Adani Power Heading downwards; cut earnings/TP; Maintain Reduce::Emkay

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Adani Power

Heading downwards; cut earnings/TP; Maintain Reduce

REDUCE

CMP: Rs91                                        Target Price: Rs82

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n     1Q PAT of Rs1.8bn is below expectation of Rs2.6bn, despite aggressive accounting - 1) not providing MAT (supposed to provide), 2) recognized SEZ duty (Rs263mn) as revenues &   3) forex MTM gains of Rs250mn 

n     Higher fuel cost led by 1) maintenance/synchronization period shutdown, 2) restart/lower PLF requiring higher secondary fuel (could be Chinese equipment impact), 3) higher aux 9%

n     Reiterate earnings downgrade through out FY12E; after 1Q its 19%/10% for FY12E/13E - driven by 1-2mth delay in COD of Mundra III/IV, lower merchant tariff and lower PLF   

n     Foresee further downgrades due to - (1) fuel cost assumed at Rs1.0/unit (1Q – 1.15), (2) Indonesian regulations & (3) operating parameters (aux, heat rate & PLF); Maintain Reduce; Cut TP to Rs82