Tata Power Company Ltd. share price target

6 June 2018 Over the last year, TPWR has accelerated the pace of sale of non-core assets. The reported consolidated net debt to equity will decline from 2.7x in FY17 to 2.3x post divestments. TPWR is also evaluating the performance of its overseas power assets for possible consolidation/monetization. CGPL continues engaging beneficiaries for a sustainable resolution of partial under- recovery of fuel cost. CGPL is optimizing fuel cost by blending of low GCV coal, which is available at a steeper discount. CGPL is also in discussion with DISCOMs to sell power beyond minimum commitment of 80% at merchant tariff. The regulated PPA for the Trombay power plant with BEST is valid until March 2019 (after the recent extension by one year). BEST is seeking competitive bids, but, based on the initial results (two rounds have been completed), the competitive price may be higher than regulated supply by Trombay.

Mundra UMPP Continues to Incur Higher Loss; Maintain HOLD Tata Power Company (TPCL) has posted consolidated (reported) Rs14.8bn net profit in 4QFY18 vs. Rs2.3bn net loss in 4QFY17 led by exceptional gains to the tune of Rs12.4bn. Its consolidated revenue rose by 14.2% YoY to Rs78.5bn vs. Rs68.8bn in 4QFY17. However, adjusted PBT declined by 31.5% YoY to Rs2.5bn from Rs3.6bn in 4QFY17 owing to lower dividend from associate companies, higher losses at Mundra Plant (CGPL) along with higher interest and depreciation cost. Looking ahead, we believe that any meaningful upside in valuation is capped owing to near-term overhang relating to losses at CGPL. Thus, we maintain our HOLD recommendation...

Tata Power's 4QFY18 consol. adj. PAT declined 8% QoQ/30% YoY to INR2.7b (below our estimate of INR4.5b) due to higher losses at Mundra, lower coal production, and losses at some of the overseas JV companies. PAT is adjusted for (a) impairment reversal of INR18.8b, (b) impairment at Georgia Hydro of INR5.2b and (c) INR2.3b of other one-off items. Net debt (incl. perpetual securities) was unchanged YoY at INR501b. Consol. PAT increased ~3% YoY to INR14.4b for FY18.

Consolidated net profit (reported) including Rs2.9bn gain on recognition of deferred tax assets on indexation benefit on the investments and adverse impact of tariff order in MPL of Rs960mn declined by 1.2% YoY to Rs6.1bn led by continued loss in CGPL. Standalone PAT surged by 73% YoY to Rs5.2bn mainly due to higher one-off gains of Rs1.9bn, lower loss at CGPL (Rs2.1bn vs. Rs 2.4bn in 3QFY17) despite higher coal prices and higher contribution from coal business at Rs3.3 bn (vs. Rs 2.2 bn in 3QFY17). Profit from renewable portfolio surged to Rs720mn from Rs140mn in 3QFY17, off-set by Rs310mn loss at Maithon (vs. Rs740mn profit in 3QFY17) and lower PAT of...

Q3 PAT at Rs 6.3 bn beat our estimate of Rs 5.7 bn mainly due to lower-than-expected losses at Mundra UMPP on improving operational metrics. Up-to-mark performance by coal companies (EBITDA up 55% YoY) helped to partially offset Mundra losses and one-off at Maithon plant.

Tata Power Company Ltd Q3FY18 results comment Revenue fell by 8.57% to Rs. 6949.91 Cr in Q3FY18 when compared to the previous quarter. On the other hand, it grew by 5.71% when compared with Q3FY17.

Dispose its Strategic Engineering Division (SED), part of its standalone operations. It generated EBITDA of ~INR600m in FY17. Sell its investment in Tata Ceramics, ~57% subsidiary. It had a carrying value of INR91m, revenue of ~INR464m and PAT loss of INR5.9m in FY17. Sell investment in Tata Projects, ~48% associate. It has a carrying value of ~INR4.9b, revenue of ~INR60b and PAT of ~INR1.3b in FY17. Sell stake in Panatone Finvest, ~39% associate that owns ~88m shares in Tata Communication (TCOM). At TCOM's CMP, the attributable value is ~INR23b

Consolidated revenue grew by just 1% YoY in Q2FY18 primarily due to weak performance by its Delhi discom and power trading businesses. Improved earnings of coal companies and renewable businesses helped to offset...

Q2 PAT at Rs 2.7 bn was above our estimate of Rs 2.2 bn despite one-off of Rs 1.5 bn (Rs 1.1 bn Docomo and Rs 350 mn Rithala plant), but sharply below sreet's expectation at Rs 4.4 bn.

TPCL's standalone revenue came in at Rs18.2bn vs. Rs17.9bn 2QFY17. PAT before exceptional item of Rs1.1bn stood at Rs1.6bn (on higher interest on Walwhan acquisition debt and other borrowings) vs. Rs4.9bn in 2QFY17 (on higher dividend from subsidiaries and interest income of Rs0.9bn from CGPL). Renewable business reported Rs1.7bn profit vs. Rs0.8bn in Q2FY17. Consolidated PAT before one-off impact of Rs1.5bn, which includes provisioning for DoCoMo & Rithala plant declined to Rs3.8bn vs. Rs4.3bn in 2QFY17. Notably, MPL, IPTC (Zambia), and...