Power - Festive season boosts demand… :: ICICI Securities, link

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Festive season boosts demand…
Generation increased 13.2% YoY in October 2014 driven by the Diwali
festival during the month. Robust growth across coal and gas segments
was partially offset by lower YoY generation across hydro and nuclear
segments. Plant load factors (PLFs) declined across all segments barring
coal plants. Both base and peak deficits increased MoM due to a rise in
demand. Merchant rate remained flat in October 2014. While the sector
continues to face constraints in terms of 1) fuel availability and pricing, 2)
environment clearances and 3) SEB’s financials, the recent initiatives
taken by the government like Coal Ordinance 2014, fixing of gas price,
fast tracking of project clearances, etc. may unblock the policy logjam for
the sector. Top picks in our coverage universe are NTPC and Power Grid.


Generation: Generation increased 13.2% YoY in October 2014 driven
by a rise in power demand during Diwali. Strong growth across the
coal and gas segments, which increased 19.1% and 9.7% YoY,
respectively, was partially offset by a 7.0% and 10.0% YoY decline in
generation across the hydro and nuclear segments, respectively
• Company performance: NTPC reported a 13.5% YoY increase in
generation as both coal and gas-based plants reported an increase in
generation by 13.3% and 16.7% YoY, respectively. Generation at
Tata Power was moderate (up 1.8% YoY). Strong YoY generation
growth across Reliance Infra (up 93.5%), Jaiprakash Power (up
81.1%), Adani Power (up 34.6%) and Jindal Power (up 40.1%)
reflects capacity addition and improved fuel availability during the
quarter. GMR continued to report strong generation growth due to
improved gas supply from ONGC. Generation across NHPC and
SJVN also improved 18.5% and 9.5% YoY, respectively, fuelled by
incremental YoY capacity
• PLF: Growth in generation improved coal PLF by 279 bps to 63.9%.
However, it declined across all other sectors – gas (-24 bps YoY),
hydro (-383 bps YoY) and nuclear (-901 bps YoY). Fall in nuclear PLF
was primarily due to high base effect YoY as generation in October
2013 saw a sharp increase due to better fuel availability. Accordingly,
overall industry PLF improved 93 bps YoY to 48.5% YoY
• Deficit: Both base and peak deficit increased to 4.3% and 4.5% vs.
4.1% and 3.5%, respectively, MoM due to a rise in demand. Even on
a YoY basis, base deficit and peak deficit deteriorated from 3.5% and
3.0%, respectively. Consequently, merchant rates increased 53.5%
YoY to | 4.2/unit while they were flat on an MoM basis

LINK
http://content.icicidirect.com/mailimages/IDirect_PowerMonthly_Nov14.pdf