JPVL: Maintain outperformer on better Q1 profitability, says IDFC Securities

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Published: August 8, 2015 12:14:59 AM

Jaiprakash Power Ventures (JPVL) reported 431 MU at Baspa HEP (+15% y-o-y), 1696 MU at Karcham HEP...

Jaiprakash Power Ventures (JPVL) reported 431 MU at Baspa HEP (+15% y-o-y), 1696 MU at Karcham HEP (+34% yoy) and 577 MU at Vishnuprayag HEP (+17% y-o-y) led by higher availability of water during the quarter. Bina TPS reported a mere 142 MU (PLF of 13%; PAF of 100%, leading to full fixed cost recovery) due to low demand in Madhya Pradesh. Nigrie TPS generated 832 MU (PLF of 29%) due to lack of PPAs for open capacity during the quarter.

Power sale to Haryana, UP and Rajasthan for net capacity of 504 MW under long-term PPA from Karcham HEP has begun. Sale to Punjab under long-term PPA is likely to start in next 3 months. Kharcham HEP’s average realization was Rs 3.28/ unit in Q1FY16, resulting in in-line revenues of Rs 490 crore.

Nigrie reported revenues of Rs 400 crore (against our estimate of Rs 230 crore) on account of higher fixed cost recovery (better availability). As a result, the loss at Nigrie plant was Rs 140 crore as against our estimate of R240 crore.
Hence, adjusted ebitda of Rs 900 crore was ahead of our estimate of Rs 760 crore. Further, higher other income led to a net profit of Rs 6,470 crore.

JPVL has been deleveraging its balance sheet by selling Karcham and Baspa hydro power plants and repaying high-interest corporate debt. Also, JPVL has won Amelia Coal Block to secure fuel supply for the Nigrie power plant, which has helped company to secure 60% of fuel supply. The stock is trading very cheap at 0.3x FY16 P/ B and the completion of sale of Kharcham and Baspa II by July 15 will act as a trigger for the stock.  Maintain ‘outperformer’ with a revised target price of Rs 20.

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