Tata Power (2QFY15) : Lacks triggers. Maintain NEUTRAL :: HDFC Sec, link

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->

Lacks triggers
Tata Power reported a below estimated APAT of Rs
716mn for 2QFY15, driven primarily by subdued
profitability of coal operations. Since the Supreme
Court has stayed payment of compensatory tariff,
the company has not booked compensation (Rs
1.64/3.88bn for 1Q/1HFY15) due from beneficiaries
of Mundra UMPP.
Tata Power has moved the SC, pleading that it should
be allowed to argue for force majeure/change of law
in response to the petition filed by beneficiaries of
Mundra UMPP in APTEL. SC has started hearings but
timeline for resolution of the case has been extended
further as a result.
While balance sheet stress has reduced, exposure to
coal price movements and under recovery of costs in
the distribution business still remains. With no
medium term growth triggers, we retain Neutral
with an SOP based TP of Rs 95/sh.
 CGPL reported a loss of Rs 2.7bn. Units sold were
5.26bn, realisation was Rs 2.4/unit and fuel cost was Rs
1.85/unit. PAF for 1QFY15 was 67% (down 1,800bps
YoY). Even after adjusting for compensation, CGPL
would have reported a loss of Rs 1bn.
 Maithon Power reported a profit of Rs 280mn.
Profitability was aided by higher merchant realisation
on the 150MW open capacity.
 Realisation from the KPC and Arutmin mines was down
13% YoY to US$ 54/tonne, while cash cost declined by
only 5% YoY leading to EBIT decline of 26% YoY. Coal
prices remain subdued and coal business profitability
will remain under pressure for FY15.
 Fund raising via rights issue has eased stress on the
balance sheet. Sale of stake in Arutmin mines and an
option to sell part stake in KPC gives further comfort
that D/E will not spiral out of control in the near term.
 With no major medium term growth plans and
subdued global coal prices, we don’t see any positive
triggers for the stock. CMP and our estimates factor in
compensation for CGPL. Retain Neutral.

LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3009816