Jaiprakash Power, Debt reduction may get delayed… :: ICICI Securities, PDF link

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Jaiprakash Power -Strong operating performance in 1Q FY13, , Barclays Capital,

JAIPRAKASH POWER VENTURES LTD.
Strong operating performance in 1Q FY13
1Q FY13 pretax profit was up 135% and marginally ahead of our estimates. The PAT
beat was though higher, led by lower taxes in this quarter. Revenue growth of 98%
y/y was driven by contribution from complete commissioning of Karcham Wangtoo.
Management highlighted that generation would have been higher than reported
numbers by 30% had the monsoons been on track. Karcham Wangtoo (1GW)
generated ~1.3bn units in June quarter and will continue to sell power at merchant
rates till the PPA dispute with PTC is resolved. We maintain our 1-OW rating.

Jaiprakash Power :PAT +2.6x on full benefit of Hydro; best is yet to come :: BofA Merrill Lynch

Jaiprakash Power Ventures Ltd.
PAT +2.6x on full benefit of
Hydro; best is yet to come
􀂄 1Q Rec PAT +163% on higher merchant sale & MAT credit; Buy
JP Power 1QFY13 Rec. PAT at Rs1.8bn grew 163%YoY (+24% BofAMLe) led by
a) 343%YoY growth in merchant volume on full benefit of 1.2GW Karcham Hydro
power (KHP) and +24%YoY higher merchant ASP (Rs3.60/kWh) and b) lower tax
on recognition of Rs391mn of MAT credit entitlement. 1Q PAT accounts for 36%
of our FY13E PAT and we think best is yet to come in 2Q. Catalyst for FY13 is full
benefit of KHP and start of 2x250MW Bina plant in 2/3Q and on-time execution of
mines and attached Nigree project. JP Power has UPF BSE power index
11%YTD and Sensex by 15% on stake sale by promoters'. JP Power is our Utility
top-pick as we believe it offers compelling & diversified model across: fuel mix,
regulated vs merchant mix and locations. Risks: Shift to part-PPA vs 100%
merchant at KHP and any cap. on returns from captive coal mine projects.

Jaiprakash Power - Fairly valued now; Downgrade to Hold:: Emkay

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3Q12 PAT at Rs595mn – ahead of expectations driven by
higher income from sale of VERs (Rs292mn) and higher
merchant realizations (Rs4.7/unit) from Karcham
¾ Issues/overhang on JPVL - (1) huge funding gap for equity inv
and to repay corporate debt, (2) uncertainty on Karcham
offtake, (3) fuel availability and (4) captive mine under no-go
¾ Issues addressed - (1) few projects on hold - lower funding &
fuel needs, (2) high court’s order on Karcham & healthy
internal accruals - easing of cash flows, (3) forest clearance
of Nigrie mine in few mths & (4) use of captive coal for Bina
¾ Upgraded the stock to Buy post last qtr, it has outperformed
nifty by 23% since. Do not see upside from these levels
unless clarity emerges on (1) funding NCD repayment, (2)
forest clearance for Dongri-tal II & (3) use of captive coal in
Bina
Better than expected quarter on higher VERs and merchant rates
JPVL’s 3Q12 results have surprised us with PAT reported at Rs595mn against our
estimate of Rs317mn. The performance is driven by (1) higher revenues booked from
sale of Verified Emission Reductions (Rs292mn,+30% yoy) and (2) better merchant
realizations at Karcham (Rs4.7/unit). Net revenues grew by 162% to Rs3.7bn while
gross generation volumes grew by 75% to 1.2BU. EBITDA margins have improved by
648bps yoy to 90%, though declined by 362bps sequentially.
Fine tuned our estimates, revise FY12E/FY13E EPS by -0.9%/-1.1%
We have done some fine tuning of our numbers to incorporate better than expected
realizations at Karcham during FY12E, higher revenues from VER and lower other
income. Consequently we revise our FY12E/FY13E EPS by -0.9%/-1.1% respectively.
Many issues addressed; clarity on a few yet to emerge
Many of the issues faced by JPVL have been addressed with (1) Offtake at Karcham
after favorable HC order (though SC case pending); (2) management putting on hold all
the under development projects (Karchana, Lower Siyang etc) resulting into limited
funding and fuel requirement, (3) Govt’s softened stance on no-go and forest approvals.
However we would like to wait for further clarity over 1) funding for NCD bullet payment
in Feb 2013, 2) forest clearance for Dongri Tal II mine and 3) approval for use of captive
coal mine for Bina, to blend with linkage coal. One more big risk that we see is, in case
HP levies water cess – Karcham being a merchant power plant would be impacted
severely. However, as of now there is no indication/proposa

Buy Jaiprakash Power Ventures; Target : Rs 50 ::ICICI Securities (pdf link)

