Axis Securities recommended hold rating on KSK Energy Vent Ind with a target price of Rs 39 in its research report dated February 16, 2016.
Axis Securities's research report on KSK Energy Vent
KSK’s Q3 adj. loss of Rs1.3bn was in line with our estimate.After 10 quarters, EBITDA of Rs 5.2 bn (up 3-fold YoY) now covers interest cost on improved utilization (PLF) mainly at Mahanadi plant. However, leverage continues to be cause for concern (6.1xas of Sep-15). Management has now taken a view to further increase the capacity of Mahanadi plant to 2.4 GW from 1.2 GW. While the company has already incurred Rs 50 bn towards common infrastructure, it would need additional Rs 50 bn for expansion. This implies a capital cost of Rs 83 mn/MW as against earlier expectation of Rs 75 mn/MW. The company already has PPAs to support the expansion. However, it currently has temporary linkage for coal till Mar-16 and awaits a government policy on the same.
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