Q3FY13 generation down by 16.1% YoY, flattish PAT: SJVN's reported revenue de-grew by 3.3% YoY, as the generation dipped by 16.1% on the back of a 20.5% YoY dip in water discharge. However, realisation per unit was up by 15.1% YoY, leading to a lower sales de-growth at Rs3.6bn. PAT came in at Rs1.9bn which was flat YoY on account of lower interest charges. PAF for the quarter stood at 105% (approx) and for 9MFY13 was at 108%. Incentives for 9MFY13E were Rs1.2bn, mainly on account of higher-than-expected UI charges.
FY13E - a lower generation year: The river discharge in October has been lower on account of snow and thus, in FY13E, the generation will not surpass the MOU target of 6612MUs in a big way. Also, the incentives on secondary charges will be lower to that extent. This is as per our expectation (at the beginning of the year) and hence, there will be no impact on our PAT estimates.
Updates: SJVN has Rs4bn outstanding from Delhi, UP and HP SEBs. The company has chalked out plan for adding 47.6MWs of wind power for which the orders are being placed and COD is expected in Q2FY14E. Capital expenditure outlay for FY14E is Rs9bn and CWI is at Rs26bn. Additional ROE of 1% is not applicable to NJHEP. Cash stands at Rs24bn.
Valuation and Recommendation: Rampur HEP in FY14E will aid FY15E and to some extent, FY14E earnings as well. The generation this year will be a dampener on the earnings; however, the impact on the stock price would not be material as it provides a steady state dividend yield play. The stock is trading at 1x FY14E. We maintain 'Accumulate' on the stock.