Reliance Power Q1: Analysts expect better results

Private power producer Reliance Power is going to announce its first quarter earnings for the financial year 2012-13 today. Analysts on an average expect the consolidated profit after tax to grow by 15% year-on-year to Rs 225 crore, but quarter-on-quarter the same is likely to fall by 2.6%.

Consolidated net sales are seen going up by 85.5% YoY and 88.7% QoQ to Rs 1,005 crore in the quarter ended June 2012.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to go up by 96.4% YoY and 103% QoQ to Rs 363 crore during the same quarter.

EBITDA margin is expected to increase 200 basis points year-on-year and 260 basis points quarter-on-quarter to 36.1% in the April-June quarter.

Analysts expect a better quarter for the company as plant load factors (PLFs) for its Rosa plant is expected to be higher.

Growth in generation (QoQ) will be driven by commissioning of Rosa-II in March 2012. All four units of company's Rosa II plant are now operational with a capacity of around 600 MW.

Reliance Power's execution is on track with synchronisation of Unit-1 of Butibori plant announced in the last week of June 2012.

Analysts feel the fall in international coal prices is expected to lead to declining fuel costs and thus that will aid margins.

Negative for Reliance Power

Aggressive capacity addition on gas-based power projects is a key concern given the low gas availability in the country.

Analysts expect low visibility on huge project pipeline and slow progress in ultra mega power projects (UMPPs).

Disallowance of diversion of coal from captive mines for UMPPs to other projects can significantly impact valuations.