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http://www.icicidirect.com/mailimages/ICICIdirect_ConsolidatedResultPreview_Q4FY12E.pdf
Power – Fuel supply
ƒ Capacity addition back ended
In YTD FY12 (April-February 2012), aggregate incremental capacity
addition was 13332 MW (10039 MW in April-February 2011). Our
coverage universe has added ~1525 MW during this quarter of which
none have been commercialised. The installed capacity currently stands
at 1,90,693 MW. Electricity generation during April-February 2012 has
increased by 8.7% YoY. Average base deficit during April-February 2012
was 8.24% (decline of 25 bps YoY) while average peak deficit was
10.7% (decline of 17 bps YoY).
ƒ Merchant power rates decline 9% YoY
Merchant power rates have declined ~20% QoQ and 9% YoY in
Q4FY12 (traditionally the weakest for merchant rates). We expect
companies with merchant power exposure (Lanco Infratech, Tata
Power, JPVL) to report realisations in the range of ~| 3.6-4/kwhr.
ƒ Global coal prices range bound
During Q4FY12, international spot thermal coal prices (6700 kcal)
remained flat (0.8% decline) on a QoQ basis. However, a decline in
merchant prices would put profitability of merchant IPP (based on
imported coal) under pressure.
ƒ Tariff hikes continue; focus on fuel supply
In FY12, 21 SEBs have hiked tariffs between 1% and 37% (more hikes
can came with the next hike anticipated from Uttar Pradesh ~30%).
Number of power plants with coal stocks of less than seven days have
declined from 45-48 to ~34. Still, the situation needs to improve
significantly in light of 1) flip flop of FSA by Coal India (expect a
President directive soon) 2) muted production by Coal India (~435 MT in
FY12 vs. 431 in FY11) and 3) dwindling gas production from Reliance KG
DG basin.
ƒ PAT, EBITDA to increase YoY but decline QoQ
From our coverage universe, we expect EBITDA margins to decline by
240 bps YoY and increase 511 bps QoQ (one-offs in NHPC, Tata Power).
Higher depreciation & interest cost of newly commissioned projects
would lead to PAT margin contraction of 393 bps YoY and increase of
249 bps (grossing up of revenues at normal tax rates assumed in NTPC
and NHPC). We expect CESC and Power Grid to deliver strongest
numbers under over coverage universe.
: Company specific view
Company Remarks
NTPC We expect NTPC to sell 55.3 BU in Q4FY12E, an increase of 1.6% YoY leading to
4.6% topline growth. However, higher fuel costs and lower PAF would result in 4%
YoY decline in PAT. We expect realisation to be ~ | 2.97/unit. In Q4FY12, the
company has commissioned 1000 MW (FY12 - 2820 MW)
NHPC We expect NHPC to sell ~2087 MUs in Q4FY12E (decline of 12% YoY) resulting in
13% de-growth in topline. We expect EBITDA and PAT to decline 32% YoY mainly on
account of prior period charge in Q4FY11. We expect the company to gross up
revenues at full tax rate. We have built in realisation of | 4.65 per unit
Neyveli Lignite The company is expected to report YoY topline growth of 26% mainly due to higher
generation (up 7% YoY). EBITDA is expected to remain flat while PAT would decline
by 58% YoY (higher other income in Q4FY11). The company is expected to sell
~5500 MUs. We have built in a realisation rate of | 1.99/unit
JP Hydro We have built in sales of ~516 MUs in Q4FY12E. We expect average realisation of
| 5.9/unit. We expect revenue and EBITDA growth of 94% and 96% YoY. We expect
a minor loss mainly on account of higher depreciation and interest cost due to
commissioning of Karcham Wangtoo
PTC India We expect PTC to report trading volumes of 5890 MUs for Q4FY12, implying 13.5%
YoY growth. Trading margins are also expected to be at 5.8 paisa/unit in Q4FY12.
We have built in average realisation of | 4/unit in Q4FY12E
Lanco Infratech
**
The company has sold ~ 4000 MUs. We expect average realisation to be |
3.8/kwhr (up 60% YoY). We expect revenue and EBITDA growth of 33% and 40%
mainly due to improved numbers in power segment (commissioning of Anpara 600
MW). We expect PAT growth of 191% (lower taxes and higher elimination of profit
from associates in Q4FY11)
Tata Power We expect sales & EBITDA growth of 19.8% and 18.9%, respectively (led by higher
coal realisation & Maithon commissioning). However, we expect bottomline degrowth of 29.9% on account of interest, depreciation and tax expenses. We expect
coal realisation at $95/tonne in Bumi Resources with volume of 16.2 MT
CESC We expect YoY sales, EBITDA and PAT growth of 70.5%, 50% and 82.2%,
respectively, mainly on account of tariff hike of 13.3% in March 2012. The hike
would be retrospective in nature. Additionally, the regulators' approval for capex of
|589 crore would boost earnings and EBITDA
Power Grid We expect Q4FY12E capitalisation of ~| 3700 crore (up 67% QoQ). For FY12, we
expect capitalisation of | 10,200 crore. As a result of higher capitalisation, we
expect topline growth of 20% and bottomline growth of 12.2% YoY
Source: Company, ICICIdirect.com Research
**One offs like higher inter segment elimination; other income may impact PAT growth
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