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H i g h e r   m e r c h a n t   r a t e s   le a d   t o   r o b u s t   r e s u l t s
Robust top line (better  than our and  street estimates), higher merchant
realisation (| 4.7/kwhr), lower operating costs, higher interest
expenditure, robust other operating income (+65% QoQ) has led to PAT
of | 59.5 crore (well above our estimates and street estimates of | 18
crore). Increase in interest cost (+129% YoY) was on account of
commissioning of Karcham Wangtoo. The stock is expensive as
compared  to  NHPC  on  P/B  basis.  The  full  impact  of  Karcham  Wangtoo
commissioning will be visible in FY13. Delay in capacity addition (on coal
based power plants), possibility of equity dilution to fund its investment in
power projects are the key risks to the stock. Maintain Buy with a revised
target price of | 50/ share.
ƒ Other highlights of the quarter
The company generated 1172 million units for the quarter (+75%
YoY,-59% QoQ). Average realisation for quarter stood at | 3.17/kwhr
(Sales realisation at 88% of generation). Average realisation from
Karcham Wangtoo project was | 4.7/kwhr. The company has VERs
worth | 29 crore during quarter. In FY12, the company expect ~|43
crore as sales from VERs. For FY14, the company expects to earn |
200 crore per annum from Karcham Wangtoo project.

V a l u a t i o n
At the CMP of | 45, the stock is trading at P/E of 31.1x and 16.6x on FY12E
and FY13E EPS, respectively. Similarly, on P/B multiple the stock is
trading at 2.1x and 1.6x FY13E, respectively. The execution capability of
parent company (JAL) renders significant comfort to upcoming expansion
plans. In FY13 and FY14 only 500  MW Bina Power Plant would be
commissioned which we believe is a blessing in disguise for the company
given the state of coal supplies for newly commissioned projects. We are
only taking projects commissioning by FY15 in our valuation.

JP Power (XJSHF, Buy) BofA Merrill Lynch,

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JP Power (XJSHF, Buy)
Bear Case: What can go wrong
􀂄 In the bear case, equity funding for its new power projects may get tough so
we remove all future projects starting after FY15E that are not ordered yet -
Bina-II (1x660MW), Bara-II (2x660MW), Lower Siang (5x300MW) and Hirong
(2x250MW) power projects of 3.98GW capacity from our valuation.
􀂄 We assumed a 10% cut in merchant tariff for merchant sale of Karcham,
Bina-I and Bara-I projects. Further, assumed Bina-I to source 35% of its
FY13-15E coal requirement at higher price through e-auction / market on
lack supply from CIL.
􀂄 We assumed 50bps higher interest rate.
􀂄 Consequently, we expect EPS cut of 35% in FY13E and 31% in FY14E
leading to a 50% EPS CAGR over FY11-14E
􀂄 Further, raised holdco discount to 30% subsidiaries value and valued
treasury stock at 30% discount to SOTP value.
Base Case: FY13 80% Hydro – an anti-coal play
􀂄 In the Base case, we assumed delay in capex by 2 years at 1x600MW Bina-
II and and 1 year at 2x660MW Bara-II, to protect its leverage.
􀂄 Assumed Bina-I to source 35% of its FY13-14E coal requirement at higher
price through e-auction / market on lack supply from CIL
􀂄 Further, assumed a 25bps higher interest cost.
􀂄 We assumed 15% holdco discount to subsidiaries value and valued treasury
stock at 20% discount to SOTP value.
􀂄 To factor in above, we cut our PO to Rs55 (Rs65).
Risk-Reward: Favorable
􀂄 In the Bear case, we expect the stock could trade at Rs34/share based on
DCF based SOTP value translating into 1.6x FY13E P/BV.
􀂄 In the base case, we expect the stock could trade at Rs55/share based on
DCF based SOTP value translating into 2.54x FY13E P/BV.
􀂄 Overall, the risk-reward appears favorable given 80% of its capacity is Hydro
in FY13E, which doesn’t have shortage challenge.

