Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Union Budget
Budget 2011-2012 Home
Industry Expectations - Budget 2011-2012
Industry Reactions - Budget 2011-2012
Budget 2010-2011
Budget 2010-2011 Home
Industry Expectations - Budget 2010-2011
Industry Reactions - Budget 2010-2011
Contributor's Corner
Bonanza Portfolio
Hemant K Gupta
Krish Bhatt
S A A R T H I
Trinity Investments
Exchange Information
BSE 2009 Holidays
NSE 2009 Holidays
Investor Guide
Depository & Dematerialisation
Grievance Redressal
Investor Guide
SEBI
Trading of Securities
Transfer of Securities
Your Rights
Budget 2009-2010
Budget 2009-2010 Home
Industry Expectations - Budget 2009-2010
Industry Reactions - Budget 2009-2010
Interim Budget 2009-2010 Home
Industry Expectations - Interim Budget 2009
Budget 2008-2009
Railway Budget 2008-2009
Industry Expectations - Budget 2008
Union Budget 2008-2009
Highlights of Budget 2008-2009
Summary of Budget 2008-2009
Industry Reactions - Budget 2008
IPOs
Current IPOs
Past IPOs
IPO Subscription
Mutual Funds
Gold Exchange Traded Fund
MF Unique Holding
Forthcoming Dividends
ELSS Schemes Comparison
Tax Plans
New Fund Offers
Research
Arbitrages
Equity
Market Whispers
Tax Planning
Home
Equity Linked Savings Scheme
Post Office MIS
9% GOI Senior Citizens Savings Scheme
8% Savings (Taxable) Bonds
Kisan Vikas Patra
National Savings Certificate
Public Provident Fund
Research

| More

Apex court disallows rise in imported coal tariff, though awards compensation for lack of domestic coal

Posted On: 2017-04-12 21:49:30

In stark contrast to the judgement of the Appellate Tribunal of Electricity and Central Electricity Regulatory Commission, the Supreme Court ruled against allowance of tariff revision for increase in coal prices imported from Indonesia to both Tata Power and Adani Power for their power projects at Mundra.

The Supreme Court has however allowed awarding a tariff revision for higher fuel cost incurred due to non-availability of domestic coal. The Court has taken recourse to change in government policies (construed as change in Indian Law) that restricted supply of domestic coal and allowed imported coal substitution to be compensated under competitive bids. The fine print of the order makes little change to our interpretation for Tata Power, though it brings relief for Adani Power as not all PPAs will be denied compensatory tariff.

We highlight that Adani Power had recognized compensatory tariff of Rs14.6 bn for 9MFY17 (Rs30 bn for FY2016) against EBITDA of Rs54 bn for 9MFY17 (Rs85 bn in FY2016). Tata Power on the other hand did not recognize any compensatory tariffs but had an average under-recovery of Rs9 bn or Rs0.5/kwh for 9MFY17 (Rs7 bn or Rs0.3/kwh for FY2016) against EBITDA of Rs5 bn for 9MFY17 (Rs11.3 bn for FY2016).

Tata Power will have to seek alternate loss mitigating factors; Adani Power goes back to CERC

Tata Power will likely look for alternate loss mitigating factors such as (1) looking for fuel sources that are more cost competitive, (2) maintaining an optimum generation level to recover capacity charge without losing too much on fuel cost under-recovery, (3) utilizing the losses to set-off against alternate income to minimize overall tax incidence, and (4) re-financing of debt and the appreciation of local currency that will further help the overall loss equation.

Adani Power while adopting loss mitigating measures listed above will seek relief for compensatory tariffs due to poor availability of domestic coal for sale of power to Haryana (1,424 MW). The same principle will be applicable in the case of Tiroda and Kawai where the company had to resort to coal imports. It remains unclear on the sustenance of compensatory tariff, as domestic coal availability has improved since the government policy released in 2013.

Downgrade rating on Tata Power to REDUCE, maintain SELL rating on Adani Power

We lower rating on Tata Power to REDUCE (from ADD) with a revised target price of Rs80/share (from Rs87 previously). The sustained earnings drag from Mundra UMPP prompts our rating downgrade. We do concede that lowered generation cost and potential tax credits for Mundra UMPP, could help alleviate our concerns on fuel cost under-recovery. Upside risk to our call and target price also emanates from potential value unlocking of the holding of Tata Power in its parent company Tata Sons. Our target price would have declined more drastically by Rs15/share on account of the revision in fair value of Mundra UMPP, but for the upward revision of Rs7/share in value of cash and investments that are now valued at Rs30/share.

