Power - Initiation of reforms gathers pace: ICICIdirect.com
Power: NTPC's generation fell 4.2 percent YoY due to 1.1 percent YoY decline in coal-based generation and 34.1 percent YoY decline in gas-based generation. Tata Power reported 114.5 percent YoY growth in generation, following the commissioning of the entire 4000 MW Mundra plant, says ICICIdirect.com.
June 27, 2013 / 19:23 IST
ICICIdirect.com's report power sector
The recent reform measures taken by the government such as allowing pass through of the imported coal cost under modified FSA, finalising the new standard bidding document, etc. are positive steps towards allaying the growing investor concern in the sector. However, the sector still faces constraints in terms of 1) gas availability and pricing, 2) environment clearances, 3) SEB's financials and 4) rising debtors for utilities. The top picks in our coverage universe are Power Grid (defensive nature, no fuel risk, higher capitalisation leading to earnings growth) and NTPC (inexpensive valuation, risk averse regulatory business model and strong capacity addition during FY14-15).Generation: Overall generation increased 5.7 percent YoY in May 2013, as growth across coal and hydro based plants was offset by a decline across other sectors. While coal-based generation was up 10.8 percent YoY, hydro-based generation increased 7.9 percent YoY. However, gas and nuclear-based generation declined 36.7 percent and 8.8 percent YoY, respectively, due to declining output from the KG basin and lower fuel suppliesCompany performance: NTPC's generation fell 4.2 percent YoY due to 1.1 percent YoY decline in coal-based generation and 34.1 percent YoY decline in gas-based generation. Tata Power reported 114.5 percent YoY growth in generation, following the commissioning of the entire 4000 MW Mundra plant. The strong growth in generation of Adani Power and JP Power reflects capacity additions while gas-based plants of GMR, Lanco and GVK Power continued to suffer from gas supply constraints. JP Power, NHPC and SJVN's generation increased 64.9 percent,11.1 percent and 29.7 percent YoY, respectively, due to improved water level at reservoirsPLF: The PLF declined steeply across all sectors except hydro, resulting in YoY decline in industry PLF to 51.5 percent vs. 53.6 percent in May 2012. While PLF of coal-based plants declined to 68.2 percent vs. 70.6 percent, gas-based PLF declined to 29.7 percent from 51.2 percent YoY. Hydro PLF improved to 37.4 percent vs. 35.1 percent YoY. Nuclear PLF declined significantly to 74.4 percent vs. 81.5 percent in May 2012 due to lower fuel receipt.Deficit: Both energy/peak deficits saw steep declines to 5.7 percent/ 6.0 percent in May 2013 vs. 8.4 percent/6.9 percent in April 2013, respectively. Consequently, merchant rates declined by 13.7 percent MoM to Rs 2.7/unitFuel supply, prices: Coal inventory continued its improving trend in May 2013, with 17 out of 99 coal-based plants facing sub-critical inventory levels (vs. 29 plants in May 2012 and 18 in April 2013). International coal prices at USD76.55/tonne were down 9 percent YoY mainly due to lower demand from China resulting in excess supply in the market. The declining trend in natural gas production continued, with output for May 2013 down 19 percent YoY to 97 mmscmdCapacity: In May 2013, capacity addition was 1,508 MW well ahead of targeted 1,060 MW. YTD FY14 capacity addition was 1,790 MW vs. target of 1,093 MW. In the Eleventh Plan (2007-12), the industry achieved 86 percent of targeted capacity, adding approximately 67.5 GW (including approximately 17 GW renewable) vs. target of 78 GW. The government has set a target of 88.5 GW for the Twelfth Plan. Currently, all-India installed capacity stands at 225.1 GW Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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. 
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