JSW Energy - 4Q13 result below expectations; maintain Sell - Emkay

- JSW Energy's 4Q13 APAT came at Rs3.3bn, a miss of Rs276mn on - 1) losses in associates (Rs161mn), 2) higher costs for units commissioned at Barmer in Q4 (Rs362mn); partly compensated by higher other income (Rs149mn)

- Management was guarded during the analyst meet. No new thermal projects to be executed till clarity on fuel and SBD emerges. Kutehr HEP execution likely to start in FY14E

- Dividend payout of ~40% for FY13 a balance between rewarding shareholders and conserving cash. Mgmt open to utilize excess cash in any organic/ inorganic opportunities

- While there is some pressure on merchant tariff, coal prices outlook remains soft. There is a reasonable visibility of FY14 numbers. But visibility for FY15 remains poor with synchronization of southern grid & post elections

- Despite the correction, the stock continues to trade 8.5x P/E - expensive for cyclical earnings, in our view. Hence we maintain Sell. However, the stock might remain strong in the near-term given the strong numbers

Source : Equity Bulls

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