Torrent Power Ltd. share price target

Torrent Power is one of the leading brands in the Indian power sector.

UnoSugen PPA kicks off but RE projects may be at risk EBITDA increased 9% YoY to INR8.3b (our estimate: INR8.1b) in 1QFY20, led by (a) increased merchant power sales, (b) higher renewable generation and (c) investments in the distribution license business. However, the gains from these segments were partly offset by the impact from the new CERC regulations on...

The PPA is for the remaining life of the plant of 19 years. The annual fixed charge (AFC) is approved at the lower of CERC determined tariff or INR2.28b. The AFC approved by CERC is INR3.46b in FY19, but TPW has offered a discount as part of negotiation in the interest of consumers. The approved AFC equals to INR1.1/kWh (@ 85% PLF). Variable cost will be a pass-through. According to the tariff order, the PPA is subject to the purchase cost from UnoSugen (gas cost + fixed charges) not being more than the cost of medium-term power. The implied landed cost of power (incl. transmission) based on the recent medium-term contract will be ~INR5/kWh. This becomes the ceiling price for TPW. The company will have to enter into medium-term LNG contracts which are subject to the movement in crude oil prices (i.e.

EBITDA grew 3% YoY to INR31.9b, while PAT was down 5% YoY to INR8.9b in FY19. The numbers are not comparable to the previous year, as the company used to follow cash-accounting for its regulated distribution business until FY18. Assuming similar accounting even in the previous year, TPW's EBITDA would have increased by ~10% and PBT by ~29%. The strong underlying performance was driven by: INR1.4b from the distribution franchisee, as AT&C; losses in Bhiwandi and Agra were down by ~240bp/480bp to 14.9%/16.1% in FY19. INR0.9b from the regulated distribution circles of Ahmedabad and Surat, led by...

Torrent Power 19 March 2019 TPL has a diversified portfolio spanning (i) regulated electricity distribution, (ii) franchisee-based distribution (DF), (iii) a mix of gas- and coal-based conventional generation and (iv) renewable energy (RE) generation. The companys regulated distribution business is among the most efficient in India, delivering steady growth and generating assured returns. TPLs RE capacity is likely to more than double in two years to 1.4GW; it has an attractive mix of (a) feed-in tariff-based capacities generating a high RoE and (b) under-construction competitively bid projects at >12% equity IRR. It has a mix of gas- and coal-based conventional generation capacity of ~3.1GW. The sourcing of imported LNG has improved the PLF of its gas plant which is under PPA, the DF business performance has improved now with the risk of contract expiry behind, and the likely doubling of RE capacity has bolstered the growth prospects.

Torrent Power Limited is an India-based company engaged in the electricity generation, transmission and distribution.

Torrent Power Limited is an India-based company engaged in the electricity generation, transmission and distribution.

Torrent Power Limited is an India-based company engaged in the electricity generation, transmission and distribution.

Revenue rose by 25.54% to Rs. 3528.13 Cr in Q1FY19 when compared to the previous quarter. Torrent Power Ltd Q1FY19 results Comment

Torrent Power Ltd Q2FY18 results comment Revenue fell by 4.7% to Rs. 2915.1 Cr in Q2FY18 when compared to the previous quarter