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21 September 2011
Recommendation CMP Target Upside Potential Sector Sensex Bloomberg code Reuters Code AT A GLANCE Issued Equity Capital (Rs .Mn) Mkt. Cap (Rs. in Bn) Mkt. Cap (In Bn USD) Major Shareholders Promoters (%) Free Float (%)
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Background: Adani Power (APL) is promoted by Adani Enterprises, which is the flagship company of Adani Group. APL has a capacity of 1,980 MW as on FY11 and is currently in the process of commissioning 6,600MW of power, which is in various stages of development. All of the Company's upcoming projects are coal-fired, with the 1,320MW Mundra-I project based on sub critical technology and the other projects based on supercritical technology. The Company is procuring equipment for its power plants from various Chinese manufacturers such as Dongfang and Shanghai Electric.
Plant Mundra I & II Mundra III Mundra IV Tiroda I & II Tiroda III Kawai
Utility Gujarat Urja Vikas Nigam Ltd Gujarat Urja Vikas Nigam Ltd Uttar Haryana Bijli Vitran Nigam Ltd & Dakshin Vitran Nigam Ltd Maharashtra State Electricity Distribution Company Ltd Maharashtra State Electricity Distribution Company Ltd JVVNL & AVVNL & JOVVNL*
*JVVNL Jaipur Vidyut Nigam Ltd; JOVVNL-Jodhpur Vidyut Vitran Nigam Ltd; AVVNL- Ajmer Vidyut Vitran Nigam Ltd; # PPA Power Purchase Agreement
Structural Advantage
Adani Power enjoys location advantage for most of its power projects as it derives benefits, such as, easy access to fuel & water and proximity to power deficit areas due to favourable location. Its Mundra Project is located close to the Mundra Port which is owned and operated by Mundra Port and Special Economic Zone Limited (MPSEZ), a promoter group company. Also, the company is positioning itself to cater to the need of a region with high power demand. It is evident from the fact, that 88% of its total planned capacity (9,240MW of 10,560MW) is being developed in Western India, which according to Central Electricity Authority (CEA), experiences highest power deficit in India. CEA does not anticipate power deficit situation in this region to improve below 11% in FY12.
Financial Overview
Revenues to grow due to Capacity Additions
APL in FY11 has an installed capacity of 1,980 MW and is likely to increase its capacity to 5,940 MW in FY12 and 6,600 MW in FY13. APL revenues are likely to increase to Rs. 72,820mn and Rs. 1,27,187mn in FY12 and FY13 respectively as against Rs. 21,352mn during FY11. We have assumed merchant power rates to be Rs.4 per unit in FY12 and FY13. Unit Mundra I & II Mundra III Unit-1 Unit-2 Mundra IV Unit-1 Unit-2 Unit-3 Tiroda I & II Unit-1 Unit-2 Unit-3 MW 1320 660 660 660 660 660 660 660 660 Expected Commissioning Date Commissioned Commissioned Nov-11 Jun-11 Sep-11 Nov-11 Sep-11 Dec-11 Jun-12
EBITDA Margins
59.00% 57.00% 55.00% 53.00% 51.00% 49.00% 47.00% 45.00% 2010 2011
EBITDA Margins
2012E
2013E
Key Risks
Fuel Shortages
APL has entered into fuel supply agreement (FSA) with Coal India for its upcoming projects. Any shortfall in supply of coal by coal India will result in the company purchasing coal from the spot market which would put pressure on its margins.
Financial Statement Income Statement Particulars Net Sales Other Income Total Income EBITDA Interest Depreciation PBT Tax PAT (Rs. Million) FY12E FY13E 72,820 127,187 1,238 2,162 74,058 129,349 42,073 65,103 8,514 17,028 8,664 11,854 26,134 38,383 6,272 9,212 19,862 29,171 Cash flow Statement Particulars Net Cash from Operations Net Cash from Investments Net Cash from Financing Net Flow Opening Balance of Cash Closing Balance of Cash Ratios Particulars OPM% EBIDTA% EBIT Margin% PBT Margin % NPM % Debt-Equity Ratio EPS (Rs.) (Rs. Million) FY12E FY13E 24,725 -87,370 87,363 24,718 12,551 37,268 38,644 -44,038 29,172 23,778 37,268 61,047
FY11 21,352 363 24,982 12,204 2,550 1,886 8,131 3,000 5,131
Balance Sheet Particulars Share Capital Reserves & Surplus Equity Application Money Total Debts Deferred Tax Liability (Net) Minority Interest Total Source of Funds Net Block CWIP Investments Net Current Asset Net Deffered Tax Misc.Exp not W/O Total Application of Funds
FY11 21,800 41,073 9 245,027 3,120 5,663 316,692 87,472 236,909 100 -7,789 0 0 316,692
(Rs. Million) FY12E FY13E 23,932 23,932 66,071 95,242 9 9 333,635 379,835 3,120 3,120 5,663 5,663 432,430 507,801 234,199 174,084 100 24,047 0 0 432,430 317,016 134,808 100 55,877 0 0 507,801
Cholamandalam Securites Limited Member: BSE, NSE, MSE Regd. Office: Dare House, 2 (Old # 234) N.S.C. Bose Road, Chennai 600 001. Website : www.cholawealthdirect.com E-mail id customercarewm@chola.murugappa.com
BEM Mr. Swetal Mr. Sathyanarayana.N Mr. Baskaran S Mr. Mohan V N Mr. Srinivasa Reddy D V Mr. Kumar Gaurav Ms. Sheetal Bheda Mr. Maneesh
PHONE NUMBERS 079 - 64500318 / 19 080- 41503340 / 44 044 - 26208911 / 14 0422- 4292041 040- 23316567/68 033- 44103638 / 39 022 -22617210 / 30729730/31 011 30461161/62/63/64 REGIONAL EQUITY MANAGER 9840019701 9930103070 9840494132 RESEARCH 044-3000 7353 044-3000 7363 044-30007266 044-30007361 COMPLIANCE 044 - 3000 7370
Mr.Balaji H
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balajih@chola.murugappa.com
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STOCK RATINGS : Outperformer:>15% upside over the next 12 months; Marketperformer: trade within a +/-15% range over the next 12 months; underperformer:>15% downside over the next 12 months.