Power 3QFY15E Results Preview :: HDFC Securities

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Power : Uncertainties persist
 Power sector remains plagued by uncertainties surrounding off take,
tariffs, evacuation and fuel supply. Upcoming coal block auctions
should ease near term headwinds for certain developers and
consolidation should gather pace after the auction. However, with the
sector moving towards a semi-regulated regime (capped returns),
private sector interest will be limited to select large developers in the
longer term, in our view.
 We remain selective and would continue to prefer stocks with strong
balance sheets , proven track record and unutilised capacity. Our top
picks are CESC and Powergrid.
 NTPC will report for the third time under the 2014-19 CERC tariff
regime and any improvement in performance over 1HFY15 will be
keenly watched for. PGCIL should report decent growth driven by
commissioning of assets during the past one year. We expect
capex/commissioning of Rs 60/40bn during the quarter.
 We expect JPVL to report seasonally weak results but the losses may
narrow down compared to 3QFY14 as Bina plant has now stabilized
while Nigrie will also contribute to earnings.
 JSW Energy will report strong earnings due to fall in imported coal
prices. Management commentary on further asset acquisitions and/or
bidding for coal blocks will be keenly watched out for.
 Reliance Power should report steady numbers but progress on under
implementation projects is the key monitorable. Tata Power’s earning
will continue to be impacted by lower coal prices and losses at
Mundra. Management commentary on the progress of the mining
stake sale, tariff revision for Mundra UMPP and strategy for the coal
block auctions will be the key monitorables.
 CESC should report steady standalone earnings. Movement in store
level EBITDA for Spencer’s and progress on capacity/fuel tie up for
Chandrapur will be the key monitorables.

LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3010598