MOSL: TORRENT POWER (Buy)-UnoSugen, merchant sales drive growth
TORRENT POWER: UnoSugen, merchant sales drive growth
(TPW IN, Mkt Cap USD2b, CMP INR291, TP INR357, 23% Upside, Buy)
Torrent Power's (TPW) 2QFY20 EBITDA was up 7% YoY to INR10.6b, led by the UnoSugen PPA, short-term sales and the better performance at DFs. This was partly offset by the impact from the new CERC norms on Sugen. PBT was up 6% YoY to INR5.3b (our estimate: INR5.1b). PAT increased 83% YoY to INR7.5b on account of deferred tax credit. The current quarter contains one-offs pertaining to (1) +INR1.7b on favorable APTEL order, (2) -INR1.6b related to provisions on SECI-III delay and (3) +INR2.8b on deferred tax credit. Excluding these, PAT would be up 14% YoY to INR4.7b (our estimate: INR4.1b).
- UnoSugen (PLF: 70%) PPA kick-started during the quarter. DGEN (PLF: 9%) also benefited from the sale of power in the merchant market.
- PLFs for TPW's wind/solar business declined 500bp/10bp YoY.
- Profitability for Sugen was impacted by the new CERC regulations, which has tightened O&M norms and increased sharing on efficiency gains.
Torrent Power Limited is a holding company. The Company is an integrated utility engaged in the business of power generation, transmission and distribution with operations in the states of Gujarat, Maharashtra and Uttar Pradesh. It is also engaged in the business of cables manufacturing with operations in the state of Gujarat. It has an aggregate generating capacity of approximately 3,334 megawatts (MW). The Company's generation facilities include an approximately 1,147.5 MW SUGEN Mega Power Plant near Surat; an over 382.5 MW UNOSUGEN Power Plant near Surat; an approximately 1,200 MW DGEN Power Plant at Dahej SEZ near Bharuch; an approximately 422 MW AMGEN Power Plant at Ahmedabad; an approximately 49.6 MW Wind Power Plant at Lalpur, Jamnagar; an approximately 51 MW Solar Power Plant at Charanka, Patan, and an approximately 81 MW GENSU Solar Power Plant near Surat. The Company distributes approximately 10 billion units of power to over 2.2 million customers.
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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