Result Update JSW Energy Company Reports
JSW Energy : Lower Fuel, Higher Merchant Priced In
Reco : Hold Cmp : 63 Target : 61
JSW EnergyⳠQ2 adjusted PAT of Rs 1.8 bn (excl. forex gain) was below our estimate of Rs 2.2 bn due to higher than expected fuel cost at Rs 2.4/unit vs. our estimate of Rs 2.2/unit. Key highlights of Q2 were: (a) merchant realization at Rs 4.6/ unit (Rs 4.4 QoQ), (b) marginal decline in fuel costs (down 2% QoQ) as the company used high quality expensive coal during the monsoons to operate the plants at high PLFs, and (c) upward revision in ad-hoc tariffs for Rajasthan project Rs 3.63/unit for Unit# 1-4 and Rs 3.86/unit for Unit 5-8 (vs. Rs 3.34/unit earlier). PBT breakeven for the project is at ~Rs 3.7/unit.
Key analyst meet highlights
Merchant outlook stable: Strong merchant realizations during Q2 were attributed to strong demand in southern India. However, management maintained its guidance for merchant realization of Rs 4-4.25/unit going ahead. Conservatively, we have assumed FY13 and FY14 realization at Rs 4 and 3.8/unit respectively.
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