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● KSK’s 1Q12 PBT of Rs354 mn declined 66% YoY and was 13%
below our estimate. The disappointment was mainly led by KSK
registering revenues from only 405 MW of its 540 MW Wardha
Warora project (last unit’s revenue capitalised until 1H of July 2011).
● However, the reported PAT was ahead of our estimate on account
of deferred tax asset and one-time tax writeback (we are awaiting
details from the company). We note that minority interest is
notional for KSK as the captive power consumers owning equity
stake are not entitled to profits of the projects.
● According to the company, its open offer has been further delayed
on account of some pending SEBI clearances. KSK expects the
open offer to start during September 2011.
● Start of linkage coal supply from cost plus mines of WCL for
Wardha Warora project and resolution of ‘no-go zone’ issue for
Morga-II captive coal block for Mahanadi-I project are long pending
issues. Visibility on fuel supply from the resolution of these issues is
the key trigger ahead. We maintain our OUTPERFORM rating.
1Q12 results below estimates
KSK’s 1Q12 PBT of Rs354 mn declined 66% YoY and was 13%
below our estimate. The disappointment was mainly led by the
company registering revenues from only 405 MW of its 540 MW
Wardha Warora project (last unit’s revenue capitalised until 1H of July
2011). However, the reported PAT was ahead of our estimate on
account of deferred tax asset and one-time tax writeback (we are
awaiting details from the company). We note that minority interest is
notional for KSK as the captive power consumers owning equity stake
are not entitled to profits of the projects. During the quarter, KSK has
sold wind assets of 31.8 MW to its subsidiary, KSK Wind Energy Pvt.
Ltd. for Rs181.3 mn.
Gross generation increased to 1.1 bn kwh vs 466 mn kwh in 1Q11, led
by better PLF and increase in capacity at the Wardha Warora project
Visibility on fuel supply key factor to watch
Reliance Infra has already signed a three-year PPA for purchase of
0.3 GW from the Wardha Warora project at an attractive levelised
tariff of Rs4.85/kwh (as reflected in 1Q12). Construction work for its
3.6 GW Mahanadi project is progressing well—boiler drum lifting for
two units of 0.6 GW each is complete and KSK maintains its guidance
of synchronising first unit in 1Q13. But, start of linkage coal supply
from cost plus mines of WCL for the Wardha Warora project and
resolution of the ‘no-go zone’ issue for Morga-II captive coal block for
Mahanadi-I project are long pending issues and key triggers for
profitability ahead. We maintain our OUTPERFORM rating on KSK.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● KSK’s 1Q12 PBT of Rs354 mn declined 66% YoY and was 13%
below our estimate. The disappointment was mainly led by KSK
registering revenues from only 405 MW of its 540 MW Wardha
Warora project (last unit’s revenue capitalised until 1H of July 2011).
● However, the reported PAT was ahead of our estimate on account
of deferred tax asset and one-time tax writeback (we are awaiting
details from the company). We note that minority interest is
notional for KSK as the captive power consumers owning equity
stake are not entitled to profits of the projects.
● According to the company, its open offer has been further delayed
on account of some pending SEBI clearances. KSK expects the
open offer to start during September 2011.
● Start of linkage coal supply from cost plus mines of WCL for
Wardha Warora project and resolution of ‘no-go zone’ issue for
Morga-II captive coal block for Mahanadi-I project are long pending
issues. Visibility on fuel supply from the resolution of these issues is
the key trigger ahead. We maintain our OUTPERFORM rating.
1Q12 results below estimates
KSK’s 1Q12 PBT of Rs354 mn declined 66% YoY and was 13%
below our estimate. The disappointment was mainly led by the
company registering revenues from only 405 MW of its 540 MW
Wardha Warora project (last unit’s revenue capitalised until 1H of July
2011). However, the reported PAT was ahead of our estimate on
account of deferred tax asset and one-time tax writeback (we are
awaiting details from the company). We note that minority interest is
notional for KSK as the captive power consumers owning equity stake
are not entitled to profits of the projects. During the quarter, KSK has
sold wind assets of 31.8 MW to its subsidiary, KSK Wind Energy Pvt.
Ltd. for Rs181.3 mn.
Gross generation increased to 1.1 bn kwh vs 466 mn kwh in 1Q11, led
by better PLF and increase in capacity at the Wardha Warora project
Visibility on fuel supply key factor to watch
Reliance Infra has already signed a three-year PPA for purchase of
0.3 GW from the Wardha Warora project at an attractive levelised
tariff of Rs4.85/kwh (as reflected in 1Q12). Construction work for its
3.6 GW Mahanadi project is progressing well—boiler drum lifting for
two units of 0.6 GW each is complete and KSK maintains its guidance
of synchronising first unit in 1Q13. But, start of linkage coal supply
from cost plus mines of WCL for the Wardha Warora project and
resolution of the ‘no-go zone’ issue for Morga-II captive coal block for
Mahanadi-I project are long pending issues and key triggers for
profitability ahead. We maintain our OUTPERFORM rating on KSK.
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