Buy Jaiprakash Power; target of Rs 50: ICICIdirect.com

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Buy Jaiprakash Power; target of Rs 50: ICICIdirect.com

ICICIdirect.com is bullish on Jaiprakash Power Ventures and has recommended buy rating on the stock with a target of Rs 50 in its February 6, 2012 research report.

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ICICIdirect.com is bullish on Jaiprakash Power Ventures and has recommended buy rating on the stock with a target of Rs 50 in its February 6, 2012 research report.

"Jaiprakash Power Ventures, robust top line (better than our and street estimates), higher merchant realisation (Rs 4.7/kwhr), lower operating costs, higher interest expenditure, robust other operating income (+65% QoQ) has led to PAT of Rs 59.5 crore (well above our estimates and street estimates of Rs 18 crore). Increase in interest cost (+129% YoY) was on account of commissioning of Karcham Wangtoo. The stock is expensive as compared to NHPC on P/B basis. The full impact of Karcham Wangtoo commissioning will be visible in FY13. Delay in capacity addition (on coal based power plants), possibility of equity dilution to fund its investment in power projects are the key risks to the stock. Maintain Buy with a revised target price of Rs 50/ share."

"The company generated 1172 million units for the quarter (+75% YoY,-59% QoQ). Average realisation for quarter stood at Rs 3.17/kwhr (Sales realisation at 88% of generation). Average realisation from Karcham Wangtoo project was Rs 4.7/kwhr. The company has VERs worth Rs 29 crore during quarter. In FY12, the company expect ~Rs 43 crore as sales from VERs. For FY14, the company expects to earn Rs 200 crore per annum from Karcham Wangtoo project."

"At the CMP of Rs 45, the stock is trading at P/E of 31.1x and 16.6x on FY12E and FY13E EPS, respectively. Similarly, on P/B multiple the stock is trading at 2.1x and 1.6x FY13E, respectively. The execution capability of parent company (JAL) renders significant comfort to upcoming expansion plans. In FY13 and FY14 only 500 MW Bina Power Plant would be commissioned which we believe is a blessing in disguise for the company given the state of coal supplies for newly commissioned projects. We are only taking projects commissioning by FY15 in our valuation," says ICICIdirect.com research report. 

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