GVK Power (GVKPOW) - ICICI Direct

GVK’s power segment performance was dismal in Q4FY12
as power plants reported lower PLF due to continued
restricted supply of gas
Ex MIAL Q4 FY12 performance
Ex-MIAL, GVK’s Q4FY12 was below our estimates mainly due to lower
revenues from the power segment on account of restricted gas
availability and, thus, lower PLF. Consequently, the topline (ex MIAL) for
Q4FY12 was at | 333 crore vs. our estimate of | 440.1 crore. The loss at
| 20.9 crore, therefore, was higher than our estimate of net loss of | 9.2
crore mainly on account of the dismal power segment performance and
higher interest for loan taken to fund airport acquisition.
Exhibit 2: Financial performance (ex MIAL)
(| Crore) Q4FY12 Q4FY12E Q4FY11 Q3FY12 QoQ (Chg %) YoY (Chg %)
Total Operating Income 333.0 440.1 461.8 744.6 -55.3 -27.9
EBITDA 86.7 107.5 104.4 210.8 -58.9 -17.0
EBITDA Margin (%) 26.0 24.4 22.6 28.3 -226 bps 343 bps
Depreciation 39.7 47.3 41.2 78.3 -49.4 -3.9
Interest 247.5 122.2 54.7 143.6 72.4 352.5
Reported PAT -20.9 -9.2 36.8 -14.5 44.0 -156.7
EPS (|) -0.1 -0.1 0.2 -0.1 44.0 -156.7
Source: Company, ICICIdirect.com Research
Segmental Performance
Power division
GVK’s power segment performance was dismal and revenues saw a
sequential and YoY decline of 31.7% and 30.9%, respectively, in Q3FY12
as power plants reported lower PLF due to restricted supply of gas. The
company would receive interim RLNG supply during the peak demand
season of March-May, which implies that there could be marginal
improvement in PLF particularly in Q1FY13E.
While Gautami Power reported revenues of | 114.5 crore, a sequential
decline of ~47%, GVK Industries posted a sequential decline of ~15% at
| 166.4 crore in Q4FY12.
Commissioning of one of the four units of the Alaknanda Hydro Project is
expected in December, 2012 and all four units are expected to be
operational by May, 2013 vs. the original commissioning date of March,
2012. The project has witnessed a cost escalation and the revised cost
now stands at | 4600 crore (subject to regulators approval) vs. | 2700
crore originally. Commissioning of the first unit of the Goindwal Sahib
Project is expected by February 2012 and the second unit by June, 2013.
Exhibit 3: Power vertical performance
| crore Q4FY12 Q4FY11 Q3FY12 QoQ (Chg %) YoY (Chg %)
Revenue 280.9 403.0 411.4 -31.7 -30.3
EBITDA 39.9 83.6 82.2 -51.4 -52.3
Margin (%) 14.2% 20.7% 20.0%
PAT -37.8 5.8 3.0 -1351.7 -751.7
Margin (%) -13.5% 1.4% 0.7%
Source: Company, ICICIdirect.com Research
Exhibit 4: Operational highlights of power plants
JP I JP II Gautami
| per unit Q4FY12 Q3FY12 Q4FY11 Q4FY12 Q3FY12 Q4FY11 Q4FY12 Q3FY12 Q4FY11
Realisation 2.8 2.8 2.8 2.8 3.1 3.1 2.3 3.1 3.0
Fuel cost 2.0 2.0 2.1 2.1 2.2 2.0 1.9 2.1 2.0
O&M 0.4 0.4 0.9 0.0 0.3 0.2 0.3 0.6 0.3
EBITDA 0.4 0.3 -0.1 0.7 0.6 0.8 0.5 1.6 1.8
PLF (%) 81 76 67 49 67 73 53 69 74
Units sold (million) 373 351 308 228 318 338 503 686 725
Source: Company, ICICIdirect.com Research
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