The market cap of Anil Ambani-led Reliance Power, one of the major private power producers in the country, has fallen by 93.3% since its IPO in 2008.
On October 11, the market cap was Rs 7,265 crore on the BSE, down from Rs 1,07,856 crore on the day of listing.
However, Reliance Power’s net worth improved from `13,533 crore in FY09 to `22,482 crore in FY18. The debt to equity ratio is lower at 1.24 times as against 3.3 times in 2008.
The company runs a 3,960 MW ultra mega power project in Salaya, 1,200 MW Rosa power plant in Uttar Pradesh and 600 MW plant at Butibori in Maharashtra, apart from a few solar and wind projects.
The company had offered bonus shares in the ratio of three shares for every five shares held shortly after listing to reduce the cost of RPower shares to `269 for retail investors and to `281 for other allottees.
Analysts believe the stable operating profit at `4,633 crore in FY18 will continue in coming quarters. Debt repayments at special purpose vehicle levels bought down the debt to equity ratio to 1.4 times in FY18 from 1.6 times in FY16.
JP Morgan in a report dated August 17 said Reliance Power is currently getting paid less than what it is billing for both of its regulated thermal projects in Butibori and Rosa. “Around `500 crore of fuel costs billed by the company for its 600 MW Butibori project in Maharashtra has so far been disallowed by the regulator. In Q1FY19, the figure was around `30 crore. For the 1,200 MW Rosa power plant in Uttar Pradesh, billed revenue includes higher interest on working capital than what is accepted by the regulator, and the outcome of an appeal filed with APTEL is pending,” the report said.
The brokerage also said, “The corporate-level debt of Reliance Power has increased by `600 crore in FY18 to `2,500 crore to fund debt repayments for the mothballed Samalkot gas project in Andhra Pradesh and yet-to-be-capitalised 100 MW concentrated solar project (CSP) in Dhursar.”
The way forward for the company hinges on legal outcomes for the Rosa and Butibori projects where the timelines are uncertain. Besides, Reliance Power has non-core investments including Indonesian coal assets and under-development hydro projects that it hopes to monetize to unlock up to `1,200-1,500 crore and reduce corporate-level debt.
“If execution of the 750 MW proposed gas plant in Bangladesh commences this fiscal, then CoD is likely by FY21, and this could reduce the quantum of capital locked in idle Samalkot equipment,” the JP Morgan report said.
Analysts believe the commencement of construction of a gas project in Bangaladesh will improve revenue visibility. The company has initiated the terminal use agreement with PetroBangla for setting up of 500 mmscm/d floating storage and gasification unit-based LNG terminal in Kutubdia, Bangladesh.
Reliance Power has already finalised the EPC contractors for both the LNG terminal and power project while approval has been received from the Asian Development Bank for financial assistance.