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Positives in the price. With a quarterly profit of `3.8 bn, JSW Energy’s CMP already factors the sharp improvement in earnings, considering (1) low fuel cost because of declining prices of imported coal, (2) sustained merchant tariffs with standalone realizations at `4.3/kwh, and (3) improved utilization rates with 86% PLF during the quarter. Potential capital-raising to fund inorganic growth could keep stock performance in check while further growth on existing capacities may be hard to come by. Maintain SELL with a revised PT of `81/share (`73 previously).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Barmer ramp up augurs well for consolidated earnings; lower fuel costs chip in JSW Energy reported net sales of `23 bn (+11% yoy, +6% qoq), EBITDA of `9.4 bn (+23% yoy, 16% qoq) and net income of `3.8 bn (+71% yoy, +10% qoq) against our estimates of `24 bn, `9.8 bn and `4.2 bn respectively. Earnings performance was primarily driven by higher generation (5.3 BU, KIE at 5.6 BU) due to a ramp up in Barmer’s capacities—these saw generation grow to 1.5 BU from 0.7 BU yoy. For 9MFY14, JSW Energy has reported a more modest income growth of `10.5 bn (+8% yoy). Standalone performance was aided by better realizations (`4,28/kwh, up 4% yoy and 3% qoq) and marginal decline in fuel cost (`2.64/kwh, down 1% yoy and 3% qoq) leading to an EBITDA contribution of `1.46/kwh (up 21% yoy and 19% qoq). Growth ambitions remain high, enabling resolution to raise `50 bn capital JSW Energy’s management has taken an enabling resolution to raise `50 bn (25% of current market capitalization) for pursuing inorganic and organic growth opportunities in the power sector. This is on the heels of its acquisition of Jaiprakash Power Ventures’ hydro assets (1,391 MW, for an enterprise value of `97 bn—debt of `58 bn and equity value of `39 bn). It is considering funding the acquisition of JPVL’s assets through an incremental borrowing of `39 bn (by the parent entity) that will also bring in an additional tax shield on interest costs for the acquisition debt. Maintain SELL with a revised price target of `81/share We have revised our target price to `81/share (`73/share previously) to factor lower sustainable coal prices and better merchant realizations. We have increased our earnings estimates by 3% for FY2015 and 10% for FY2016 to reflect (1) a lower sustainable coal price (US$65/ton versus US$70/ton previously), and (2) higher sustainable merchant realizations (of `3.75/kwh versus `3.65/kwh). We have traditionally remained skeptical of the company’s excessive dependence on spot purchases of imported coal and a high proportion of merchant sales.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily03022015ga.pdf
Positives in the price. With a quarterly profit of `3.8 bn, JSW Energy’s CMP already factors the sharp improvement in earnings, considering (1) low fuel cost because of declining prices of imported coal, (2) sustained merchant tariffs with standalone realizations at `4.3/kwh, and (3) improved utilization rates with 86% PLF during the quarter. Potential capital-raising to fund inorganic growth could keep stock performance in check while further growth on existing capacities may be hard to come by. Maintain SELL with a revised PT of `81/share (`73 previously).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Barmer ramp up augurs well for consolidated earnings; lower fuel costs chip in JSW Energy reported net sales of `23 bn (+11% yoy, +6% qoq), EBITDA of `9.4 bn (+23% yoy, 16% qoq) and net income of `3.8 bn (+71% yoy, +10% qoq) against our estimates of `24 bn, `9.8 bn and `4.2 bn respectively. Earnings performance was primarily driven by higher generation (5.3 BU, KIE at 5.6 BU) due to a ramp up in Barmer’s capacities—these saw generation grow to 1.5 BU from 0.7 BU yoy. For 9MFY14, JSW Energy has reported a more modest income growth of `10.5 bn (+8% yoy). Standalone performance was aided by better realizations (`4,28/kwh, up 4% yoy and 3% qoq) and marginal decline in fuel cost (`2.64/kwh, down 1% yoy and 3% qoq) leading to an EBITDA contribution of `1.46/kwh (up 21% yoy and 19% qoq). Growth ambitions remain high, enabling resolution to raise `50 bn capital JSW Energy’s management has taken an enabling resolution to raise `50 bn (25% of current market capitalization) for pursuing inorganic and organic growth opportunities in the power sector. This is on the heels of its acquisition of Jaiprakash Power Ventures’ hydro assets (1,391 MW, for an enterprise value of `97 bn—debt of `58 bn and equity value of `39 bn). It is considering funding the acquisition of JPVL’s assets through an incremental borrowing of `39 bn (by the parent entity) that will also bring in an additional tax shield on interest costs for the acquisition debt. Maintain SELL with a revised price target of `81/share We have revised our target price to `81/share (`73/share previously) to factor lower sustainable coal prices and better merchant realizations. We have increased our earnings estimates by 3% for FY2015 and 10% for FY2016 to reflect (1) a lower sustainable coal price (US$65/ton versus US$70/ton previously), and (2) higher sustainable merchant realizations (of `3.75/kwh versus `3.65/kwh). We have traditionally remained skeptical of the company’s excessive dependence on spot purchases of imported coal and a high proportion of merchant sales.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily03022015ga.pdf
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