EBITDA for Q3 increased by 22% y-o-y to Rs 11.9 billion while revenue was up by 11% y-o-y to Rs 26.5 billion. Higher revenue was supported by higher-than-expected realisation of Rs 4.09/unit compared to Rs 3.99/unit in Q2FY16. Generation also increased by 11% y-o-y to 6BU though it was partially contributed by additional generation from newly acquired hydro plants (609MU).
Average fuel cost for coal-based plants declined 11% y-o-y to Rs 2.05/unit during Q3FY16 due to declining international coal prices. However, profit fell by 16% y-o-y due to additional depreciation, interest and other cost on account of hydro plants which did not contribute much to earnings due to seasonality. Reported net profit came in at Rs 3.2 billion, which was still 10% higher than consensus at Rs 2.9 billion.
We maintain ‘buy’ rating on the stock with a target price of Rs 105 which implies PE of 10.7x and PB of 1.7x for FY17e.
JSW acquired 1.3GW hydro projects from JPVL at the far end of hydro season during Q2FY16. As a result the company lost out on earnings from this project for FY16, while it will bear costs including interest and depreciation for Q3 and Q4.