Buy Jaiprakash Power Ventures; Target : Rs 45 ::ICICI Securities

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R o b u s t   r e s u l t s   a g a i n …
Robust topline (in line with our estimates), commissioning of remaining
500 MW (two units of Karcham Wangtoo) and lower other expenditure
YoY led to PAT of | 281 crore (above our estimates). Expectedly, interest
costs increased 96.9% YoY (due to commissioning of Karcham Wangtoo).
We have revised our FY12 PAT estimates upwards by 19.9%. The current
operational capacity of the company stands at 1700 MW. We maintain
BUY rating on the stock with a revised target price of | 45 due to 1) Delay
in capacity addition (For coal based power plants) and 2) possibility of
equity dilution to fund its investment in power projects.
ƒ Operational highlights for Q2FY12
The company generated 2946 million units (MUs) for the quarter (up
88% YoY and 211% QoQ). Average realisation for the quarter stood
at | 2.47/kwhr (sales realisation at 88% of generation). The company
has VERs worth | 9.31 crore.
ƒ Expect 250 MW of Bina Phase 1 in Q4FY12
We expect 250 MW of Bina Phase 1 to get commissioned in
February 2012. The company has obtained fuel linkage from Coal
India (SECL and CCL). Given the tepid production increase of Coal
India and the fact that many private IPPs are able to get linkage to
the tune of 50% (of 80% PLF) from Coal India , the company has
entered into stop gap arrangement (with permission of CERC) for
the use of captive mines in Amelia and Dongri. The coal from these
mines was to be used for Nigrie project (1320 MW) expected to be
commissioned in September 2013.
V a l u a t i o n
At the CMP of | 37, the stock is trading at a P/E of 31.7x and 7.9x on
FY12E and FY13E EPS, respectively. Similarly, on P/BV multiples, the
stock is trading at 2.3x and 1.0x FY13E, respectively. We are only taking
projects getting commissioned by FY15 in our valuation and have taken
out the Karchana Project from our valuation (since land acquisition for the
projects is yet to be completed).

JP Infratech: Noida woes : CLSA

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Noida woes
JP Infratech’s Noida sales volumes halved in 1Q as poor sentiment
following Noida land agitations impacted sales at the end of the quarter.
Earnings were also slightly below expectations on slower than expected
revenue recognition. With UP elections stated for 1QFY13, we push out
our sales estimates from new land parcel by an year, as well as cut Noida
sales volumes. Cash flow improvement post road completion and stock
trading at 60% discount to NAV and 5x earnings makes it attractive.
1Q results slightly below on weaker revenues
JP Infratech reported 1QFY12 net profit of Rs2.4bn, 5% below estimates on
weaker revenues. Revenues at Rs6.2bn were down 14% QoQ/+3% YoY – but
weaker as new projects take longer than expected time to enter revenue
recognition. Ebitda margins improved 2ppt QoQ, a positive surprise, leading
to a smaller drop in Ebitda to Rs3.0bn.
Sales half QoQ as Noida issues hit sentiment
While we build in lower sales in Noida as JP curtails supply; sales at ~1.3m sf
were lower than expected, down 50% QoQ. Pricing, at c.Rs4,600/sf, was up
c.45% YoY as JP sold a better mix/took price increases early on in April. The
volumes dropped for the company in June as land acquisition issues in Noida
emerged and adversely impacted buyer sentiment. We now cut our Noida
volumes for FY12 by 25% to 6m sf. JP has launched its lower priced/higher
volume offering Aman (c.3,000/sf, separate land parcel) to boost its sales.
Cut realty volumes 14-50% as land agitation continues
With land acquisition related issues in the state of UP likely to remain under
scrutiny till state elections in 1QFY13, we now postpone JP’s launch of
property sales at its Greater Noida and Agra land parcels to FY13 from FY12.
This leads to a 50% cut in FY12 sales volumes and a 14-22% sales cut in
FY13-14 sales volumes. We do note that management maintains its launch
target here later in the year. Additionally, pre-launch of a commercial
property in Greater Noida earlier in 1Q had fetched good response.
Earnings cut 17-27%; Valuations, FCF improvement key support
Slower than expected sales and some delay in execution leads to a revenue
cut of 9-24%, earnings cut of 17-27% & NAV/TP cut of 18% for JP Infra over
FY12-14. Road capex has meanwhile continued (Rs7.6bn in 1Q) and c.85% of
surfacing as well as exchange work is now complete. With FCF likely to turn
positive in FY13 and valuations remaining attractive, we maintain BUY.

