Adani Power Ltd (APL)
Its different; Subscribe
We believe there are several factors, which differentiate APL from other private power producers, who have/are adopting the IPO route for raising funds. With (1) almost everything tied up (land, water, fuel, PPAs, evacuation) for their 6600MW generation capacity and (2) the commissioning of the first turbine of 330MW within 30 months from EPC ordering date - the company has demonstrated strong execution capability, signifying low risk of execution slippages and cost overruns. The company expects to commission capacities every 3-6 months and has planned 6600MW to be operational by Q1FY13E. APL has also made significant progress in the additional planned capacity of 3300MW, rendering high visibility to 9900MW capacity by FY13-14E. Another differentiating factor is that the IPO is for the last leg of equity - 9900MW capacity would achieve financial closure (except 25% of debt for 3300MW). With (1) vertical integration through coal mining and transmission facilities, (2) access to cheap imported & domestic coal resulting in competitive cost of generation and (3) ideal mix of PPAs and merchant capacity at every phase of commissioning – APL is all set to earn handsome project level ROEs in the range of 40-45% (1.5-2x peers).
On the back of low execution risks and high ROEs, we expect APL to command premium valuations. We believe there is some room for investors, recommend subscribe with a long term horizon of two years. Key risks to our call are - (1) any force majeure or other event leading to coal cost above $36/T and (2) project cost overruns.
--~--~---------~--~----~------------~-------~--~----~
Safe Harbor:
The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.
You received this message because you are subscribed to the Google Groups "Investors Please Listen !" group.
To post to this group, send email to investorspleaselisten@googlegroups.com
To unsubscribe from this group, send email to
investorspleaselisten+unsubscribe@googlegroups.com For more options, visit this group at http://groups.google.com/group/investorspleaselisten?hl=en
-~----------~----~----~----~------~----~------~--~---
No comments:
Post a Comment