29 April 2013
4QFY13 Results Update | Sector:
Utilities
Jaiprakash Power
BSE Sensex
19,287
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
S&P CNX
5,871
JPVL IN
2,938.0
78/1.4
46/26
4/-36/-46
CMP: INR26
TP: INR40
Buy
Financials & Valuation (INR b)
Y/E March
2013 2014E 2015E
34.4
27.3
6.9
2.3
95.2
24.0
10.2
7.4
11.3
1.1
11.9
74.6
49.2
11.3
3.8
64.6
25.7
15.5
11.3
6.9
1.0
6.8
Sales
24.6
EBITDA
19.3
NP
3.5
EPS (INR)
1.2
EPS Gr. (%)
(12.4)
BV/Sh. (INR)
22.0
RoE (%)
5.9
RoCE (%)
6.3
Valuations
P/E (x)
22.1
P/BV (x)
1.2
EV/EBITDA (x) 14.4
Loss higher than estimated:
On a standalone basis, Jaiprakash Power Ventures
(JPVL) reported a loss of INR1.2b, higher than our estimate of a loss of
INR663m. The reported number includes INR250m of arrears paid towards
transmission charges. Adjusted for this, the loss was INR973m. The higher
than estimated loss was due to lower generation from hydropower projects,
lower merchant realization for Karcham Wangtoo and mismatch in revenue
recognition for the Bina project.
During the quarter, the PLF of Bina was on the lower side due to lower demand
from the MP DISCOM, though PAF remained strong.
Project execution on track:
Project execution is on track, with Unit-1 of the
Nigrie project expected by November 2013 and Unit-1 of the Bara project by
April 2014. Also, coal production at Amelia mine (Nigrie project) is likely to
start by May 2013. For Dongri Tal mine, land acquisition is in progress and the
management expects coal production to commence from 3QFY14.
Cutting estimates; reiterate Buy:
We lower our PLF/generation assumption
for hydropower projects and build in 10% cost increase for the Bara project.
Our FY14E/15E earnings are, therefore, cut 13%/8% and we reduce our target
price to INR40 (from INR44 earlier). Reiterate
Buy,
as JPVL is best placed on
the PPA/FSA front.
Nalin Bhatt
(NalinBhatt@MotilalOswal.com); +91 22 39825429
Aditya Bahety
(Aditya.Bahety@MotilalOswal.com); +91 22 39825417
Investors are advised to refer through disclosures made at the end of the Research Report.
1

Jaiprakash Power
4QFY13 performance disappoints
For 4QFY13, JPVL reported standalone revenue of INR3.7b, lower than our estimate
of INR4.5b. Lower revenue was on account of lower hydropower generation (K
Wangtoo generation for 4Q at 165MU v/s our estimate of 262MU) and lower
merchant realization for K Wangtoo project. Merchant realization for FY13 was
INR3.44/unit v/s INR3.79/unit for FY12 and our estimate of INR3.70/unit.
Also, the sale of VER income was lower (INR53m v/s our estimate of INR554m)
due to non-continuation of Kyoto protocol, resulting in lower realization for VERs.
Accruals/revenue booking on the first unit of the Bina project meant recovery of
just 50% of costs, while costs have been capitalized to the extent of 60%+. This led
to further mismatch in revenue and fixed cost.
The management indicated that hearings for the final tariff are underway and
should be concluded in a month. The mismatch in revenue recognition and fixed
cost should reverse from next year.
In addition, the company accounted for long-term open access charges payable to
Power Grid Corporation for evacuation of power from the K Wangtoo project,
including arrears. It booked total transmission charges of INR767m in 4Q, of which
INR250m are arrears.
EBITDA for the quarter was INR1.6b v/s our estimate of INR3.9b. Standalone
reported PAT loss was INR1.2b owing to MAT credit availed by JPVL (PBT loss of
INR2b). Adjusted for transmission charges and arrears of INR250m, loss was
INR973m, higher than our estimate of INR663m.
On a consolidated basis, FY13 revenue was INR24.6b (v/s our estimate of INR24.8b),
EBITDA was INR19.3b (v/s our estimate of INR20b) and adjusted PAT was INR3.5b
(v/s our estimate of INR4.2b).
Losses in 2HFY13 owing to Bina project,
lower hydropower generation
EBITDA/unit largely flat in FY13
Lower generation in 2HFY13 due to hydropower capacity
Bina generation lower due to backdown, PAF higher
29 April 2013
2

