14 August 2015
1QFY16 Results Update | Sector:
Utilities
RattanIndia Power
BSE SENSEX
28,067
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD
b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val,(INRm)/Vol ‘000
S&P CNX
8,519
RTPOW IN
2,952.9
26.4/0.4
14 / 6
-11/-25/-35
29/2691
42.5
CMP: INR7
TP: INR14 (+88%)
Buy
Stabilization, one-offs impact performance
Consolidated EBIDTA below estimate:
RattanIndia Power (formerly Indiabulls
Power) reported consolidated revenue of INR3b, higher than estimate of
INR2.6b—partly led by high net generation at ~544MUs v/s estimate of 510MUs.
RTPOW also booked prior period revenue and compensatory tariff totaling to
~INR800m. However, consolidated EBIDTA stood at INR879m v/s estimate of
INR1.2b led by higher fuel cost (INR2.8/unit v/s estimate of INR1.7/unit).
Stabilization of three units commissioned at Amaravati project in March 2015
increased fuel cost.
Higher interest cost, deferred tax liability led to higher PAT loss:
Interest cost
inched up due to capitalization of three units at Amaravati, while depreciation was
lower due to change in accounting policy. PBT loss, thus, stood at INR2.6b v/s
estimate of INR2.2b. We had assumed NIL tax, while RTPOW provided for deferred
tax liability of INR70m—driving PAT loss to INR2.6b v/s estimate of INR2.2b.
Amravati PLF up in July; 2QFY16 operational performance to look up:
In 1QFY16,
Amravati average PLF was ~20% as Unit-1 ran at full load with available coal
supply. Coal supply improved to 0.3m tons in July and further in August (2-3
rakes/day being received v/s 4-5 rakes/day requirement); thus, generation/PLF is
expected to look up in 2QFY16 as all units achieve full load. For July 2015 itself, the
average PLF increased to 45%.
Cut estimate:
We lower our FY16/17 estimates to factor higher project cost and
slower ramp-up in operations. We now expect loss of INR1.6b in FY16 (v/s
INR1.4b earlier) and PAT of INR5.5b in FY17 (v/s INR7b earlier). Commissioning of
Nashik project by March 2016 and signing of PPA are the key triggers/monitorable.
The stock trades at P/E of 3.5x and P/BV of 0.4x on FY17E basis.
Free float (%)
Financials & Valuation (INR Billion)
Y/E MAR
Net Sales
EBITDA
Adj PAT
EPS (INR)
Gr. (%)
2015
6.3
0.3
(6.6)
(2.5)
-
2016E 2017E
27.8
15.1
(1.6)
(0.6)
(77)
17.2
(3.4)
6.0
(12.6)
0.4
67.8
29.0
5.5
2.1
(456)
19.0
11.6
12.8
3.5
0.4
BV/Sh.(INR) 17.8
RoE (%)
(13.2)
RoCE (%)
P/E (x)
P/BV (X)
(0.6)
(2.9)
0.4
Estimate change
TP change
Rating change
Nalin Bhatt
(NalinBhatt@MotilalOswal.com); +91 22 3982 5429
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

RattanIndia Power
Consolidated EBIDTA loss higher than estimate:
RattanIndia Power (formerly Indiabulls Power) reported consolidated revenue of
INR3b, higher than estimate of INR2.6b. This is partly led by high net generation
at ~544MUs, vs estimate of 510MUs.
Also, RTPOW has booked prior period revenue and compensatory tariff, totaling
to ~INR800m. Average realization for 1QFY16 thus stood higher at
~INR4.30/unit, vs INR2.91/unit QoQ and INR3.5/unit YoY.
Maharashtra Electricity Regulatory Commission (MERC) has rejected
Maharashtra DISCOMs plea to review compensatory tariff.
However, consolidated EBIDTA stood at INR879m, vs estimate of INR1.2b led by
higher fuel cost (INR2.8/unit, vs estimate of INR1.7/unit). Stabilization of 3 units
commissioned at Amaravati project in March 2015 increased fuel cost
Interest cost inched up due to capitalization of 3 units at Amaravati, while
depreciation was lower due to change in accounting policy. PBT loss thus stood
at INR2.6b, vs estimate of INR2.2b. We had assumed NIL tax, while RTPOW
provided for deferred tax liability of INR70m, aiding PAT loss to INR2.6b, vs
estimate of INR2.2b.
Exhibit 2: Gross realisation aided by prior period revenues
Realization per unit (INR)
Gross margin per unit (INR)
Fuel cost per unit (INR)
Exhibit 1: PLFs pick up in July 2015 (%)
Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16
Source: MOSL, Company
Source: MOSL, Company
Exhibit 3: Higher fuel cost impacts PAT
EBITDA per unit (INR)
PAT per unit (INR)
Exhibit 4: CoD of 3 units at Amravati ups cost in 1QFY16
Depreciation (INR m)
Interest cost (INR m)
1,198 1,219 1,221
429
391
378
210
202
117 193
60
599
606
605
87
1,822
872
2,682
Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16
CT-Compensatory Tariff,
Source: MOSL, Company
Source: MOSL, Company
14 August 2015
2

