Emkay's research report on Reliance Power
Reliance Power’s Q3FY15 APAT of Rs 2.5bn (-5% YoY) was in line with our estimates
Operational performance of Rosa and Butibori was strong in the quarter with Rosa reporting a PAF of 90% and Butibori 95%
Key catalyst for the stock would positive compensatory tariff ruling wrt rupee depreciation and change in operational date for its Susan UMPP
We remain positive on the stock given limited downside and potential for creating value, and hence like the stock from a longer-term perspective. Value of base case projects (Rosa, Butibori, Sasan UMPP, Indonesian mines) plus cash & equivalents at Rs61/Sh.
"Rpower’s assets are reasonably good, earnings are bit back-ended, with major growth likely only in FY18. Also, none of the current/foreseeable problems is likely to impact Rpower given its: fuel (captive - control on supplies/cost), merchant prices (no merchant capacity), discom’s health (contributor to improvement) and drying up case I bids (13,800MW PPAs/LOIs). Triggers in near to medium term - 1) Sasan II construction start, 2) signing of FSA for its Butibori plant unit-2, and 3) CERC’s order on Sasan tariff hike. We remain positive on the stock given limited downside and potential for creating value, and hence like the stock from a longer-term perspective. Value of base case projects (Rosa, Butibori, Sasan UMPP, Indonesian mines) plus cash & equivalents at Rs61/Sh. Maintain Buy with a target price of Rs 102", says Emkay Global Financial Services research report.
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