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Still nothing to cheer. Tata Power continues to report weak earnings as (1) a resolution to the compensatory-tariff issue remains in a legal imbroglio, and (2) continued weakness in prices of imported coal have eroded its international coal business margins. Approval of a final tariff for Maithon is the limited positive from earnings this quarter. However, we maintain our positive stance on a possible resolution of compensatory-tariff-related issues around Mundra in FY2016. Maintain ADD rating and price target of `96/share.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Lower unit sales and generation distort standalone earnings performance Tata Power reported standalone revenues of `19 bn (1% yoy, 1% qoq), EBITDA of `2.9 bn (- 52% yoy, -28% qoq) and net income of `2.2 bn (-28% yoy, -36% qoq) against our estimates of `19 bn, `3.4 bn and `2.6 bn, respectively. Lower-than-estimated sales (3.3 BU against estimate of 3.8 BU) and generation (2.9 BU against estimate of 3.4 BU) led to higher dependence on purchased power and a consequent miss at the EBITDA level. Higher other income because of contribution from its strategic electronic division as well as dividend from subsidiaries and lower depreciation (due to change in accounting method, leading to `195 mn reduction in depreciation expense) helped compensate the miss at the EBITDA level, to an extent. Reported profits include forex gains of `492 mn offset by reassessed deferred tax liability of `410 mn. Contribution from coal business continues to contract, Maithon improves Tata Power reported consolidated revenues of `87 bn (+1% yoy, +5% qoq), EBITDA of `14.5 bn (-16% you, -12% qoq) and a loss of `2.2 bn. Consolidated revenues were boosted by higher revenue from Mundra UMPP on a 32% yoy increase in units sold. However, this was dragged down by an 18% yoy decline in revenues from the coal segment (that saw 11% yoy decline in volume sales and a 10% yoy reduction in dollar realizations). Contribution from the coal business at `2.9 bn includes a forex gain of `4.2 bn on re-statement of liabilities, offset by settlement of certain tax claims (worth `2 bn)—adjusted for this, the contribution is down to `0.7 bn. Stock performance will be range bound pending the awarding of compensatory tariffs Since the resolution of the issue on compensatory tariff for Mundra UMPP is pending, Tata Power’s stock performance is likely to remain range bound, with investors’ expectations oscillating between a compensatory tariff for Mundra UMPP (currently factored by us) or status quo. Maintain ADD rating and a price target of Rs96/share with revision in FY2015 estimates to factor higher tax expense, delayed compensatory tariff and lower coal realizations.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily05022015pu.pdf
Still nothing to cheer. Tata Power continues to report weak earnings as (1) a resolution to the compensatory-tariff issue remains in a legal imbroglio, and (2) continued weakness in prices of imported coal have eroded its international coal business margins. Approval of a final tariff for Maithon is the limited positive from earnings this quarter. However, we maintain our positive stance on a possible resolution of compensatory-tariff-related issues around Mundra in FY2016. Maintain ADD rating and price target of `96/share.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Lower unit sales and generation distort standalone earnings performance Tata Power reported standalone revenues of `19 bn (1% yoy, 1% qoq), EBITDA of `2.9 bn (- 52% yoy, -28% qoq) and net income of `2.2 bn (-28% yoy, -36% qoq) against our estimates of `19 bn, `3.4 bn and `2.6 bn, respectively. Lower-than-estimated sales (3.3 BU against estimate of 3.8 BU) and generation (2.9 BU against estimate of 3.4 BU) led to higher dependence on purchased power and a consequent miss at the EBITDA level. Higher other income because of contribution from its strategic electronic division as well as dividend from subsidiaries and lower depreciation (due to change in accounting method, leading to `195 mn reduction in depreciation expense) helped compensate the miss at the EBITDA level, to an extent. Reported profits include forex gains of `492 mn offset by reassessed deferred tax liability of `410 mn. Contribution from coal business continues to contract, Maithon improves Tata Power reported consolidated revenues of `87 bn (+1% yoy, +5% qoq), EBITDA of `14.5 bn (-16% you, -12% qoq) and a loss of `2.2 bn. Consolidated revenues were boosted by higher revenue from Mundra UMPP on a 32% yoy increase in units sold. However, this was dragged down by an 18% yoy decline in revenues from the coal segment (that saw 11% yoy decline in volume sales and a 10% yoy reduction in dollar realizations). Contribution from the coal business at `2.9 bn includes a forex gain of `4.2 bn on re-statement of liabilities, offset by settlement of certain tax claims (worth `2 bn)—adjusted for this, the contribution is down to `0.7 bn. Stock performance will be range bound pending the awarding of compensatory tariffs Since the resolution of the issue on compensatory tariff for Mundra UMPP is pending, Tata Power’s stock performance is likely to remain range bound, with investors’ expectations oscillating between a compensatory tariff for Mundra UMPP (currently factored by us) or status quo. Maintain ADD rating and a price target of Rs96/share with revision in FY2015 estimates to factor higher tax expense, delayed compensatory tariff and lower coal realizations.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily05022015pu.pdf
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