Jaiprakash Power :: A healthy quarter, but uncertainties remain:: JPMorgan,

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 Karcham Wangtoo (KW) drives PAT growth. JPVL reported 1Q PAT of
Rs696mn, ~15% ahead of consensus. Reported PAT implies growth of ~81%
YoY; after adjusting 1QFY11 for one-off prior period item (~Rs100mn),
growth is 44%. While results appear to be well ahead of consensus, we were
factoring in sale of ~249MU from KW in Jun-q (as per CEA data) at short term
rates (@Rs3.9/Kwh based on our discussion with management). At operating
level reported EBITDA of Rs2.55bn (up 43% YoY) was in-line with our est. of
Rs2.6bn. The amalgamation of KW (earlier 57% subsidiary) and Bina (100%
sub) into parent company has received legal sanction during the quarter; our
FY12 consol. estimates were already factoring this eventuality (no minority
interest factored for KW in current fiscal). It was business as usual for balance
operating regulated return hydro capacity (700MW).
 KW execution broadly on track, but PPA uncertainty remains: 2 units of
250MW commenced commercial operations in Jun-q (unit-I 26th May onwards,
unit-2 starting 23rd Jun). As per notes to accounts, is under test run and will be
commissioned shortly. Balance two units are expected to achieve CoD in Sep-q
(vs. our est. of end-Aug-11). Pending verdict on under litigation PPA with PTC,
JPVL has been selling KW generation in ST market (~80% bilateral with PTC,
and 20% on power exchanges). While the current arrangement is working to
JPVL’s benefit, near-term PPA uncertainties remain. In base case, we assume
the revised project cost (Rs71.5bn, ~21% higher than original) is approved and
PPA: merchant is 80:20. Downside arises from disapproval of cost escalation,
while upside could arise if the company succeeds in carving out a higher
merchant component while renegotiating the PPA.
 Execution uncertainty at Karchana. Press reports indicate that land
acquisition issues severely impede visibility on execution (see Karchana Power
project in limbo? sourced from HT). Our SOP conservatively factors
~Rs1/share for 2x660MW of Karchana.
Maintain Neutral. Positive surprise for consensus post Jun-q results may lead
to short term rebound. We maintain estimates and Mar-12 SOP PT of
Rs46/share pending clarity on project execution, progress on Karcham PPA and
funding plans from management. Key upside risk- improvement in linkage coal
visibility; downside- unfavorable PPA outcome on KW.

Buy Jaiprakash Power Ventures; Target : Rs 50 ::ICICI Securities

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R o b u s t   r e s u l t s … . .
A  robust  topline (above  our  &  Street  estimates),  commissioning  of  500
MW (two units of Karcham Wangtoo) and increase in interest costs (on
account of commissioning of Karcham Wangtoo) resulted in PAT beating
our estimates and Street consensus (| 52.9 crore). While the stock is
cheap as compared  to NHPC on a P/BV basis, delay in capacity addition
(on coal based power plants), possibility of equity dilution to fund its
investment in power projects are  key risks for the stock. Due to
amalgamation of two subsidiaries  –  Bina  Power  Supply  Co  (1500  MW
under construction) and Jaypee Karcham Hydro Corp (1000 MW), with
itself has resulted in equity dilution of 26.5%. Hence, as a result, the no of
o/s shares have increased from 208.5  crore to 262.5 crore. We maintain
our BUY rating with a revised target price of | 50/ share.
ƒ Other highlights of the quarter
The company generated 1223 million units (MU) for the quarter (up
26% YoY, 563% QoQ). Average realisation for the quarter stood at |
2.55/kwhr (sales realisation at 88% of generation). Average
realisation from Karcham Wangtoo project was | 2.4/kwhr. The
company has VERs worth | 56 lakh this quarter. In FY12, the
company expect ~| 75 crore as sales from VERs. For FY14, JPVL
expects to earn | 200 crore/annum from Karcham Wangtoo project.
ƒ Status of projects near completion
JPVL has commissioned 500 MW of Karcham Wangtoo in Q1FY12.
The remaining 500 MW will be commissioned by Q2FY12. One unit
of Bara project (250 MW) has been delayed by three months. Hence,
incremental capacity commissioned would be 750 MW in FY12.
V a l u a t i o n
At the CMP of | 38, the stock is trading at P/E of 31.4x and 7.9x on FY12E
and FY13E EPS, respectively. Similarly, on P/BV multiple, the stock is
trading at 2.3x and 1.0x FY13E, respectively. The execution capability of
the parent company (JAL) renders  significant comfort to upcoming
expansion plans. We are only taking projects commissioning by FY15 in
our valuation and value Karchana Project at 1x investment value.

Jaiprakash Power Ventures :: 1Q12 results below estimates; clarity on coal supplies and equity issuance is the key:: Credit Suisse,

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Jaiprakash Power Ventures Ltd------------------------------------------------ Maintain NEUTRAL
1Q12 results below estimates; clarity on coal supplies and equity issuance is the key


JPVL’s 1Q12 recurring PAT at Rs696 mn grew 43.5% YoY, mainly
led by the commissioning of the 0.5GW Karcham Wangtoo project.
However, profit was 38% below our estimates, mainly led by lowerthan-
expected merchant tariff of Rs3.5/kWh earned by the Karcham
Wangtoo project versus our estimate of Rs4.5/kwh and marginal
disappointment from lower incentives at the Baspa-II and
Vishnuprayag projects and higher interest expenses.
● JPVL plans to sell 0.6GW from the Karcham project, on a long-term
basis, through PTC from April 2012, based on the CERC’s cost-plus-
RoE model. MoU for this has already been entered with PTC.
Meanwhile, the project would sell power on a merchant basis.
● JPVL plans to implement 5.1GW linkage/captive coal projects. Given
rising coal deficits and forest clearance issues with one of its captive
blocks, visibility on fuel supplies will be key in the future.
● We cut our earnings by 5% during FY13, as we tweak our estimates
for the Karcham project but cut our target price by 34%, as we factor
in the risk of 25% equity issuance to maintain gearing at a
sustainable level of about 4x. Maintain NEUTRAL.


