MOSL: Morning India (30/June/17)-1. Tata Power-2. Tech Mahindra-3. Telecom- 4. Automobiles
​MOrning India (30/June/17): 1. Tata Power; 2. Tech Mahindra; 3. Telecom; 4. Automobiles
Today’s top research idea
- ​Tata Power: Challenges remain, Trombay Unit-6 PPA at risk; Maintain Sell
- We met Tata Power’s (TPWR) management and visited its Trombay power plant. While generation assets at Trombay are uncompetitive, their PPAs are likely to get extended for a few years due to transmission constraints. However, the PPA for Unit-6 is at risk.
- The Mundra project can potentially save from opportunistic spot sourcing of coal. Arutmin sale is on track as small tranches of payments have started flowing. TPWR is now focusing on deleveraging instead of pursuing growth in the highly competitive solar energy space.
- We have cut PAT estimates by 6%/4% for FY18/19E to INR17b/INR18b as we factor in sale of Arutmin and expiry of Trombay Unit-6 PPA. As TPWR is struggling for RoE-accretive growth, we value the stock at INR68/share based on 1.1xFY19E book value. Maintain Sell.
Piping hot news
Government hikes GST rate on construction sector from 12 pct to 18 pct
The landmark tax reform measure that will unify the $2 trillion Indian economy and 1.3 billion people into a single market for the first time ever – Goods and Services Tax (GST) – will roll out from July 1.
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