RattanIndia Power
Amravati PLF up in July, 2QFY16 operational performance to look up
In 1QFY16, Amravati average PLF was ~20% as Unit-1 was run at full load with
available coal supply.
Coal supply has improved to 0.3m tons in July and further in August. Average
rake supply stands at 2-3 rakes/day vs requirement of 4-5 rakes/day to achieve
full load.
Thus, generation/PLF is expected to look up in 2QFY16 as all units achieve full
load. For July 2015 itself, the average PLF has gone up to 45%.
Valuations and view
Well placed on several fronts:
IBPOW’s capacity will grow to 2.7GW by CY15, 3x
the current 1.6GW. It is favorably placed with 2.1GW of net capacity (~85% of
total capacity) tied up under LT PPA with reasonable tariff and 9.6mtpa of
domestic linkages/FSA for projects. In addition, IBPOW has land and requisite
clearances for ~4GW of capacity, offering visibility on growth option.
Bid tariffs entail near regulated return:
IBPOW’s bid tariffs for power projects
are skewed in favor of variable component, providing leverage to high
generation/PLF. Secured PPA, sub-INR4/unit average tariff, and PPAs with
financially better placed DISCOMs would trigger higher generation, as demand
outlook improves. Also, approval of compensatory tariff towards cost of
imported coal aids project profitability. Core returns/profitability from
generation are close to regulated returns (RoE of ~20%) and offer comfort.
Possibility of alternate PPA for Nashik project with Uttar Pradesh Power
Purchase Corporation (UPPCL) could provide significant fillip to project/overall
profitability and valuations.
Earnings growth back-ended, Nashik PPA crucial:
FY17 will be full year of
operations for both Amravati project and Nashik project and thus, near term
earnings growth will remain constrained. We expect loss of INR1.6b in FY16E
and PAT of INR5.5b in FY17E. Commissioning of Nashik project by March 2016
and signing of PPA are key triggers/monitorable. Stock trades at PER of 3.5x and
P/BV of 0.4x on FY17E basis.
14 August 2015
3

RattanIndia Power
Story in Charts
Exhibit 5: Capacity of 2.7GW by March 2016
Amravati
1620
270
810
270
540
Mar-14
Mar-15
Mar-16
Source: MOSL, Company
7.1
1350
1350
2.1
743
FY15
Nashik
2700
1350
Exhibit 6: PLF to look up in FY17E
Weighted Avg Cap (MW)
PLF
(%)
33%
46%
Generation (BUs)
73%
17.1
1,755
FY16E
2,700
FY17E
Source: MOSL, Company
Exhibit 7: Interest cost absorption to be better
2.79
Interest (INR b)
Interest/unit
Exhibit 8: Project returns at near regulated levels (INR b)
8
5
Amravati PAT
RoE (%)
Nashik PAT
20%
10%
0%
-10%
-20%
FY14
FY15
FY16E
FY17E
1.73
0.98
3
0
-3
-5
5.5
FY15
11.2
FY16E
15.4
FY17E
Source: MOSL, Company
-8
Source: MOSL, Company
Exhibit 9: Return ratios to look up
RoE (%)
RoCE (%)
Core RoE (%)*
6.0
11.6 12.8 12.3
Exhibit 10: Cashflow robust, leverage manageable
Free cash flow (INR b)
2.8
9.4
DSCR (x)
DER (x)
(0.6)
(3.4)
(4.0)
2.5
0.0
3.2
(13.2)
(13.9)
FY16E
FY17E
2.5
1.4
27.8
(2.7)
FY16E
FY17E
FY15
FY15
*On project equity
Source: MOSL, Company
Source: MOSL, Company
14 August 2015
4

