MOSL: TATA POWER (Neutral)-Debt remains elevated; Mundra PPA renegotiation can provide relief
TATA POWER: Debt remains elevated; Mundra PPA renegotiation can provide relief; Maintain Neutral
(TPWR IN, Mkt Cap USD2.3b, CMP INR60, TP INR64, 7% Upside, Neutral)
Tata Power's (TPWR) 1QFY20 consol. operational performance (EBITDA and PAT of JVs) increased 19% YoY to INR23.4b, led by a better performance of the Mundra-Coal JV hedge and Maithon. Adj. PAT increased 19% YoY to INR2.6b (in-line).
- Mundra (EBITDA) and coal JVs (PAT) increased 27% YoY to INR4.2b. Given the decline in coal prices, there was no significant impact of DMO obligation for its JVs. Further, tariff escalation at Mundra - on account of timing difference - also lowered its under-recoveries, in our view.
- RE (ex-standalone) EBITDA increased 10% YoY to INR5.4b, led by a 21% YoY increase in generation to 994MU. Capacity increased 13% YoY (8% QoQ) to 2.1GW.
- Maithon EBITDA rose sharply to INR3.3b (vs. INR1.9b) on account of the favorable order related to capex approval (INR1.4b benefit).
- Interest cost rose 13% YoY to INR11.4b. Tax came in at INR3.4b on account of INR1.1b of dividend distribution tax for its coal SPVs.
Tata Power is an integrated power utility based in India. Co. has an installed generation capacity of 8,584 MW in India and a presence in all the segments of the power sector viz. Fuel and Logistics, Generation (thermal, hydro, solar and wind), Transmission, Distribution and Trading. Co. maintains public-private partnerships in Generation, Transmission and Distribution in India. Co. is also active in renewable energy in India and has developed and fully commissioned a 4,000 MW Ultra Mega Power Project at Mundra (Gujarat) based on super-critical technology. Co.'s international presence includes strategic investments in Indonesia, Singapore, South Africa, Australia and Bhutan.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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