Karvy_Power Sector -Results Preview-11th July 2014

8/11/2019 Karvy_Power Sector -Results Preview-11th July 2014

1/7


2/7

July 11, 2014

Power Sector

2

Quarterly EstimatesJune14E June13 Mar14 YoY (%) QoQ (%) Comment

Adani Power (ADANI IN Equity, SELL, CMP Rs 57 , TP: Rs 47 ; Mcap: Rs 163 bn)

Sales (Rsmn) 53,986 25,367 59,907 112.8 (9.9) Higher depreciation, interest, fuel cost would be

offset by compensatory tariff approvals.Improved supply by Coal India coupled with

favourable tariffs post the compensatory tariff

continue to show improvement in operational

performance.

EBITDA (Rsmn) 19,836 3,889 27,083 410.1 (26.8)

EBITDA margin (%) 36.7 15.3 45.2 2,141.3 (846.5)

PBT 4,481 (10,982) 11,280 (140.8) (60.3)

PAT (Rsmn)3,585 (5,339) 25,286 (167.1) (85.8)

CESC (CESC IN Equity, HOLD, CMP Rs 660, TP: Rs 691; Mcap: Rs 81 bn)

Sales (Rsmn) 15,050 14,360 12,460 4.8 20.8

We expect company to report higher sales due to

increased generation.We believe losses at the

Chandrapur plant will increase due to lack of a

PPA

EBITDA (Rsmn) 3,265 3,210 4,540 1.7 (28.1)

EBITDA margin (%) 21.7 22.4 36.4 (65.9) (1,474.2)

PBT 1,790 1,660 3,080 7.8 (41.9)

PAT (Rsmn) 1,395 1,310 2,430 6.5 (42.6)

SW Energy (JSW IN Equity, SELL, CMP Rs 73, TP : Rs 46; Mcap: Rs 118bn)

Sales (Rsmn) 22,284 24,720 20,583 (9.9) 8.3 JSW Energy likely to report lower generation on

account of lower PLF at Barmer plant also due to

frequent back-down by the SEBs and non-

availability of schedule

EBITDA (Rsmn) 8,009 9,228 6,913 (13.2) 15.9

EBITDA margin (%) 35.9 37.3 33.6 (138.9) 235.6

PBT 3,576 4,926 2,445 (27.4) 46.2

PAT (Rsmn) 2,894 2,143 1,755 35.1 64.9

NTPC (NTPC IN Equity, HOLD, CMP Rs 149 , TP: Rs157; Mcap: Rs 1,215 bn)

Sales (Rsmn) 169,535 156,618 210,388 8.2 (19.4) We expect higher PLF/PAF for coal-based plants

on a pick-up in demand and better fuel

availability. However, the PLF for gas-based

plants to remain low on gas availability issues.

New CERC regulation to impact profitability.

EBITDA (Rsmn) 42,345 43,142 45,426 (1.8) (6.8)

EBITDA margin (%) 25.0 27.5 21.6 (256.9) 338.6

PBT 30,442 34,513 33,663 (11.8) (9.6)

PAT (Rsmn)

22,737 30,936 30,936 (26.5) (26.5)Tata Power (TTPR IN Equity, BUY, CMP Rs 103, TP: Rs 118 ; Mcap: Rs 2,76 bn)

Sales (Rsmn) 92,510 87,647 88,445 5.5 4.6 Tata Power's revenue growth expected to remain

flat due to lower generation in Mumbai License

area despite higher generation from Mundra and

Maithon plants. TPCL net profit to remain low

due to lower realization in coal companies, higher

forex loss and higher interest costs in Mundra.

EBITDA (Rsmn) 19,438 20,307 18,215 (4.3) 6.7

EBITDA margin (%) 21.0 23.2 20.6 (215.7) 41.7

PBT 4,928 2,458 2,918 100.5 68.9

PAT (Rsmn) 2,498 750 (1,453) 233.2 -

Power Grid (PWGR IN Equity, BUY, CMP Rs 133, TP: Rs 154 ; Mcap: Rs 6,87 bn)

Sales (Rsmn) 41,242 39,995 39,863 3.1 3.5The commissioning of some key projects like

765KV Raichur-Sholapur line in Jan14, would aid

earnings in Q4FY14. We expect lower other

income led cash invested in capex .

EBITDA (Rsmn) 35,144 33,887 33,831 3.7 3.9

EBITDA margin (%) 85.2 84.7 84.9 48.6 34.5

PBT 17,809 17,262 16,865 3.2 5.59

PAT (Rsmn) 12,702 12,392 11,758 2.5 8.0Coal India (COAL IN Equity, BUY, CMP Rs 366, TP: Rs 409; Mcap: Rs 2,279 bn)

Sales (Rsmn) 175,488 164,724 199,980 6.5 (12.2)

CIL sales volume expected to be up by 3.9%

YoY while blended realization expected to be

up by 2.6% YoY due to recent coal price hikes.

EBITDA (Rsmn) 48,912 39,580 51,076 23.6 (4.2)

EBITDA margin (%) 27.9 24.0 25.5 384.4 233.1

PBT 66,502 56,895 69,016 16.9 (3.6)

PAT (Rsmn) 41,528 37,310 53,106 11.3 (21.8)

Source: Company, Karvy Institutional Research


3/7


4/7

July 11, 2014

Power Sector

4

We revise target price to Rs. 409 per share (earlier 360/share (up 13.6%) based on

13x FY16E P/E (earlier 12x) at 15% discount to its 3-Yr average multiple and

maintain our BUY recommendation.