RattanIndia Power
Financials and Valuations
Income Statement
Y/E MARCH
Net Sales
Change (%)
Operating Expenses
EBITDA
% of Net Sales
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
PAT before Min. Int.
Minority Interest
Reported PAT
Change (%)
Adjusted PAT
Change (%)
Balance Sheet
Y/E MARCH
Share Capital
Reserves
Net Worth
Minority Interest
Loans
Deferred tax liability
Capital Employed
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital Work in Progress
Exp during construction
Investments
Goodwill on Consolidation
Deffered Tax Assets
Inventory
Debtors
Other Current Assets
Loans and Advances
Cash
Current Assets
Curr. Liabilities
Provisions
Current Assets
Net Curr. Assets
Misc. Expenses
Application of Funds
E: MOSL Estimates
2011
0
363
-363
2012
0
382
-382
2013
0
1,668
-1,668
2014
3,388
2,961
427
12.6
665
1,315
588
-965
45
-4.7
-1,010
0
-1,010
13.2
-1,013
13.4
2015
6,252
5,997
255
4.1
1,898
5,459
613
-6,488
151
-2.3
-6,640
0
-6,640
LP
-6,640
-
2016E
27,805
12,662
15,143
54.5
5,001
11,229
88
-999
555
-55.5
-1,554
0
-1,554
-76.6
-1,554
-
(INR Million)
2017E
67,835
38,852
28,982
42.7
7,054
15,377
248
6,799
1,267
18.6
5,532
0
5,532
-456.1
5,532
-456.1
(INR Million)
2017E
26,427
23,701
50,128
19
123,202
0
173,348
174,950
16,766
158,184
0
0
0
0
0
957
2,788
0
0
14,613
18,357
3,193
0
3,193
15,164
0
173,348
9
13
442
57
6
10.8
51
1
50
-86.7
50
-86.7
12
47
1,678
1,238
362
29.3
876
6
870
1,636.6
870
1,636.6
13
60
676
-1,065
-175
16.4
-890
2
-892
-202.6
-893
-202.6
2011
20,229
18,949
42,223
8
10,350
1
52,582
1,702
36
1,665
15,162
4,116
13,261
3
23
0
0
1,139
27,709
2,658
31,506
12,995
159
13,154
18,352
52,582
2012
22,273
21,814
44,087
13
19,920
9
64,030
2,127
79
2,047
60,285
10,063
2,438
3
45
0
0
292
31,364
4,178
35,834
46,159
526
46,685
-10,851
64,030
2013
26,427
27,657
54,084
16
57,085
0
111,186
2,212
128
2,084
90,949
20,415
203
3
107
153
0
664
34,057
4,725
39,599
41,755
419
42,174
-2,575
111,186
2014
26,427
27,296
53,723
19
106,791
1
160,534
47,583
832
46,751
67,976
23,224
203
3
79
224
1,056
1,648
30,148
2,949
36,024
13,318
409
13,726
22,298
160,534
2015
26,427
20,656
47,083
19
118,577
0
165,678
123,840
4,710
119,130
34,156
0
0
0
0
112
277
0
0
12,440
12,829
435
0
435
12,393
0
165,678
2016E
26,427
19,102
45,530
19
128,197
0
173,745
174,950
9,711
165,239
0
0
0
0
0
304
1,143
0
0
8,100
9,547
1,041
0
1,041
8,506
0
173,745
14 August 2015
5