1Q12 profits 38% below our estimates
JPVL’s 1Q12 standalone recurring profit at Rs696 mn was up 43.5% YoY.
Growth was mostly driven by the commissioning of 0.5GW of its
Karcham Wangtoo project (total capacity 1GW) during the quarter (the
merger of Karcham Wangtoo is now effective). However, profits were
about 38% below our estimates, mainly led by lower-than-expected
merchant tariff earned by Karcham Wangtoo project (earned blended
merchant tariff/ UI rate of Rs3.5/kwh versus our estimate of Rs4.5/kwh.
Our estimate of merchant tariff was based on the average bilateral
merchant tariff during 1Q12. Besides, incentives from Baspa-II and
Vishnuprayag projects were also marginally below our estimates; while
interest expenses on debt taken to finance equity investments of
subsidiaries were about 5% ahead of our estimates.


Karcham plans to sell 0.6GW power on long-term basis
The company plans to sell 0.6GW (rest could be contracted or sold on
merchant basis) power from its Karcham Wangtoo project on a long-term
basis through PTC from April 2012, based on CERC’s cost-plus-RoE
business model. As per the company, it has already entered into a MoU
with PTC for this contract. In the meanwhile, the company plans to sell its
output on a merchant basis.


Clarity on fuel supply for upcoming coal projects is key
JPVL is currently implementing 0.5GW Bina-I, 1.32GW Karchana-I and
1.98GW Bara-I projects based on linkage coal and 1.32GW Nigrie
project based on captive coal. Given the rising domestic coal deficit and
one of the two captive blocks for Nigrie block under the ‘no-go zone’, we
believe clarity on fuel supply for these projects is the key. We have
currently assumed that 45% of coal needs for linkage coal projects would
be met through e-auction/ imported coal and have optimistically assumed
the captive mine issue to be resolved soon.
Cut earnings and price target; maintain NEUTRAL.
JPVL has a strong pipeline of coal and hydro projects under execution.
However, one of the key concerns in its ability to execute these projects
is its high gearing. JPVL had announced its plans to raise US$500 mn,
but this has now been delayed. We have currently assumed a debtfunded
balance sheet for the company, but that stretches the gearing to
unsustainable levels (over 4x by FY12). We thus factor in a risk of 25%
equity issuance (required to keep gearing at 4x till FY14). We also lower
our estimates for the Karcham Wangtoo project. Overall, we cut our
earnings for FY13 by 5% and target price by 34% to Rs42/share. We
maintain our NEUTRAL rating on the stock.

Jaiprakash Power Ventures - In line; maintain hold ::Emkay

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Jaiprakash Power Ventures

In line; maintain hold

HOLD

CMP: Rs 38                                       Target Price: Rs 42

---

n     1Q12 performance in line - revenue growth of 45% yoy, EBITDA margins of 89.6% and APAT growth of 50% yoy. Generation growth of 29% yoy led by Karcham commissioning 

n     Karcham (key FY12E growth driver) two units have already commissioned. Balance two units scheduled to commission in Aug11 and Sep11 vs assumed timeline of Aug11  

n     In our numbers, we have taken Karcham as merchant plant - company currently selling through PTC in the open market. Reduce FY12E earnings on slight delay and maintain FY13E

n     Valuations corrected significantly; with 1700MW of operational hydro capacity - downside protected. Karcham litigation, funding gap & fuel remain overhang. Maintain hold

Credit Suisse,::Jaiprakash Power-- In-line 4Q11, planned equity issuance a key trigger for the stock

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Jaiprakash Power Ventures Ltd------------------------------------------------ Maintain NEUTRAL
In-line 4Q11, planned equity issuance a key trigger for the stock


