Lanco Infra up 20% as co turns corner after 3 yrs of losses

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Moneycontrol Bureau

Investors queued up for buying shares of Lanco Infratech on Tuesday as the infrastructure company turned profitable for the first time after losses in three years and favourable tariff order from UPERC. The stock is locked at 20 percent upper circuit.

The power producer has reported a consolidated net profit of Rs 98.98 crore for September quarter against loss of Rs 527.5 crore in year-ago period, driven by strong operational performance and favourable power tariff order.

Revenue increased 12.5 percent year-on-year to Rs 2,657.5 crore in second quarter of FY16.

The company said Kondapalli unit I has received a favourable order from Supreme Court directing AP utilities for MAT reimbursement of Rs 175 crore plus interest towards tax component forming part of tariff for the period FY 2001 to FY 2012. After the court order, it has recognised this amount as revenue during the quarter.

It further said Lanco Anpara Power (1200 MW), one of the step down subsidiary, has received tariff order from UPERC (Uttar Pradesh Electricity Regulatory Commission) to compensate for changes in RFP (request for proposal)/PPA (power purchase agreement) conditions in respect of coal supply and power purchase payments. Consequent to the order, the company recognised Rs 499.58 crore as one time tariff income for quarter ended September 2015.

Operating profit during the quarter shot up 246.5 percent to Rs 964.11 crore and margin expanded by 2450 basis points to 36.3 percent compared to same quarter last fiscal, supported by lower expenses.

Total expenses dropped 18.7 percent year-on-year to Rs 1,693.4 crore in quarter ended September 2015 due to fall in raw material cost (down 12 percent), depreciation cost (down 35.5 percent), construction & mining expenses (down 40.8 percent). Finance cost declined 20.4 percent to Rs 615.6 crore on yearly basis and foreign exchange loss stood at Rs 215 crore against Rs 190.5 crore in year-ago period.

Lanco Infratech said EPC order book of the company (including power and solar projects) stood at Rs 27,722 crore, adding financial closure of the cost overrun proposals of these projects will enable the execution of majority of this order book within the next three years.

It further said second quarter has seen significant jump of 366 percent (Q-o-Q) in EPC revenue on account of restart of work in group’s under construction stalled power projects (Amarkantak 3&4, Babandh, Vidarbha and Mandakini - totalling 4036 MW with an investment of approximately Rs 33,000 crore). EPC revenue increased 144 percent year-on-year.

The company has narrowed its loss to Rs 201.4 crore in H1FY16 from Rs 819.9 crore in H1FY15.

Lanco said the Supreme Court has directed South Eastern Coalfields to supply coal and Power Grid to provide transmission corridor to Amarkantak 300 MW Unit II, and accordingly SECL has started supplying coal from November 7, 2015 after a gap of 30 months.

Additionally, Lanco Infratech's subsidiary Lanco Solar Private Limited has signed a landmark agreement with Chhattisgarh government to set up 100 MW solar cell manufacturing plant.

For the integrated solar PV manufacturing project which re-started in July 2015, LITL has already done an investment of Rs 1200 crore to manufacture poly-silicon refining and wafer plant and 150 MW module plant, it said.

At 11:18 hours IST, the scrip of Lanco Infratech was quoting at Rs 6.39, up Rs 1.06, or 19.89 percent on the BSE. There were pending buy orders of 3,307,351 shares, with no sellers available.Posted by Sunil Shankar Matkar