JSW Energy - Motilal Oswal

JSW ENERGY 3QFY11: Gross margin under pressure; Higher merchant realizations surprise; Delays in capacity addition

JSW Energy reported 3QFY11 revenues at Rs10.8b (up 53% YoY), EBIDTA at Rs3.5b (down 14% YoY) and PAT of Rs1.5b (down 41% YoY).

Merchant sales contributed 66% of total generation, vs 64% in 2QFY11. JSWEL supplied only ~4% of power from Vijaynagar plant to JSW Steel on LT basis.

Merchant realisation for 3QFY11 stood at Rs4.87/unit, up from Rs4.57/unit in 3QFY10.

Fuel cost for JSWEL remained largely flat QoQ at Rs2.66/unit, despite no supply from South African mines and 0.1m tons supply from Indonesian.

We expect JSWEL to report net profit of Rs8.3b in FY11E (up 11% YoY), Rs20b in FY12E (up 140% YoY). Stock currently trades at a PER of 18xFY11E and 8xFY12E. Not Rated.

Source : Equity Bulls

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