● JPVL’s 4Q11 operating results were in-line with our estimates.
However, recurring PAT was 4% lower than our expectations on
account of slightly higher-than-expected interest expenses.
● Generation at 219mu during 4Q11 declined 17% YoY. However,
during FY11, JPVL’s 300MW Baspa-II hydro project recorded the
highest generation at about 1.5bu (up 13% YoY).
● Shareholders and creditors of JPVL and its subsidiaries, JKHCL
and BPSCL, at the court convened meeting, have approved the
amalgamation of these subsidiaries, effective April 2010.
● Last week, JPVL synchronised the first unit (of 250MW) of its 1GW
Karcham Wangtoo hydro power project. JPVL believes its PPA with
PTC for the sale of 0.8GW power from this project is now void and
expects to sell the entire output on merchant basis in the near term.
This could provide an upside potential to our FY12 EPS.
● However, JPVL’s balance sheet is highly geared and would require
equity issuance during FY12. Our sensitivity analysis suggests
planned equity issuance should be earnings accretive and would
improve visibility on the company’s ability to execute large projects.
Figure 1: JPVL – quarterly generation from operating projects
In mn kwh 4QFY10 1QFY11 2QFY11 3QFY11 4QFY11
Baspa (300 MW) 96 423 712 243 96
Vishnuprayag (400 MW) 167 607 866 428 122
Total generation 263 1,029 1,578 671 219
Source: CEA.
4Q11 operating results in-line
JPVL’s 300MW Baspa-II hydro project recorded the highest ever
generation at about 1.5bu (up 13% YoY) during FY11, since its
commencement in 2003. However, generation at 219mn kwh from its
700MW operating capacity (300MW Baspa and 400MW Vishnuprayag
projects) during 4Q11 declined 17% YoY. JPVL’s 4Q11 operating
results were in-line with our estimates. Recurring PAT at Rs116 mn
declined 81% YoY affected from interest expense on debt taken to
finance equity investments of its subsidiaries executing power projects.
Recurring PAT was 4% lower than our estimates, led by slightly
higher-than-expected interest expenses. We cut our FY11 earnings by
1% to incorporate this lower-than-expected 4Q results.
Figure 2: JPVL – 4Q11 standalone results summary
(Rs mn) 4QFY10 4QFY11 % YoY 4QFY11E % difference
Generation (mn kWh) 263 219 -17.0% 219 0%
Net Sales 1,411 1,415 0.3% 1,425 -1%
Operating expenses (328) (250) -23.9% (255) -2%
EBITDA 1,083 1,165 7.6% 1,170 0%
EBITDA margin (%) 76.8% 82.4% 561 82.1% 2610%
Depreciation (235) (234) -0.2% (240) -2%
EBIT 848 931 9.8% 930 0%
Net interest expenses (115) (787) 586.0% (779) 1%
PBT 734 145 -80.3% 151 -4%
Tax (125) (29) -77.0% (30) -4%
Tax Rate (%) 17.0% 19.9% 19.9%
Recurring PAT 609 116 -81.0% 121 -4%
Exceptionals (3) 54 0
Reported PAT 606 169 -72.0% 121 40%
Source: Company data, Credit Suisse estimates
Power capacity 3x within a year; commissioning pre-poned
JPVL plans to commission its 1GW (4 units of 250MW each) Karcham
Wangtoo hydro power project by 2Q FY12 in phases, about 3–4
months ahead of its schedule/our estimates and its 0.5GW Bina-I
coal-based project during CY11. This would more than triple its power
capacity to 2.2GW within a year (from 0.7GW currently). Early
commissioning of Karcham Wangtoo project would allow JPVL to
capture high profits earned by hydro projects during the monsoon
season (July-Sept). Also, as per JPVL, its agreement to sell 0.8GW
power from the project to PTC is now void. The company expects to
sell the entire output from the project on merchant basis in the near
term. This could provide an upside potential to our earnings estimate
for FY12.
Planned equity issuance would be earnings accretive and
improve visibility on planned projects
JPVL has a strong pipeline of coal and hydro power projects under
execution. However, one of the key concerns in its ability to execute
these projects is its high gearing. JPVL believes that it is adequately
funded in the near term, after which funding needs would be
supported by cash flows from the commissioning of the Karcham
Wangtoo and Bina-I projects.
However, we believe it would have to raise equity by FY12. JPVL has
already announced its plans to raise US$500 mn. Our sensitivity
analysis suggests that planned equity issuance should be earnings
accretive, as it would reduce interest expense from debt taken
currently to meet the equity needs of its subsidiary projects. Besides,
this should provide visibility on the company’s ability to execute large
projects. We see planned equity issuance as a key trigger for the
stock.

