Q3FY2011 Power earnings preview: Sharekhan
Sharekhan has come out with report on earning estimates for Dec' 10 Quarters. According to the research firm, we expect power generation in India to touch approximately 199.527 billion units (BU) during Q3FY2011.
January 13, 2011 / 16:08 IST
Sharekhan has come out with report on earning estimates for Dec' 10 Quarters. The research firm expects power generation in India to touch approximately 199.527 billion units (BU) during Q3FY2011.
Sharekhan report on Q3FY2011 power earnings preview:"We expect power generation in India to touch approximately 199.527 billion units (BU) during Q3FY2011. This reflects a growth of 5.2% year on year (YoY) backed by nearly 6% incremental capacity over the last year. Sequentially, we expect all-India power generation to inch up by 1.15%. Power deficit is likely to hover around 7% in Q3FY2011. We believe electricity deficit should remain marginally low at 7% due to the impact of the winter season.""In such a scenario, where power deficit is expected to remain flattish, short-term power price (popularly called merchant power) should be under pressure. Merchant power prices during Q3FY2011 remained broadly around Rs3 per unit or below, touching as low as Rs1.5 per unit in between. Due to the onset of the winter short-term power prices should remain low in the third quarter, consequently pressuring the margin of the power generators, especially companies selling in the open market. However, even regulated power producers (selling through long-term power contracts) are likely to experience a higher input cost and other operating expenses. Hence, they are likely to experience margin pressure during Q3FY2011. In contrast, power transmission companies are likely to report a decent growth in their top line and bottom line over the last year."
"We believe the transmission and distribution (T&D) engineering, procurement and construction (EPC) contractors should do well during the third quarter. Traditionally, during the post-monsoon months these companies speed up projects especially in difficult terrains. Hence, we expect the transmission companies to report a healthy growth in both the top line and the bottom line."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 
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