ACCUMULATE Nava Bharat Ventures Ltd. - Lower tariffs, PLFs and MAT credit- the culprits - Emkay

CMP: Rs180
Target Price: Rs210

- 2Q12 APAT of Rs362mn (down 59% yoy) is below est. on low merchant realizations (Rs3.3/unit vs. Rs3.7/unit expected), lower PLF (82% vs. 87% expected) and lower MAT credit (Rs15mn vs. Rs150mn expected)

- Contract with TISCO to start from mid 3Q - to provide some hedge for falling power profitability but insufficient. We increase our fuel cost & reduce tariff assumptions – earnings cut of 49%/32% in FY12E/FY13E

- Zambia coal trading to start from 4Q12 and to reach 1mnMT in FY14E. 64MW COD still pending - expected in 4Q. Indonesian investment safe, NBVL to get 20% offtake also

- Though NBVL is affected by all power sector concerns but is better placed in terms of fuel security (washery rejects and Zambia hedge) and offtake (natural hedge - ferro alloys). Maintain Accumulate.

Source : Equity Bulls

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