Reliance Power's fourth quarter consolidated profit after tax is expected to fall 6.7 percent year-on-year to Rs 251 crore, according to a CNBC-TV18 poll. Sequentially, the bottomline could almost be flattish given no additional capacity and all operational capacity having regulated returns.
Net sales are seen going up 20.3 percent on yearly basis (down 5.6 percent quarter-on-quarter) to Rs 1,634 crore in the quarter gone by.
Operating profit may jump 17.1 percent year-on-year (down 0.1 percent Q-o-Q) to Rs 627 crore but margin may fall 100 basis points (up 210 bps sequentially) to 38.4 percent during January-March quarter.
Earnings estimates do not factor in any contribution from Sasan UMPP as the last unit was commissioned on March 30, 2015. Analysts expect Sasan’s consolidation to take place in FY16.
They expect strong earnings growth for Butibori while Sasan and Rosa suffered a shutdown, which is likely to impact generation for Q4.
They see case for decline in fuel cost on account of softening of international prices of coal.
Key overhangs on the stock price:
Post Sasan UMPP's completion, Reliance Power doesn’t have much visibility on further capacity addition. Company has an operating capacity of 5.9 GW and 9 GW under development along with 2.4 GW where implementation has been stalled due to gas unavailability.
Continued depreciation of rupee against US dollar over the past 2 months (down 2 percent) does not augur well for the overseas debt liability of the company.
Supreme Court order raised concern on usage of excess coal from Sasan UMPP-linked mines, and hence, uncertainty persisted.
Company may need funds for further equity deployment in the under-construction project.
Important events post March quarter
In April, Reliance Power terminated the PPA for 3,960 MW Tilaya UMPP, with the key reason being that land and related infrastructure had not been made available despite a 5.50year delay.
The company said this termination would reduce the future capex pipeline by Rs 36,000 crore.
In May, the government issued an extraordinary gazette notification to cancel the allocation of Chhatrasal coal block to Sasan UMPP. It has also withdrawn the permission to use excess coal from 2 other allocated mines (Moher, Moher Amlohri Extension) in a proposed 4 GW expansion (Chitrangi) of Sasan UMPP.
Upside from expansion of Sasan UMPP using excess coal from allocated mines was a corner stone of Reliance Power’s strategy when they bid and won the project in 2007 at Rs 1.19/kWh levelized tariff.
This does not impact the coal requirement for 4 GW operational Sasan UMPP.
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