JPMorgan:: Jaiprakash Power - Mar-q results: Business as usual, but PPA uncertainty on Karcham Wangtoo remains

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Jaiprakash Power Ventures Ltd
Neutral
JAPR.BO, JPVL IN
Mar-q results: Business as usual, but PPA uncertainty
on Karcham Wangtoo remains


• Mar-q result update: JPVL adjusted PAT of Rs172mn (-72% YoY) was
below estimate (Rs202mn, -67% YoY) mainly on account of higher than
estimated interest cost during the quarter. The sharp dip in profits was due
to interest on corporate level debt raised by securitization of receivables of
operating capacity, to fund equity requirement of under construction
projects. At EBITDA level results for 700MW operating hydro projects was
broadly in-line. JPVL reported EBITDA of Rs1.44bn (-5% YoY) vs. our
est. of Rs1.37bn.
• FY11 PLF for run-of-river projects healthy, but it’s business as usual:
Baspa-II (300MW) operated at 56% PLF during FY11 vs. 49.6% in FY10;
this is the highest recorded level of power generation since CoD in Jun-
2003. Vishnuprayag (400MW) PLF for FY11 was up ~130bps to 57.7%.
However higher PLF does not impact profitability, given assured return
model (16% return on invested equity) and availability linked incentives
(~2% additional RoIE above 96% PAF).
• Karcham Wangtoo Unit-I (250MW) synchronized on 13th May, 2011.
We were factoring in commencement of operations of unit-I in end-April.
We have delayed CoD of entire 1000MW by 1month to end-Aug-11,
reducing FY12 EPS est. by ~3.2%.
• Uncertainty surrounding Karcham PPA remains: 704MW PPA with
PTC is still under litigation. There are 3 potential outcomes: (a) Negative:
Partial cost overruns are approved. 10% lower project cost approval would
reduce FY12E PAT by ~14%, (b) Base case: Full project cost approved,
neutral for estimates, currently priced-in by markets, in our view, (c)
Positive: Higher proportion of merchant sales allowed. If 100% generation
is sold at ST rate of Rs4, there is upside risk to our FY12 estimates.
• Maintain Neutral: Our Mar-12 SOP PT of Rs46 (vs. Rs44 earlier) factors
in Rs8 debit (vs. Rs10 earlier) to account for corporate level-debt and the
net-NPV of equity funding gap (adjusted for sale of treasury shares). A
return of risk appetite for IPPs is a potential +ive trigger, improvement in
coal visibility is also SOP accretive – 10% higher PLF (from ~75% base
case) would result in ~Rs10 upside to our PT.

Jaiprakash Power Ventures - Potential Energy :: JP Morgan

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Jaiprakash Power Ventures Ltd
Initiation
Neutral
JAPR.BO, JPVL IN
Potential Energy


• Initiate coverage with Neutral; Mar-12 PT of Rs44. JPVL is India’s
largest private hydropower generator; 76.25% is held by flagship Jaiprakash
Associates. It has an operating hydro capacity of 700MW, with 1000MW
due for commissioning over the next 4 months. Currently ~5.1GW of
domestic coal-based capacity is under construction and ~6.9GW is under
development. We expect JPVL to ramp up capacity ~10x to 6.82GW by
Mar-15 resulting in a PAT CAGR of ~80% over FY11-15E.
• The stock has underperformed and is now at 1.2x FY13E P/B, among the
cheapest in the IPP space, due to (a) sector-wide constraints on linkage coal
and poor visibility on captive mine development, which weakened outlook
for PLF, (b) higher interest burden and leverage, as partial equity
requirement of under-construction projects was funded with corporate level
debt, (c) potential dilution to earnings from announced fundraising plans
(we estimate an equity funding gap of ~Rs30bn) and (d) ~20% exposure in
PPAs to falling merchant prices. Although these factors are largely “in
the price” and the stock appears to have found support, we expect these
overhangs to limit near-term upside and the stock to deliver marketneutral
returns, at least until funding issues are fully addressed.
• Modest risk-adjusted returns with potential variance to earnings. Case-
II bids for 3.3GW projects in UP appear aggressive and are est. to yield
<11% return on invested equity over the first 5 years. Our consolidated RoE
estimates are 13-16% through FY16, and on that basis the stock appears
reasonably valued at 9.4x FY13E P/E and 1.2x FY13E P/B. Clarity on
1000MW Karcham Wangtoo PPA is a key variable to the earnings outlook
– a 10% lower project cost approval would reduce FY12E PAT by ~14%.
• Our SOP based Mar-12 PT of Rs44 includes- (a) Rs54 for business cash
flows – Rs11 for operations and Rs43 for projects under development; (b) a
Rs10 debit to account for corporate level net-debt and the net-NPV of equity
funding gap (adj. for sale of treasury shares). A return of risk appetite for
IPPs is a potential +ive trigger and would help remove the funding gap
discount. Improvement in coal visibility is also SOP accretive – 10% higher
PLF (from ~75% base case) would result in Rs10 upside to our PT.

