MOSL: TATA POWER (Neutral)-Mundra-Coal JV hedge fares better-Mundra PPA renegotiation can provide relief
TATA POWER: Mundra-Coal JV hedge fares better; Mundra PPA renegotiation can provide relief; Maintain Neutral
(TPWR IN, Mkt Cap USD2.3b, CMP INR60, TP INR66, 11% Upside, Neutral)
2QFY20 consol. adj. PAT was up 27% YoY to INR3.5b (in-line) on better performance of the Mundra-Coal JV hedge. PAT has been adjusted for INR1.6b impact of taxes on KPC and coal SPVs, INR0.7b of dividend from Cennergi (held for sale) and INR0.5b of one-time gains on other income. Operational performance (EBITDA and PAT of JV companies) was up 10% YoY to INR21.6b (v/s est. INR21.1b).
- Adjusting for INR0.6b prior period related taxes at KPC, Mundra (EBITDA) and coal JVs (PAT) increased 12% YoY to INR4b. Given the decline in coal prices, there was no significant impact of DMO obligation for its JVs. Fuel under recoveries at Mundra stood at INR0.5/kWh (v/s INR0.9/kWh in 2QFY19).
- RE (ex-standalone) EBITDA was up 1% YoY to INR4.6b on lower Wind PLFs. Capacity increased 23% YoY to 2.1GW.
- Maithon EBITDA stood at INR1.8b (v/s INR1.6b in 2QFY19) on account of favorable order for capex approval.
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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