RattanIndia Power
Financials and Valuations
Ratios
Y/E MARCH
Basic (Rs)
Adjusted EPS
Growth (%)
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation (x)
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Leverage Ratio
Debt/Equity (x)
2011
0.0
0.0
20.9
0.0
0.0
2012
0.4
0.4
19.8
0.0
0.0
2013
-0.3
-0.3
20.5
0.0
0.0
2014
-0.4
-0.1
20.3
0.0
0.0
2015
-2.5
LP
-1.8
17.8
0.0
0.0
2016E
-0.6
-76.6
1.3
17.2
0.0
0.0
2017E
2.1
-456.1
4.8
19.0
0.3
15.0
298.5
252.8
-79.1
0.0
0.4
0.0
18.8
18.7
-102.6
0.0
0.4
0.0
-21.9
-22.2
-45.5
0.0
0.4
0.0
-19.3
-56.2
292.1
36.8
0.4
0.0
-2.9
-4.1
541.7
22.1
0.4
0.0
-12.6
5.7
9.8
5.3
0.4
0.0
3.5
1.6
4.9
2.1
0.4
4.2
0.1
0.1
2.0
2.2
-1.8
-1.1
-1.9
0.3
-13.2
-0.6
-3.4
6.0
11.6
12.8
0.2
0.5
1.1
2.0
2.5
2.8
2.5
CASH FLOW STATEMENT
Y/E MARCH
PBT before Extraordinary Items
Add : Depreciation
Interest
Less : Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
CF from Investments
(Inc)/Dec in Networth
(Inc)/Dec in Preference Capital
(Inc)/Dec in Debt
(Inc)/Dec in Differed Tax Liability
Less : Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
2011
57
9
13
-6
-1,662
-1,590
-13,568
-15,157
-1,311
-14,879
-3,280
0
-8,344
0
13
0
11,611
-4,857
7,515
2,658
2012
1,238
12
47
-362
30,722
31,657
-51,464
-19,807
10,801
-40,662
-994
0
-9,569
-8
47
0
10,525
1,519
2,658
4,178
2013
-1,065
13
60
175
-7,729
-8,546
-41,065
-49,611
2,172
-38,893
-10,890
0
-37,166
9
60
0
47,986
548
4,178
4,725
2014
-965
665
1,315
-45
-26,649
-25,679
-25,168
-50,847
28
-25,140
-651
0
-49,706
-1
1,315
0
49,043
-1,776
4,725
2,949
2015
-6,488
1,898
5,459
-151
19,396
20,112
-17,232
2,880
285
-16,947
0
0
-11,785
1
5,459
0
6,326
9,491
2,949
12,440
2016E
-999
5,001
11,229
-555
-453
14,224
-16,955
-2,731
0
-16,955
0
0
-9,620
0
11,229
0
-1,609
-4,340
12,440
8,100
(INR Million)
2017E
6,799
7,054
15,377
-1,267
-145
27,819
0
27,819
0
0
0
0
4,995
0
15,377
934
-21,306
6,513
8,100
14,613
14 August 2015
6

RattanIndia Power
Corporate profile: RattanIndia Power
Company description
RattanIndia Power is one of the leading developers
of power projects in India. It is presently
developing 2.7GW of projects – 1.35GW each at
Amravati and Nashik. Of these, it has already
commissioned three units of 270MW each (two at
Amravati and one at Nashik) and its current
operating capacity stands at 810MW. The second
unit at Nashik is scheduled for commissioning in
3QFY15, taking IBPOW’s operating capacity to
1.1GW. All units of Amravati project are likely to be
commissioned by the end of FY15 and the balance
three units at Nashik should be commissioned by
CY15.
Exhibit 11: Sensex rebased
Exhibit 12: Shareholding pattern (%)
Jun-15
Promoter
DII
FII
Others
57.5
15.0
3.0
24.5
Mar-15
57.5
15.2
2.9
24.4
Jun-14
60.8
16.7
2.5
20.0
Exhibit 13: Top holders
Holder Name
FIM Ltd
Indiabulls Real Estate Ltd
LNM India Internet Ventures Ltd
Goldman Sachs India Fund Limited
Aquarius Ventures Pte Ltd
% Holding
13.3
7.4
4.6
1.4
1.2
Note: FII Includes depository receipts
Exhibit 14: Top management
Name
Rajiv Rattan
Jayant Kawale
Designation
Vice Chairman & Whole Time Dir
Managing Director
Exhibit 15: Directors
Name
Rajiv Rattan
Jayant Kawale
Saurabh K Mittal
Prem Prakash Mirdha
Shamsher Singh Ahlawat
*Independent
Name
Brigadier Labh Singh Sitara
V C Vishwakarma
D Ravi
Exhibit 16: Auditors
Name
Deloitte Haskins & Sells
Type
Statutory
Exhibit 17: MOSL forecast v/s consensus
EPS
(INR)
FY16
FY17
MOSL
forecast
-0.6
2.1
Consensus
forecast
-
-
Variation
(%)
-
-
14 August 2015
7

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