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1QFY12 results
Tata Power’s 1QFY12 consolidated net profit at Rs4.2bn, up 34% YoY,
was impacted by very high effective tax rate of 50%. Standalone
financials were in-line with our estimates. The generation assets in
Mumbai licence area would now earn 15.5% RoE (same as CERC norms)
as compared to 14% earlier. Commercial operations from Maithon project
starts in September while the commissioning of Mundra UMPP could be
delayed by couple of months due to transmission project delays. Tata
Power remains our preferred pick in utility space. Maintain BUY.
Standalone financials in line
Tata Power’s standalone net profit at Rs2.8bn, up 5% YoY, is in line with our
estimates. Generation was down YoY in both Mumbai and outside Mumbai as
cheaper power was available for purchase, due to scheduled outage of
Jojobera Unit 1-3 and lower demand from Tata Steel. Merchant sales (from
Haldia and Unit-8) were flat YoY (@ 363 mkWh) and average tariff was in the
range of Rs3.6-4.6/kWh.
15.3mt coal sales in 1Q; average realization of US$94/t
The Indonesian coal companies sold 15.3mt coal in 1Q at an average
realization of US$94/t (fob) – up 30% YoY. The cost of mining in 1Q was
US$40/t and was up 20% YoY. Overall effective tax rate for the consolidated
entity was high at 50% mainly due to higher contribution of coal profits where
tax rate is 45% and due to deferred tax provision for the expected ~150MW
of wind based capacity addition in FY12.
Mundra commissioning to be delayed due to transmission issues
Tata Power expects the transmission infrastructure for the Mundra project to
be ready by mid October 2011 - post which it would take four months to start
commercial operations. The company has carried out an exercise to asses the
recoverability of the carrying cost of Mundra and has concluded that there is
no provision required for diminution in the value of the investment. The
longer term benchmark coal price used by the company for this exercise is
US$85/t. Tata Power is also evaluating use of lower quality and lower cost
coal for the Mundra project which could result in better economics.
Maithon’s 1st unit to start commercial operations in September
The first 525MW unit of Maithon project will start commercial operations in
September. The PPA for this project starts from April 2012 and the company
has tied up 150MW from the first unit with DVC and another 300MW with
NDPL in the interim period. The company has coal linkage from Coal India for
this project and have a FSA with Tata Steel to the extent of 1mt as a buffer to
meet the shortfalls.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
1QFY12 results
Tata Power’s 1QFY12 consolidated net profit at Rs4.2bn, up 34% YoY,
was impacted by very high effective tax rate of 50%. Standalone
financials were in-line with our estimates. The generation assets in
Mumbai licence area would now earn 15.5% RoE (same as CERC norms)
as compared to 14% earlier. Commercial operations from Maithon project
starts in September while the commissioning of Mundra UMPP could be
delayed by couple of months due to transmission project delays. Tata
Power remains our preferred pick in utility space. Maintain BUY.
Standalone financials in line
Tata Power’s standalone net profit at Rs2.8bn, up 5% YoY, is in line with our
estimates. Generation was down YoY in both Mumbai and outside Mumbai as
cheaper power was available for purchase, due to scheduled outage of
Jojobera Unit 1-3 and lower demand from Tata Steel. Merchant sales (from
Haldia and Unit-8) were flat YoY (@ 363 mkWh) and average tariff was in the
range of Rs3.6-4.6/kWh.
15.3mt coal sales in 1Q; average realization of US$94/t
The Indonesian coal companies sold 15.3mt coal in 1Q at an average
realization of US$94/t (fob) – up 30% YoY. The cost of mining in 1Q was
US$40/t and was up 20% YoY. Overall effective tax rate for the consolidated
entity was high at 50% mainly due to higher contribution of coal profits where
tax rate is 45% and due to deferred tax provision for the expected ~150MW
of wind based capacity addition in FY12.
Mundra commissioning to be delayed due to transmission issues
Tata Power expects the transmission infrastructure for the Mundra project to
be ready by mid October 2011 - post which it would take four months to start
commercial operations. The company has carried out an exercise to asses the
recoverability of the carrying cost of Mundra and has concluded that there is
no provision required for diminution in the value of the investment. The
longer term benchmark coal price used by the company for this exercise is
US$85/t. Tata Power is also evaluating use of lower quality and lower cost
coal for the Mundra project which could result in better economics.
Maithon’s 1st unit to start commercial operations in September
The first 525MW unit of Maithon project will start commercial operations in
September. The PPA for this project starts from April 2012 and the company
has tied up 150MW from the first unit with DVC and another 300MW with
NDPL in the interim period. The company has coal linkage from Coal India for
this project and have a FSA with Tata Steel to the extent of 1mt as a buffer to
meet the shortfalls.
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