Adani Power - BUY - MERC allows temporary tariff increase to Tiroda - Ambit

The Maharashtra Electricity Regulatory Commission (MERC) yesterday allowed an interim one-year tariff increase of 57 paise/unit for Adani's 800MW unit at Tiroda, pending the committee order to determine the quantum of the final tariff increase. This interim tariff increase is a compensation for the cancellation of the captive coal block awarded to this project. Accordingly, we revise our tariff assumptions for Tiroda 800MW, which leads to an insignificant 1% valuation upgrade to Rs82/share. However, we expect more upgrades, as we are confident that: (a) the committee to be formed will endorse MERC's view for the entire duration of the Tiroda PPA, and (b) CERC will shortly come out with a tariff increase order for Mundra's 2.4GW supplied to the state electricity boards of Gujarat and Haryana based on the recommendation of the Deepak Parekh Committee. Accordingly, we reiterate our BUY on Adani Power.

Source : Equity Bulls

Keywords