Buy KSK Energy, target of Rs 225: IIFL

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Buy KSK Energy, target of Rs 225: IIFL

IIFL has recommended a buy rating on KSK Energy with a 12-month target of Rs 225. KSK Energy (KSK) builds and operates power plants on the ‘group captive generation’ principle, making its revenue model a unique one in India.

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IIFL has recommended a buy rating on KSK Energy with a 12-month target of Rs 225 in its August 11, 2009 report.

"KSK Energy (KSK) builds and operates power plants on the 'group captive generation' principle, making its revenue model a unique one in India. It currently has 144MW capacity operational, and is set to commission an additional 675MW through 3QFY10-1QFY11 in phases. Successful completion of these projects would showcase KSK's ability to undertake 3.6GW projects at Chhattisgarh, and enhance visibility of projects for a further 6GW."

"KSK has already signed unique agreements with state mineral corporations, who would supply low-cost fuel and buy back power at predetermined rates. Such a revenue model would be outside the purview of the regulator, and earn significantly higher RoE. A conservative valuation that factors in projects aggregating only 4.3GW, for which KSK has fuel linkages and ordered equipments, gives an NPV of Rs 225 per share," says IIFL's research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment......