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RPWR’s Rosa plant (600MW) based in UP reported a strong PLF of 91% and
PAF of 94% in the June quarter, in line with expectations. This was despite June
being a monsoon month and, of late, SEBs reducing power from imported coalbased
gencos like Adani and JSW. Jun-q EBITDA was 12% ahead of expectation
while PAT of Rs1.96B was well ahead of our est. of Rs1.26B, higher other
income and lower tax rate contributing to the beat.
Rosa benefits from use of market-priced coal. Rosa reported a PAT of
Rs1.1B benefiting from a lower station heat rate on using imported/e-auction
coal and PLF based incentives. Management guided to Rs2.75-3B of PAT for
the year (well above our estimate of Rs1.4B with an 80% PLF) implying 30-
33% return on invested equity for this cost-plus project.
Continued bullishness on project pipeline. At the analyst meet, management
was once again positive on gas availability for its Samalkot plant to meet
requirement for ~70% PLF. On the other hand, companies like GMR and GVK
have cited difficulties in gas availability. Since tariffs in South India are
relatively higher, top ups from LNG are also an option. Commissioning
schedules for under-construction projects (Butibori, Rosa 2, Samalkot, Sasan)
and pipeline projects (Tilaiya, Chitrangi) were maintained.
Krishnapatnam project was the centre of discussion. Reliance Power has
been lobbying to renegotiate the PPA, given the change in regulation by the
Indonesian Govt on establishing a minimum reference price for coal exports,
making the project unviable. The company has stalled all activity on the project
and as per the PPA, ~Rs3B of penalties are applicable if the performance is not
as per contract - a small amount for a Rs175B project. However management
was clear that the Indonesian Govt was not interested in only the requisite
royalties and taxes (an opp stance taken by Adani) and the applicable reference
price AND consequent duties/taxes are to be levied (reiterated by TPWR in its
last con call).
Maintain Mar-12 PT of Rs90 and UW rating. RPWR trades at 16x FY13
P/E, well ahead of other IPPs. Given the company’s back ended pipeline, delays
in project execution, questions on profitability of Krishnapatnam UMPP
(increase in Indo coal prices) and uncertainty of gas supply for the upcoming
Samalkot project (2.4GW) we think the premium is not justified. Maintain UW
rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
RPWR’s Rosa plant (600MW) based in UP reported a strong PLF of 91% and
PAF of 94% in the June quarter, in line with expectations. This was despite June
being a monsoon month and, of late, SEBs reducing power from imported coalbased
gencos like Adani and JSW. Jun-q EBITDA was 12% ahead of expectation
while PAT of Rs1.96B was well ahead of our est. of Rs1.26B, higher other
income and lower tax rate contributing to the beat.
Rosa benefits from use of market-priced coal. Rosa reported a PAT of
Rs1.1B benefiting from a lower station heat rate on using imported/e-auction
coal and PLF based incentives. Management guided to Rs2.75-3B of PAT for
the year (well above our estimate of Rs1.4B with an 80% PLF) implying 30-
33% return on invested equity for this cost-plus project.
Continued bullishness on project pipeline. At the analyst meet, management
was once again positive on gas availability for its Samalkot plant to meet
requirement for ~70% PLF. On the other hand, companies like GMR and GVK
have cited difficulties in gas availability. Since tariffs in South India are
relatively higher, top ups from LNG are also an option. Commissioning
schedules for under-construction projects (Butibori, Rosa 2, Samalkot, Sasan)
and pipeline projects (Tilaiya, Chitrangi) were maintained.
Krishnapatnam project was the centre of discussion. Reliance Power has
been lobbying to renegotiate the PPA, given the change in regulation by the
Indonesian Govt on establishing a minimum reference price for coal exports,
making the project unviable. The company has stalled all activity on the project
and as per the PPA, ~Rs3B of penalties are applicable if the performance is not
as per contract - a small amount for a Rs175B project. However management
was clear that the Indonesian Govt was not interested in only the requisite
royalties and taxes (an opp stance taken by Adani) and the applicable reference
price AND consequent duties/taxes are to be levied (reiterated by TPWR in its
last con call).
Maintain Mar-12 PT of Rs90 and UW rating. RPWR trades at 16x FY13
P/E, well ahead of other IPPs. Given the company’s back ended pipeline, delays
in project execution, questions on profitability of Krishnapatnam UMPP
(increase in Indo coal prices) and uncertainty of gas supply for the upcoming
Samalkot project (2.4GW) we think the premium is not justified. Maintain UW
rating.
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