Tata Power Company - One-Offs Singe Earnings; Result Update Q3FY15 ::Edelweiss, report

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Tata Power Company’s (TPC) Q3FY15 adjusted consolidated PAT at ~INR112mn was significantly lower than our ~INR1bn estimate primarily due to ~USD3/t higher operating costs at Bumi and ~INR720mn under-recovery in Mumbai regulated business. While Maithon has started reporting normalised earnings, the INR2.4bn loss at Mundra was lower than estimated. With APTEL resuming hearing on the compensatory tariff case, management is confident of an early resolution. While TPC is eyeing M&A opportunities, growth over the medium term will be driven by overseas capex.

Standalone numbers disappoint; other businesses in line

TPC’s posted Q3FY15 consolidated PAT of ~INR2bn which included ~INR4bn forex MTM gain. However, INR2bn sales tax liability in coal mines, INR720mn capacity charges under-recovery in standalone business, INR680mn prior period earnings at Maithon and INR410mn additional tax liability impacted earnings. While headline coal mining numbers of 20.8MT sales, USD52/t realisation and USD34/t cash costs were in line, additional marketing and administrative costs impacted profitability. Due to the final tariff order, the Maithon power plant has started reporting normalised earnings. Mundra UMPP reported marginally lower loss at INR2.4bn. Management has guided for turnaround in performance of Tata Solar due to India’s renewable energy thrust.

APTEL to resume hearings on compensatory tariffs

The Appellate Tribunal had accepted TPC’s request to continue with the hearing process on the compensatory tariff proposal mooted by CERC. Simultaneously, the Supreme Court will decide on the ‘Force Majeure’ or ‘Change in Law’ related issues.

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https://www.edelweiss.in/research/Tata-Power-Company--One-Offs-Singe-Earnings;-Result-Update-Q3FY15/28255.html