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Power
ƒ Capacity addition below target
The power sector added ~1GW capacity vs targeted 2.8GW during OctNov
FY15; however YTDFY15 capacity addition stood at 12GW, above
the target of 10GW. The total installed capacity currently stands at
255GW. In Q3FY15, Industry PLF improved 54 bps YoY to 47%.
However, coal inventory position deteriorated in Q3FY15 with 55 power
stations facing sub-critical level vs 28 plants (YoY) due to poor coal
supply.
ƒ E-auction of coal blocks launched during the quarter
The government has launched a portal for e-auction of 24 coal blocks on
December 25, 2014, after the Cabinet approved the coal ordinance for
the coal block auction. Of this, seven blocks have been reserved for the
power sector having 499 million tonne (MT) of mineable reserves while
the remaining 17 mines have been reserved for the non-regulated
sectors like steel, cement and captive power plants, with mineable
reserves of 875 MT. The auction process will comprise a technocommercial
bid for qualification and financial bid (e-auction) for selection
of successful applicants. E-auctions for qualified bidders will be held
between February 14 and February 2015. The entire mine allocation
process for Schedule II coal mines will be completed by March 23, 2015.
The second phase of auction for 32 Schedule III coal mines will
commence soon. Overall, the government will auction 100 coal blocks
by the end of the current fiscal.
ƒ Merchant rates softens post the onset of winter
Merchant rate declined 16.5% QoQ to | 3.2/Kwh in Q3FY15 due to the
onset of severe winter especially in the northern part of the country.
Merchant rates however were up 18.8% on a YoY basis due to lower
generation across many hydro power stations in the country from
relatively weaker YoY monsoon. Furthermore, election across few states
like Maharashtra, Jharkhand & J&K also kept demand intact for short
term power which was higher on YoY basis
ƒ Barring NTPC, all other companies likely to post positive growth across
earnings. PTC and CESC likely to report strong numbers
Our coverage universe is expected to post a topline growth of 8.5%
while bottomline is expected to decline by 5.3% YoY in Q3FY15
primarily due to sharp earning decline across NTPC. NTPC’s revenue is
likely to increase 2.9% YoY, while PAT is expected to decline 24.0% YoY
due to lower incentives income from new tariff norm and higher fixed
cost from commissioning of new capacities. However, PTC is expected
to report a strong volume growth of ~9% YoY to 0.9 BUs driven by
commissioning of long term trades. While top line is likely to grow by
14.4% YoY, PAT is expected to increase by 106.6% YoY due to lower
YoY base. CESC is likely to report flat 0.9% YoY revenue growth,
however, PAT is expected to grow 29.4 YoY due to fall in fuel cost and
declining losses at Spencer retail. NHPC’s sales volume and revenue is
expected to increase by 21% and 23% YoY driven by incremental
capacity. PAT growth however is likely to remain subdued at 9.5% YoY
due to increased fixed cost from commissioning of new capacity. For
Powergrid, we expect capitalisation of ~|5,000 crore, coupled with
11.4% YoY and 9.0% YoY growth in topline and PAT, respectively. Tata
power is likely to report 10.9% YoY growth in revenue and 21% in PAT
driven by higher generation at Mundra UMPP. Also under recovery at
Mundra is expected to decline due to fall in international coal price.
: Company specific view
Company Remarks
NTPC We expect generation to increase 2.9% YoY to 60.8 BUs in Q3FY15E, however tariff
is expected to remain flat at | 3.25/Kwh. Consequently, we expect revenues to
increase ~3% YoY while adjusted PAT is expected to decline 24% to | 2,205 crore
due to changes in tariff norm
NHPC We expect generation and sales unit to increase ~21% YoY to 3.3 BUs and 2.9 BUs,
respectively, in Q3FY15E driven by incremental capacity. Tariff realisation is
expected to increase 1.9% YoY to ~| 4.8/Kwh. Consequently, we expect topline
growth of 23.2% YoY to | 1,384 crore and PAT growth of 9.5% YoY to | 284 crore in
Q3FY15E
PTC India We expect trading volumes to grow 9% YoY to 0.9 BUs in Q3FY15E due to higher
growth across long term trades, which may grow 34% YoY driven by
commencement of LT PPA. However, sales are expected to grow 14.4% due to fall in
merchant rates while PAT may increase 106% due to lower YoY base
Tata Power We expect revenues to grow 11% YoY in Q3FY15 driven by better generation across
the Mundra plant, partially offset by fall in coal realisation to $52/tonne vs.
$66/tonne YoY across its coal SPV. We expect coal sales of 22 MT in Q3FY15 vs. 23
MT YoY with consolidated PAT of | 103 crore vs. | 85 crore YoY
Power Grid We expect strong capitalisation of ~| 5,000 crore in Q3FY15E as ~| 3,600 assets
was capitalised till mid-November 2014. For FY15E, we expect capitalisation of ~|
20,810 crore of which | 9,581 crore asset was capitalised in H1FY15. We expect
PGCIL to report sales and PAT growth of 11.4% YoY and 9% YoY
CESC We expect CESC to sell ~1.9 BUs in Q3FY15E (down 7.0% YoY) as demand declined
due to severe winter and shift of Navratri in the Q2 period. Tariff is expected to
increase 7.1% YoY to | 6.4/Kwh. Accordingly, the topline is likely to increase 0.9%
YoY while PAT will grow 29.5% YoY to | 1,385 crore driven by a fall in fuel cost and
lower YoY base
Source: Company, ICICIdirect.com Research
LINK
http://content.icicidirect.com/mailimages/IDirect_ConsolidatedPreview_Q3FY15.pdf
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Power
ƒ Capacity addition below target
The power sector added ~1GW capacity vs targeted 2.8GW during OctNov
FY15; however YTDFY15 capacity addition stood at 12GW, above
the target of 10GW. The total installed capacity currently stands at
255GW. In Q3FY15, Industry PLF improved 54 bps YoY to 47%.
