Jaiprakash Power Ventures may post Q1 loss at Rs 73.7 cr

Capacity may jump 60 percent on a Y-o-Y basis to 3,520 MW due to the commissioning of the Nigrie Plant. Both the units of Nigrie plants of 1,320 MW have come on stream resulting in higher capacity. Additional generation which comes from new plant – Nigrie – may help boost the topline.

Analysts expect 30 percent increase in generation to 3.6 billion units. However, the capacity may decrease by 1,300 MW from the next quarter as the company has already announced the completion of the deal with JSW Energy for sale of its two hydro projects. Despite the commissioning of the Nigrie Plant, analysts expect the plant to make a huge annual loss as only 37 percent of the project has tied up with a power purchase agreement. Nigrie reported plant load factor may be around 29 percent for Q1FY16 against 30 percent in Q4FY15.

Additionally, high interest and depreciation clubbed with losses from Nigrie may increase the losses. Interest and depreciation cost is likely to decline from the next quarter after the sale of 2 plants – Kharcham Wangtoo + Baspa II.

Key factors to watch out for would be near term cash flow management, clarity on recovery of mining expenses for recently bid Amelia coal mine and deal conclusion with JSW Energy & further plant sale.

In February 2015, Competition Commission of India approved JP Power’s hydro asset sale to JSW Energy. In November 2014, JSW Energy agreed to buy 300 MW Baspa II Hydroelectric projects and 1,091 MW Karcham Wangtoo Hydro-electric project from JPVL for Rs 9,700 crore.

The deal is likely to close by the end of August 2015. JPVL recently received permission from the Himachal Pradesh government to transfer the Karcham Wangtoo and Baspa power plants to JSW Energy.