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Sell Adani Power; target of Rs 57: Emkay
Emkay Global Financial Services is bearish on Adani Power and has recommended sell rating on the stock with a target of Rs 57 in its February 8, 2012 research report.
Emkay Global Financial Services is bearish on Adani Power and has recommended sell rating on the stock with a target of Rs 57 in its February 8, 2012 research report.
"Adani Power (APL) has reported net loss of Rs3.6bn during 3Q12 against our expectations of Rs1.9bn of profit. This was primarily due to i) higher adj. fuel cost (69% sequential increase to Rs2.14/unit) and (2) forex loss of Rs2.9bn (including prior period forex adj. related to fuel). Higher supply of Indonesian spot coal (67%) vs. Bunyu coal (33%) led to substantial increase in fuel cost. Adj. net loss stood at Rs0.6bn. We have revised our assumptions for fuel cost, operating parameters, tax, COD timelines. Consequently our revised FY12E/13E EPS stands at Rs2.4/Rs6.8, cut by 62%/43% respectively."
"We believe that APL is still looming with lot of uncertainties with too many ifs and buts in terms of offtake, fuel and operating parameters. 3Q12 results vindicate our view and we believe that more negative surprises are in the offing for next 2-3 qtrs at least. At Rs73/share, stock is trading at 2.1xFY13E book (likely to be cut further) - most expensive Indian power utility. We downgrade the stock from 'Reduce' to 'Sell' with revised DCF based TP of Rs57/Share. At Rs57/Share, the stock will trade at 1.6x combined equity of all it's under construction projects including Kawai," says Emkay Global Financial Services research report.
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