Jaiprakash Ventures Ltd (JPVL) Results above estimates on higher income:: ICICI Sec

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JPVL: Results above estimates on higher income, sale of VERs… 

Jaiprakash Ventures Ltd (JPVL) reported its Q3FY11 results above our
estimates on account of higher other operating income (6x YoY) and sales
of VERs. Core sales (by sale of electricity) was reported at  | 129 crore
(growth of 13.2% YoY) on account of higher generation (671 MUs vs. 512
MUs units in Q3FY10). EBITDA came in at | 156.3 crore (growth of 61.6%
YoY). However, core EBITDA (excluding other operating income and
VERs) stood at | 104 crore (growth of only 7.4% YoY) on account of
higher O&M and other expenditure.  Interest cost for the company
increased to  | 104 crore (106% YoY) on account of securitisation of
receivables of its operating projects (Baspa-II and Vishnuprayag power
plants). The company reported PAT of | 22.8 crore, up 35.1% (YoY).

Jaiprakash Power Ventures (JPVL) Highlights of Q3FY11 results:: IDFC Securities

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Jaiprakash Power Ventures (JPVL)
Highlights of Q3FY11 results


• JPVL's Q3FY11 earnings came in significantly ahead of estimates due to income from sale of emission reduction
certificates as well as due to higher than estimated interest income even as operating income was below our estimates.
• Revenues grew by 33%yoy to Rs1.52bn broadly in line with estimates of Rs1.57bn for the quarter. Revenue growth
was driven by income of Rs224m from sale of emission reduction certificates even as revenues from energy sales
trailed estimates due to lower than estimated tariffs.
• Energy sales grew by 31%yoy to 586m units lead by strong hydro power generation resulting from strong monsoons
during the year. Revenues from energy sales remained impacted by lower secondary energy incentives booked
during the quarter leading to lower realizations.

Bank Of America ML: Utilities/ Power: 3QFY11 Preview India

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Utilities

Potential Result Outperformer: Adani Power

Potential Result Underperformers: NTPC, JP Power

In the Utility sector, markets will likely be focused on the extent of fall in merchant

power rates and progress on future plans such as expansion in generation

capacity, update on new IPP projects and AT&C loss reduction in New Delhi JVs

of Reliance and Tata Power.

Jaiprakash Power Ventures: Key milestone achieved in Karcham Wangtoo: IDFC Securities

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Event
Jaiprakash Power Ventures (JPVL) has commenced filling of water in the intake channel of the
1,000MW Karcham Wangtoo hydropower plant.

Jaiprakash Power:Good 2Q; execution pick-up : BofA ML

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Jaiprakash Power Ventures Ltd.
Good 2Q; execution pick-up with 7GW under build-out


􀂄 2Q11:Rec PAT +38%YoY on VHEP merger; 7GW ordered; Buy
JPVL (Parent) 2QFY11 Rec PAT Rs870mn grew by 38%YoY (+10% BofAMLe) on
merger of Vishnuprayag HEP and incentive on secondary energy at Baspa II. 2Q
generation at BASPA II +11%YoY while Vishnuprayag by -5% vs Indian hydro +4%
as its plants are powered by snow-fed rivers. Execution has improved as JPVL has
ordered 7GW (58% of our valued capacity) and has already spent Rs98bn ($2.2) till
1HFY11. Catalysts loaded in 4QFY11E: start of generation at 1.2GW Karcham
Wangtoo HEP, start of construction at 1.5GW Lower Siang HEP and equipment
order for 1.3GW Bara Ph 2. We tweak PO to Rs82 (81) to factor-in 25% hike
capacity of Bina project to 1.5GW (1.2GW) earlier. Near-term Q’ly should be weak &
valuations are not cheap due to back-loaded cash flows and debt taken by parent to
fund equity to minimize dilution, our PO is based on DCF of its 12GW capacity.
3x by FY12E and 11x by FY15E; 12GW IPP – 17x by FY19E
We forecast 3x rise in JPVL capacity by FY12E and 11x by FY15E. Execution is
picking-up (see table 2 & 3) – with ordering of Karchana equipment, 58% of capacity
would be under-construction. We have factored in 12GW of the capacity add by
FY19E and are yet to value 2160MW of capacity pending visibility of execution.
Growth Uts. with high profitability… funds in-place till FY12
JPVL is a growth utility with visible scale up of capacity to 12GW by FY19E on a
pipeline of high RoE (20-30%) concessions, even after factoring in a 40% fall in
merchant power tariffs by FY13E. Funding is a risk, but it shouldn’t be difficult given
the high profitability of projects. It raised debt for equity funding till 1HFY12-$200mn
CB, Rs10bn ZCB and Rs26bn securitized receivables. Expect equity issue in FY12.
…and diversified business model + catalysts
We like JPVL’s compelling and diversified model across: fuel mix (hydro 33%:
thermal 67%), regulated vs merchant mix (57: 43) and plant location across north,
central and north east India (60:23:17). A lot of catalysts for the stock in form of new
plant order and start of Karcham HEP are loaded in 4QFY11 as described above.