MOSL: TATA POWER (Neutral)- Higher interest cost and FX drive miss; Proceeds from non-core asset sale driving de-leveraging
Tata Power: Higher interest cost and FX drive miss; Proceeds from non-core asset sale driving de-leveraging; Maintain Neutral
(TPWR IN, Mkt Cap USD2.8b, CMP INR71, TP INR75, 6% Upside, Neutral)
Tata Power's (TPWR) 1QFY19 consol. adj. PAT increased 35% YoY to NR2.2b. This was below our estimate of INR4.4b, primarily due to higher interest cost and FX loss. PAT is adjusted for gain on sale of investment of INR18.9b net of tax of INR4.1b. Net debt was down ~INR12.2b on proceeds from sale of investments.
- Coal+Mundra: Mundra (EBITDA) and coal (PAT of JVs) combined were unchanged QoQ. Mundra's FoB cost of coal declined QoQ on discounted cargos, even as global thermal coal prices were higher. However, PAT of coal mining companies declined QoQ as Indonesia adopted domestic market obligation (DMO) requiring sale of 25% of quantity in domestic market at lower price of USD70/t (~USD10/t lower than spot prices of coal in sea-borne market).
- RE (ex-standalone): RE EBITDA was unchanged YoY at INR4.9b, but PAT improved on saving in interest cost. Capacity increased by 19% YoY to 1.87GW and generation by 18% YoY to 820MU. It has secured solar capacity PPAs of 400MW to be executed over the next two years.
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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