Adani Power Ltd - Losses continue to widen; reiterate Sell - Emkay

Reco: SELL
CMP: Rs 35
Target Price: Rs 16

- Adani Power's Q1FY14 adj. loss at Rs7bn (conso.) was higher than our est. of Rs5bn loss on - (1) higher depreciation & interest cost, (2) deferred tax (Rs1bn)

- Fuel cost/unit at Rs2.21 (est of Rs2.1) continues to be high with supply of Bunyu and CIL only at 0.7mnt and 0.6mnt resp.

- Cut FY14/FY15 estimates; expect net loss of Rs5.3/Rs3.4 per share for FY14/FY15 (without Mundra tariff hike). Clarity on quantum of tariff hike for Mundra would be a key driver of the stock, but the final report of the committee is still awaited

- Most expensive utility with P/B of 2.7x FY14E. We cut PT to Rs16. ~Rs0.3/u tariff hike already factored in current price, so we see limited upside in the best case but possibility of downside due to uncertainty in base case valuation itself. Sell

Source : Equity Bulls

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