Jaiprakash Power
Bina PAF higher, project execution on track
During the quarter, the PLF of Bina TPS was on the lower side due to poor drawal
schedule from DISCOMs, though PAF remained strong. The second unit for the
project has been commissioned during the first week of April 2013. This takes
JPVL's operating capacity to 2,200MW.
Execution on the Nigrie project is progressing well, with hydro test for the unit-1
boiler now complete. Also, the boiler and structural work are completed to the
extent of 70% and 85%, respectively. Commissioning of the first unit is expected
by November 2013 and second unit by March 2014. As at March 2013, total capex
on the Nigrie project was INR63b.
On the mining front, the overburden removal for Amelia mines has begun on 24
January 2013 and coal production will begin in May 2013. For Dogri Tal mines, the
non-forest area land acquisition has begun and coal production is expected to
commence by 3QFY14.
In the Bara project, physical work on unit-1 is halfway through, with unit-2 and
unit-3 at various stages of completion. The management indicated that capex
incurred on the project as at March 2013 stood at INR48b.
D/E on the higher side
FY12
FY13
Debt (INR m)
Gross
174,661 232,221
Net
165,469 223,219
DER(x)
Gross
3.2
3.6
Net
3.0
3.5
Source: Company, MOSL
INR9.5b raised through QIP
During the quarter, JPVL raised USD175m (INR9.5b) through a QIP at an issue price
of INR32/share, entailing an issue of 313.2m shares. This amounts to a dilution of
12% on paid-up capital.
D/E for FY13 was 3.6x as compared with 3.2x in FY12. The total equity investment
made in Nigrie is ~INR23b (total equity investment required is ~INR30b) and Bara-
I is ~INR14.3b (total equity investment required is INR27b).
Cutting FY14/15 earnings estimates by 8-13%, target price to INR40;
maintain Buy
We lower our PLF/generation assumptions for hydropower projects. On merchant
sale, we retain our realization assumption of INR3.5/unit. While the management
has not yet indicated any cost increase for Bara, we build in 10% increase due to
project delays and cost escalation.
We cut our earnings estimates for FY14 and FY15 by 13% and 8%, respectively.
Consequently, we reduce our target price from INR44 to INR40. We continue to
believe that JPVL remains one of the best placed IPPs in the current uncertain
macro environment.
The stock trades at 11.3x FY14E and 6.9x FY15E EPS, and at 1.1x FY14E and 1x FY15E
BV.
Buy.
29 April 2013
3

Jaiprakash Power
Jaiprakash Power: an investment profile
Company background
Jaiprakash Power Ventures (Bloomberg: JPVL) is part
of the Jaypee Group. The promoter group holds 65% in
JPVL - 60.7% through holding company, JP Associates,
and 4.28% through JP Infra Ventures. JPVL's current
operating capacity is 2,200MW.
Key investment risks
60% of PPA capacity and 41% of total capacity is
signed with UPDISCOMs, which are among the
highest loss-making DISCOMs, and receivables have
been an issue for several IPPs.
Karcham Wangtoo project PPA is sub-judice and we
currently assume merchant sales. Any adverse ruling
will have an impact on earnings and valuations.
Key investment positives
2x increase in capacity over FY14-15:
JPVL is
currently executing 3.3GW of thermal projects,
comprising of 1.3GW Nigrie, linked to a captive coal
block and 1.98GW Bara (Case-2 bid and thus, fuel
supply not a responsibility of developer). CoD for
Nigrie and Bara unit-1 is targeted in November 2013
and April 2014. Thus, JPVL's installed capacity
would grow to 5.5GW by FY15.
Well placed on PPA/FSA front:
JPVL's project
portfolio has a balanced mix of capacity on LT and
ST basis and is backed by fuel supply sources. Thus,
JPVL scores well on the PPA/FSA matrix in the
current uncertain macro environment.
Consolidated PAT to grow 3.2x over FY13-15:
Backed by capacity addition growth, we expect
JPVL's consolidated PAT to increase 3.2x to
INR11.4b in FY15 v/s INR3.5b in FY13.
Recent development
Bina I unit-2 of 250MW was commissioned in the
first week of April 2013.
Valuation and view
The stock trades at 11.3x FY14E and 6.9x FY15E EPS,
and at 1.1x FY14E and 1x FY15E BV.
Buy
with a target
price of INR40.
Sector view
The Power sector has begun to witness several
initiatives by the authorities to address concerns on
SEBs, fuel supply pacts and PPAs. It would, however,
be a while before clarity on several issues emerges.
In this environment, we continue to prefer CPSUs,
which are relatively better positioned on these
fronts.
EPS: MOSL forecast v/s consensus (INR)
MOSL
Forecast
2.3
3.8
Consensus
Forecast
2.6
3.9
Variation
(%)
-13.1
-3.5
Target price and recommendation
Current
Price (INR)
26
Target
Price (INR)
40
Upside
(%)
53.8
Reco.
Buy
FY14
FY15
Stock performance (1 Year)
Shareholding pattern (%)
Mar-13
Promoter
Domestic Inst
Foreign
Others
29 April 2013
65.0
7.9
8.7
18.4
Dec-12
72.7
5.4
1.6
20.3
Mar-12
76.1
4.0
0.9
19.0
4

Jaiprakash Power
Financials and Valuations
29 April 2013
5

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