Jaiprakash Power -Strong operating performance in 1Q FY13, , Barclays Capital,

JAIPRAKASH POWER VENTURES LTD.
Strong operating performance in 1Q FY13
1Q FY13 pretax profit was up 135% and marginally ahead of our estimates. The PAT
beat was though higher, led by lower taxes in this quarter. Revenue growth of 98%
y/y was driven by contribution from complete commissioning of Karcham Wangtoo.
Management highlighted that generation would have been higher than reported
numbers by 30% had the monsoons been on track. Karcham Wangtoo (1GW)
generated ~1.3bn units in June quarter and will continue to sell power at merchant
rates till the PPA dispute with PTC is resolved. We maintain our 1-OW rating.

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Sales up on higher generation and merchant tariffs: Total generation in 1Q FY13 was
up ~56% y/y (as per CEA data) with Karcham Wangtoo generation up ~340% y/y.
Management highlighted that generation was lower than their plan by ~30% due to weak
monsoons. Merchant realisations at Karcham Wangtoo were at an average of ~Rs3.7 per
unit with some contracts during the quarter as high as Rs4.0/unit.
Update on PPA dispute with PTC: Following the Delhi High court directive in favour of
PTC, which directed JPVL to fix tariff for ~700MW as per CERC, management has filed a
revision petition in the court. We believe that the case will take a much longer period to
resolve. We note that even if KWHP converts to regulated PPA(for 700MW), the impact on
near term profitability would likely be limited as we calculate that regulated tariff would be
~Rs3.6/unit, similar to that of merchant rates and JPVL will continue to have some
capacity on merchants.
Maintain 1-OW: Management highlights that the hydrological risk remains given the
weak monsoons (the hydro plants of JPVL are run of the river) and could continue to
impact generation volumes compared with what can be theoretically achieved. PAF
continues to be 99.9%. Although weak monsoons may impact generation in 2Q FY13, we
expect commissioning of 250MW thermal capacity (Bina Unit-1) to support revenues in
2H FY13. Moreover, with Karcham Wangtoo getting registered with UNFCCC under the
Clean Development Mechanism (CDM), the company also expects ~800-1000mn of
carbon credits each year, which are currently not in our estimates.