlights during the quarter and update on Mundra
Total non-cash provisions in the quarter were at | 1140 crore that
included | 325 crore for deferred stripping costs. EBIT margins in
the power segment were at 12.8%. Maithon incurred a loss of | 174
crore in FY12 mainly on aggressive short-term PPAs while the
Mundra SPV loss was mainly due to take or pay charges on
shipping and ports. For the Maithon project, the company intends
to use imported coal and middling from Tata Steel in case of fuel
shortages.
V a l u a t i o n
We have a HOLD rating on the stock and note that the scope on out
performance/re-rating for the stock would depend on 1) tariff increase in
Mundra 2) reversal on provision due to a decline in international thermal
coal prices and 3) regular tariff increases (in fuel adjustment charge) in
Mumbai and Delhi. However, key headwinds for the company would be a
decline in currency (further impairment in Mundra cannot be ruled out)
and fuel shortage in the Maithon power plant.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M u n d r a i m p a i r m e n t a g a i n … .
Mundra impairment (| 815 crore) mainly on account of a change in
exchange assumption, higher power purchase costs in NDPL (resulting in
| 664 crore higher power sales), truing up adjustments under multi year
tariffs (MYT) in standalone numbers (resulting in higher power standalone
sales), losses in the Mundra SPV and forex loss of | 165 crore were the
highlights of Tata Power’s Q4FY12 numbers. As a result of impairment on
Mundra, the company reported a net loss of | 628 crore. Adjusted profit
for the quarter was ~ | 548 crore. We maintain our HOLD rating on the
stock as: 1) the company is incurring ~60 paisa/unit loss in Mundra 2) no
significant profitable capacity addition in till FY14 3) higher tax rates (in
the absence of merger between Indonesian subsidiaries & Mundra UMPP)
and 4) overhang of 20% export tax on coal by Indonesia government - if
implemented will erode the profitability of Bumi Resources.
ƒ Other highlights during the quarter and update on Mundra
Total non-cash provisions in the quarter were at | 1140 crore that
included | 325 crore for deferred stripping costs. EBIT margins in
the power segment were at 12.8%. Maithon incurred a loss of | 174
crore in FY12 mainly on aggressive short-term PPAs while the
Mundra SPV loss was mainly due to take or pay charges on
shipping and ports. For the Maithon project, the company intends
to use imported coal and middling from Tata Steel in case of fuel
shortages.
V a l u a t i o n
We have a HOLD rating on the stock and note that the scope on out
performance/re-rating for the stock would depend on 1) tariff increase in
Mundra 2) reversal on provision due to a decline in international thermal
coal prices and 3) regular tariff increases (in fuel adjustment charge) in
Mumbai and Delhi. However, key headwinds for the company would be a
decline in currency (further impairment in Mundra cannot be ruled out)
and fuel shortage in the Maithon power plant.
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