MOSL: Morning India (20/March/19): 1. Torrent Power (On growth track, again!); 2. Axis Bank (Focused execution to drive RoE improvement); 3. L&T (MindTree acquisition plan puts buyback option to rest); 4. MindT
MOrning India (20/March/19): 1. Torrent Power (On growth track, again!); 2. Axis Bank (Focused execution to drive RoE improvement); 3. L&T (MindTree acquisition plan puts buyback option to rest); 4. MindTree (Downgrade to Neutral); 5. JSPL
Today’s top research idea
Torrent Power: On growth track, again! Initiating coverage with a Buy rating
- Torrent Power (TPL) is engaged in generation and distribution of electricity. It has amongst the best balance sheets and RoICs in the private power sector, even as ~30% of the gross block remains unutilized and capex is on an uptrend.
- Given its presence across the value chain from generation to distribution, we believe the company is well poised to capitalize on opportunities stemming from distribution privatization, thrust on RE, and consolidation in the conventional generation sector.
- We expect EBITDA/PAT CAGR of ~12% to INR40.8b/INR13.3b over FY19-21. We value the stock on an SOTP basis at INR315/share. The SOTP method does not capture any value for the shut gas capacity of 1.8GW. Initiate with Buy.
Piping hot news
With a formal offer to SBI, Etihad seeks to fly out of Jet
Jet Airways’ financial problems took a turn for the worse on Tuesday with partner Etihad formally asking State Bank of India to purchase its stake in the airline and the pilots’ union threatening to strike work from April 1 if salary arrears are not cleared. The Abu Dhabi-based airline, which owns about 24% in Jet, has been a reluctant participant in discussions to resolve Jet’s financial woes. Etihad conveyed to SBI its decision to exit Jet in a meeting on Monday
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