We maintain our rating and target price on Adani Power, as the SC verdict refers back the quantification of compensation under 'change in law' for non-availability of domestic coal.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Company Update: Maruti Suzuki India Limited (MSIL) - BUY - TP Rs.9061 - Kotak
Power: Monthly Tracker, September 2017 - Kotak
Consumer Products (Cautious): Observations: field trip to Patna - Kotak
Reliance Home Finance (RHFL) listed today and it is trading at 4.6x FY2017 book value: Angel Broking
Stocks Picks - TVS Motors, TCS & DCB Bank - Arihant Capital Markets Ltd
Result Update: AksharChem India Ltd - ACCUMULATE - TP Rs.800 - Kotak
Initiating Coverage: VIP Industries Ltd - BUY - TP Rs.325 - Kotak
Company Update: KNR Constructions Ltd - BUY - TP Rs.236 - Kotak
Top Stock Picks by Arihant Capital Market
Chhota (to) MOTA ideas - CALL UPDATE: Venky's India Ltd - BUY - TP Rs.2650 - Kotak
Gabriel India Limited (GABR IN) - Shift in strategy to accelerate the growth - Initiating Coverage - CSEC Research
Banks : Some signs of life; but still weak | Sanctions made in the private corporate sector undertaken by banks/FIs - Kotak
Petroleum minister's clarification on not interfering with auto fuels pricing is a relief
Energy - OMCs (BPCL | HPCL | IOCL): A false but worrying alarm - Kotak
Company Update: Mangalore Refinery and Petrochemicals Ltd (MRPL) - BUY - TP Rs.155 - Kotak
RIL scales uncharted highs - Jio Dhan Dhana Dhan: Angel Broking
Energy-Petroleum consumption: Weakness in industrial fuels; base affects auto fuels - Kotak
Company Update: GE Shipping Company (GESCO) - BUY - TP Rs.530 - Kotak
The Pitch: BSE Ltd - BUY - TP Rs.1170 - Kotak Securities
Cess hike breather for automobile companies, removes hangover on the stocks: Angel Broking
Demerger in CESC Ltd - Kotak PCG Research
Cement:Prices remain soft - Kotak
FIEM Industries Ltd - Result Update - Kotak PCG Research
Ashok Leyland reports fastest growth after Oct-16 - Auto sales numbers analysis: Angel Broking
Bajaj Auto reports recovery in 2W exports - Auto sales numbers analysis: Angel Broking
MSIL August-17 indicates faster recovery from GST blues: Angel Broking
Dr. Reddy's Laboratories, gets a favourable district court verdict for Suboxone: Angel Broking
Company Update: FIEM Industries Ltd - BUY - TP Rs.1254 - Kotak
Sun Pharma: 1QFY2018 Result Update - Angel Broking
Cipla: 1QFY2018 Result Update - Angel Broking
Consumer Products (Cautious): 1QFY18 review - Muted quarter, but better than subdued expectations - Kotak
Result Update: Time Technoplast Ltd - ACCUMULATE - TP Rs.210 - Kotak
Result Update: PNC Infratech Ltd - ACCUMULATE - TP Rs.154 - Kotak
Result Update: Praj Industries Ltd - REDUCE - TP Rs.73 - Kotak
Result Update: Blue Star Ltd - ACCUMULATE - TP Rs.741 - Kotak
Result Update: AIA Engineering Ltd - SELL - TP Rs.1130 - Kotak
Result Update: KNR Constructions Ltd - ACCUMULATE - TP Rs.236 - Kotak
Result Update: Finolex Industries Ltd - BUY - TP Rs.712 - Kotak
HSIL Q1 FY18 Result Update Rating - HOLD - Arihant Capital Markets
CEO & MD of Infosys Resigns: Angel Broking
Indoco Remedies: 1QFY2018 Result Update - Angel Broking
Aurobindo Pharma: 1QFY2018 Result Update - Angel Broking
Insurance: Widening the base - Kotak
Banks : NIM-short term tailwinds and cyclical headwinds : Deciphering the cause of recent compression of NIM - Kotak
Jagran Prakashan Q1 FY18 Result Update Rating - HOLD - Arihant capital Markets
NCLT admits RCOM merger petition with Aircel: Angel Broking
Views on Sun Pharmaceutical Industries Limited 1QFY2018 Results: Angel Broking
Economy: RBI surplus transfer: real danger of fiscal slippage - Kotak
Views on Cadila Healthcare Ltd 1QFY2018 Results: Angel Broking
Views on Cipla Ltd 1QFY2018 Results: Angel Broking


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2017