We believe that concerns over the environmental and forest clearances,

deployment of cash and CILs pricing power against the backdrop of SEBs poor

financials are likely to reduce, going forward, as the PMO is looking at key power

sector issues like fuel supply and SEB reforms.

Exhibit 2:

Coal Off-take Break Up Assumption

Year FY11 FY12 FY13 FY14 FY15E FY16E FY17E

Raw coal (MTPA) 403.9 417.5 451.3 456.6 474.9 496.6 521.5

Linkage/MoUs 356.2 366.6 406.1 410.9 441.6 461.8 485.0E-auction 47.7 50.9 45.1 45.7 33.2 34.8 36.5

Beneficiated coal 15.5 15.5 15.5 15.7 16.9 19.0 21.7

Total 419.4 433.0 466.7 472.3 491.8 515.6 543.3

Raw coal 1143 1392 1410 1400 1428 1485 1554

Linkage/MoUs 1049 1224 1284 1313 1366 1420 1477

E-auction 1846 2599 2544 2182 2253 2343 2585

Beneficiated coal 2203 2654 3006 2358 2193 2215 2259

Average realisation (Rs per Tonne) 1170 1424 1450 1419 1438 1493 1562

Source: Karvy Institutional Research, Company

NTPC:

We keep our revenue expectations intact for FY15-FY16E however we downgrade

our recommendation to HOLD from BUY due tolimited upside.

Currently, NTPC is trading at 1.3x and 1.2x its FY15E & FY16E P/BV, respectively,

and at P/E of 10.9x on FY16E, which is fairly valued. We believe the new CERC

regulations would significantly reduce Core RoE led by impact of PLF-linked

incentives,tightening of station heat rate and removal of tax arbitrage benefit


5/7

5

July 11, 2014

Q1FY15 Result Preview

Valuation Summary- Power

Company RatingCMP

(Rs)

TP

(Rs)

Upside/

Downside

Revenue (Rs mn) EBITDA (Rs mn) EPS (Rs mn) P/E (x) EV/EBITDA (x)

FY13 FY14 FY15E FY16E FY13 FY14 FY15E FY16E FY13 FY14 FY15E FY16E FY13 FY14 FY15E FY16E FY13 FY14 FY15E FY16E

Adani Power Sell 57 47 (17.5) 68 158 184 196 12 49 65 68 -9.6 -1.0 2.0 2.7 -5.8 - 28.8 21.0 44.9 11.0 8.7 8.9

CESC Hold 660 691 4.7 54 54 65 71 15 15 18 21 49.2 51.9 62.1 70.7 13.4 12.7 10.6 9.3 9.5 9.5 8.8 7.9

Coal India Buy 367 409 11.0 683 743 810 894 181 160 193 226 27.5 23.9 28.0 32.0 13.4 15.3 13.1 11.3 9.6 11.5 9.1 7.4

JSW Energy Sell 73 46 (37.1) 89 87 91 98 30 34 29 30 5.5 4.6 5.3 6.2 13.4 16.1 13.9 11.9 6.8 5.9 7.0 6.7

NTPC Hold 149 157 5.5 657 720 758 830 202 205 214 224 15.3 13.3 13.1 13.6 9.7 11.2 11.4 10.9 9.1 9.4 9.3 8.7

Tata Power Buy 103 118 14 328 355 394 414 64 75 99 100 3.9 2.2 8 .2 9.0 26.7 46.2 12.5 11.4 8.7 7.5 5.7 5.3

PGCIL Buy 133 154 16.0 128 153 182 202 115 138 162 180 9.1 9.3 10.8 11.5 14.5 14.3 12.4 11.6 11.3 11.0 10.0 9.7

Source: Company, Karvy Institutional Research


6/7

6

Institutional Equities Team

Rahul SharmaHead Institutional Equities /

Research / Pharma

+91-22 61844310 [email protected]

Gurdarshan Singh Kharbanda Head - Sales-Trading +91-22 61844368/69 [email protected]

INSTITUTIONAL RESEARCH

Analysts Industry / Sector Desk Phone Email ID

Hatim Broachwala, CFA Banking +91-22 61844329 [email protected]

Mitul Shah Automobiles/Auto Ancillary +91-22 61844312 [email protected]

Parikshit Kandpal Infra / Real Estate / Strategy/Consumer +91-22 61844311 [email protected]

Rajesh Kumar Ravi Cement/ Logistics/ Paints +91-22 61844313 [email protected]

Rupesh Sankhe Power/Capital Goods +91-22 61844315 [email protected]

Varun Chakri Research Associate +91 22 61844326 [email protected]

Vinesh Vala Research Associate +91 22 61844325 [email protected]

INSTITUTIONAL SALES

Celine Dsouza Sales +91 22 61844341 [email protected]

Edelbert Dcosta Sales +91 22 61844344 [email protected]

INSTITUTIONAL SALES TRADING & DEALING

Bhavesh Gandhi Institutional Sales/Trading/ Dealing +91-22 61844361 [email protected]

Prashant Oza Institutional Sales/Trading/ Dealing +91-22 61844370 /71 [email protected]

Pratik Sanghvi Institutional Dealing +91-22 61844366 /67 [email protected]


7/7

Karvy_Power Sector -Results Preview-11th July 2014

Documents

Transcript of Karvy_Power Sector -Results Preview-11th July 2014