However, coal inventory position deteriorated in Q3FY15 with 55 power
stations facing sub-critical level vs 28 plants (YoY) due to poor coal
supply.
ƒ E-auction of coal blocks launched during the quarter
The government has launched a portal for e-auction of 24 coal blocks on
December 25, 2014, after the Cabinet approved the coal ordinance for
the coal block auction. Of this, seven blocks have been reserved for the
power sector having 499 million tonne (MT) of mineable reserves while
the remaining 17 mines have been reserved for the non-regulated
sectors like steel, cement and captive power plants, with mineable
reserves of 875 MT. The auction process will comprise a technocommercial
bid for qualification and financial bid (e-auction) for selection
of successful applicants. E-auctions for qualified bidders will be held
between February 14 and February 2015. The entire mine allocation
process for Schedule II coal mines will be completed by March 23, 2015.
The second phase of auction for 32 Schedule III coal mines will
commence soon. Overall, the government will auction 100 coal blocks
by the end of the current fiscal.
ƒ Merchant rates softens post the onset of winter
Merchant rate declined 16.5% QoQ to | 3.2/Kwh in Q3FY15 due to the
onset of severe winter especially in the northern part of the country.
Merchant rates however were up 18.8% on a YoY basis due to lower
generation across many hydro power stations in the country from
relatively weaker YoY monsoon. Furthermore, election across few states
like Maharashtra, Jharkhand & J&K also kept demand intact for short
term power which was higher on YoY basis
ƒ Barring NTPC, all other companies likely to post positive growth across
earnings. PTC and CESC likely to report strong numbers
Our coverage universe is expected to post a topline growth of 8.5%
while bottomline is expected to decline by 5.3% YoY in Q3FY15
primarily due to sharp earning decline across NTPC. NTPC’s revenue is
likely to increase 2.9% YoY, while PAT is expected to decline 24.0% YoY
due to lower incentives income from new tariff norm and higher fixed
cost from commissioning of new capacities. However, PTC is expected
to report a strong volume growth of ~9% YoY to 0.9 BUs driven by
commissioning of long term trades. While top line is likely to grow by
14.4% YoY, PAT is expected to increase by 106.6% YoY due to lower
YoY base. CESC is likely to report flat 0.9% YoY revenue growth,
however, PAT is expected to grow 29.4 YoY due to fall in fuel cost and
declining losses at Spencer retail. NHPC’s sales volume and revenue is
expected to increase by 21% and 23% YoY driven by incremental
capacity. PAT growth however is likely to remain subdued at 9.5% YoY
due to increased fixed cost from commissioning of new capacity. For
Powergrid, we expect capitalisation of ~|5,000 crore, coupled with
11.4% YoY and 9.0% YoY growth in topline and PAT, respectively. Tata
power is likely to report 10.9% YoY growth in revenue and 21% in PAT
driven by higher generation at Mundra UMPP. Also under recovery at
Mundra is expected to decline due to fall in international coal price.
: Company specific view
Company Remarks
NTPC We expect generation to increase 2.9% YoY to 60.8 BUs in Q3FY15E, however tariff
is expected to remain flat at | 3.25/Kwh. Consequently, we expect revenues to
increase ~3% YoY while adjusted PAT is expected to decline 24% to | 2,205 crore
due to changes in tariff norm
NHPC We expect generation and sales unit to increase ~21% YoY to 3.3 BUs and 2.9 BUs,
respectively, in Q3FY15E driven by incremental capacity. Tariff realisation is
expected to increase 1.9% YoY to ~| 4.8/Kwh. Consequently, we expect topline
growth of 23.2% YoY to | 1,384 crore and PAT growth of 9.5% YoY to | 284 crore in
Q3FY15E
PTC India We expect trading volumes to grow 9% YoY to 0.9 BUs in Q3FY15E due to higher
growth across long term trades, which may grow 34% YoY driven by
commencement of LT PPA. However, sales are expected to grow 14.4% due to fall in
merchant rates while PAT may increase 106% due to lower YoY base
Tata Power We expect revenues to grow 11% YoY in Q3FY15 driven by better generation across
the Mundra plant, partially offset by fall in coal realisation to $52/tonne vs.
$66/tonne YoY across its coal SPV. We expect coal sales of 22 MT in Q3FY15 vs. 23
MT YoY with consolidated PAT of | 103 crore vs. | 85 crore YoY
Power Grid We expect strong capitalisation of ~| 5,000 crore in Q3FY15E as ~| 3,600 assets
was capitalised till mid-November 2014. For FY15E, we expect capitalisation of ~|
20,810 crore of which | 9,581 crore asset was capitalised in H1FY15. We expect
PGCIL to report sales and PAT growth of 11.4% YoY and 9% YoY
CESC We expect CESC to sell ~1.9 BUs in Q3FY15E (down 7.0% YoY) as demand declined
due to severe winter and shift of Navratri in the Q2 period. Tariff is expected to
increase 7.1% YoY to | 6.4/Kwh. Accordingly, the topline is likely to increase 0.9%
YoY while PAT will grow 29.5% YoY to | 1,385 crore driven by a fall in fuel cost and
lower YoY base
Source: Company, ICICIdirect.com Research
LINK
http://content.icicidirect.com/mailimages/IDirect_ConsolidatedPreview_Q3FY15.pdf
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