decline in April-May 2012. Some uptick has been seen in June-July 2013, driven by thermal coal. We believe growth will be at sub-5-6% levels, compared with 8% levels in earlier years, given the sharp slowdown.
Buy Tata Power, Power Grid; upgrade Adani Ports to Hold from Underperform: Earnings volatility is limited for these companies compared with E&C(engineering & construction)/capital goods companies. We have reduced our price targets by 5-15%, and within this, we prefer Tata Power and Power Grid, given their stronger earnings traction on company-specific events and execution.
We have cut our FY14e and FY15e estimates for Tata Power, factoring in lower coal prices and higher currency assumptions. Mundra losses in FY14e make the base PAT (profit after tax) for the group fairly small and, hence, the estimate reduction is fairly sharp for FY14e. A sharp rise in FY15e profits is linked to the resolution for the Mundra UMPP project.
While we continue to like Power Grid, the 15% fresh public offering would cap upside in the near term, especially given the past government issuances going at a discount to market price. We upgrade Adani Port to Hold from Underperform, as slowing growth has been priced in the correction. Maintain Hold on NTPC.