Buy Indiabulls Power; target of Rs 21: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's report on Indiabulls Power (RattanIndia Power)

"RattanIndia Power (formerly Indiabulls Power) reported consolidated revenue of INR1.8b, lower than the estimate of INR2.5b. While generation for the quarter stood at 625MUs, v/s our estimate of 586MUs, lower FC recovery could have led to lower revenue. This, we believe, could be due to lower plant availability, partly aided by seasonality. Lower average realization for 2QFY15 at INR2.93/unit, v/s INR3.26/unit QoQ reflects the same, despite lower generation in 1QFY15 at 447MUs. Consolidated EBITDA loss thus stood at INR36m, v/s our estimate of positive contribution of INR1b. Also, it is vital to note that the company reported positive standalone EBITDA of INR411m, indicating positive contribution from Amravati project. Fuel cost improved to INR1.59/unit, v/s INR1.94/unit QoQ and INR2.50/unit YoY and better than the estimate of INR1.90/unit."

"FY17 will be full year of operations for both Amravati and Nashik projects and thus near term earnings growth will remain constrained. We currently expect PAT break-even in FY15 and PAT of INR5b in FY16E. Stock trades at PER of 6.5x and P/BV of 0.6x (RoE of 9%) on FY16E basis. Reiterate Buy (With a target price of Rs 21) as the company is insulated from the current macro uncertainty in the sector. We await clarity on a) FC component/PAF for Amaravati project, b) status on project capacity ramp-up, c) compensatory tariff hike booking and d) progress on Nashik PPA", says Motilal Oswal research report.

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