Adani Power - Losses continue to widen; maintain SELL - Emkay

- Adani Power's 4Q13 adj. loss at Rs6.9bn (conso.) was below our est. of Rs4.9bn on - (1) higher interest cost (Rs5.6bn vs. est of Rs4.5bn), (2) deferred tax (Rs1.4bn)

- Fuel cost/unit at Rs2.28 (est of Rs2.34) continues to be high with 1) auxiliary consumption and heat rate remaining very high and 2) proportions of Bunyu and CIL coal remaining low

- Clarity on quantum of compensatory tariff for Mundra to be a key driver of the stock, but the process forming a committee as per CERC orders is not complete yet

- Most expensive pvt sector utility at 2.4x FY14E book, thus already factoring in tariff hike of Rs0.16-0.20/unit. Thus, we see no upside in the best case but possibility of significant downside due to uncertainties in base case valuation itself

Source : Equity Bulls

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