Tata Power Company Ltd (TPC) – Q3FY15 Result Update :: HDFC Securities

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TPC reported a consolidated profit of Rs 197.7 cr in Q3FY15 aided by significant forex gain in coal companies due to VAT settlement during this quarter. The previous year had a favourable ATE order of Rs. 185 crore in Mumbai Operations (MO) Business Consolidated Net Sales were marginally up by 1% y-o-y but was up by 4.7% q-o-q to Rs 8754.1 cr mainly due to ~10% YoY rise and 5.6% QoQ rise in its power business to Rs 6,545.7 cr. CGPL’s higher availability coupled with higher generation and TPTCL’s increase average rate realization due to higher power purchase cost also helped. The revenues were adversely impacted by lower price realization from coal companies. Mundra UMPP continued to report losses to the tune of Rs.243 cr in Q3FY15 as compared to loss of Rs 318 cr in Q3FY14 and loss of Rs 274 cr in Q2FY15. Maithon Power reported a robust profit of Rs 107 cr as against Rs 38 cr in Q3FY14 (growth was ~182%) led by favourable tariff impact. Fund raising via rights issue has eased stress on the balance sheet. Also the proceeds from the sale of its stake in Arutmin mine and an option to sell part stake in KPC (Kaltim Prima Coal) will not let debt to equity ratio to go up further and improve cash flows. However, both these matters are being pursued and finalization of the same is subject to certain approvals. During the quarter, TPC issued two series of Non-Convertible Debentures worth Rs. 1500 crore on a private placement basis, signed share purchase agreement with Ideal Energy Projects Limited (IEPL) for acquisition of 540 MW coal based thermal power project near village Bela in the Nagpur district of Maharashtra and also signed MoU with Russian Direct Investment Fund to increase Energy Investment between India and Russia. The company reiterated its commitment to renewable energy generation by successful commissioning of the final 8 MW of the 32 MW wind farm at Girijashankarwadi in Maharashtra. TPC' standalone generation for the quarter stood at 2954 MUs. Mundra reported generation of 7298 MUs as compared to 5554 MUs in Q3FY14. Maithon plant reported 1599 MUs. Trombay Thermal Power Station generated 1643 MUs while Hydro Power Stations generated 318 MUs. Wind Farms generated 82 Mus. Jojobera Thermal Power Station generated 694 MUs and Haldia reported generation of 215 MUs. Industrial Energy Limited reported generation of 399 MUs and. Tata Power Renewable Energy Limited (TPREL) generated 38 MUs. Solar plants recorded generation of 1 MU. Disappointing standalone sales on lower generation In Q3FY15, TPC reported Net Sales of Rs 1908.75 cr, flat on y-o-y and q-o-q basis. The Gross generation for the quarter was at 2954 MUs compared to 3212 MUs y-o-y down 8.0%. Other operating income includes Rs 170mn gain on sale of Lodhivli plant. Sales was lower by 4.6% YoY to 3.4BUs. Also, the Trombay Unit-8 continued to remain under forced outage as the unit is under restoration. EBIDTA stood at Rs 782.3 crore led by lower FC recovery and lower incentives. Operating margins have gone down from 37.6% in Q3FY14 to 25.6% in Q3FY15. In Q2FY15, the same was 28.3%. Staff costs have gone up sharply from 7.2% in Q2FY14 and 8.4% in Q3FY15 as a percentage cost to sales, due to annual increment. Power purchased cost was also up by 41% y-o-y due to higher power purchase rate in the current year. Cost of components has gone up significantly by 212% y-o-y due to MAFI contract in SED. Cost of fuel (as a percentage of sales) increased from 34.3% in Q3FY14 to 42.6%in Q3FY15. It grew by 26% y-o-y as in Q3FY14 there was back down of Unit 6 leading to low use of oil & RLNG.

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