Tata Power (TATPOW) 71

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1 Result Update Rating matrix Rating : Buy Target : 79 Target Period : 12 months Potential Upside : 12% What s changed? Target Changed from 67 to 79 EPS FY17E Changed from 5.3 to 4.6 EPS FY18E Changed from 5.8 to 5.1 Rating Changed from Hold to Buy Quarterly performance Q4FY16 Q4FY15 YoY (%) Q3FY16 QoQ (%) Revenue EBITDA (3) 2095 (9) EBITDA (%) (331) 23 (291) PAT 356 (13) Key financials Crore FY15 FY16 FY17E FY18E Net Sales EBITDA Net Profit Valuation summary FY15 FY16 FY17E FY18E P/E EV / EBITDA P/BV RoNW (%) RoCE (%) Stock data Particular Amount Market Capitalization ( Crore) Total Debt (FY16) ( Crore) Cash & Investments (FY16) ( Crore) EV ( Crore) week H/L ( ) 89.7/55.6 Equity capital ( crore) Face value 1.0 Price performance 1M 3M 6M 12M Tata Power (14.3) (12.9) (14.9) (28.2) NTPC (11.8) (8.9) (8.0) (12.0) CESC (9.7) (16.8) (24.0) (34.6) Research Analyst Chirag Shah shah.chirag@icicisecurities.com All round performance May 25, 2016 Tata Power (TATPOW) 71 Revenues came in at 9374 crore up 13.8% YoY, higher that I-Direct estimates of 9037 crore. On a segmental basis, power segment revenues were higher that estimates at 7025 crore (estimate of 6624 crore) while coal segment revenues came in line at 2023 crore vs. estimate of 2000 crore. Performance across subsidiaries was reasonably strong. The likes of Maithon power (strong generation), Mundra (lower fuel costs), Tata Solar (strong revenue booking and outlook) added to overall performance. EBITDA margins came in at 20.4% for Q4FY16 vs. our estimate of 23% for the quarter. The key miss stemmed due to miss in the power segment EBIT which came in at 17.3% YoY as compared to 19.4% in Q4FY15. The same is reiterated from the fuel costs which have gone up sharply by 73% YoY Higher than expected revenues, strong subsidiary performance and one off regulatory gain led to a PAT of 360 crore higher than our estimates of 320 crore in Q4FY16. Sectoral woes impact earnings Being the largest integrated power company in India with an installed capacity of 8,560 MW, Tata Power (TPL) has been impacted by various sectoral woes like higher fuel price, increased regulated assets and huge debt level. The change in Indonesian policy to link the export price of its coal with the international index in September 2011 led to an increase of the generation cost for TPL s 4000 MW Mundra UMPP to ~ 2.85/Kwhr (total fixed + variable cost) against a fixed price sale agreement at 2.26/Kwhr for 25 years with state discoms. This led to an erosion of close to 3,817 crore of TPL s networth in the past three years. Furthermore, cost of carrying regulatory assets at its Delhi and Mumbai operations (~ 7,063 crore) along with a sliding rupee, led to a working capital crunch. This resulted in increased debt of ~ 39,930 crore as on Q3FY16 (D/E of 2.3x) vs. 18,500 crore in FY10. Mundra hearing completed by APTEL; Judgment kept reserved As per the Supreme court s (SC) order, APTEL has completed the hearing of Mundra tariff and the judgement has been kept reserved. We believe that the judgement would be pronounced anytime soon, post which the related parties are likely to approach the Supreme Court again resulting in further delay. This delay in Mundra tariff hike will continue to significantly impact the feasibility of the project. Losses at Mundra have already eroded ~ 3,985 crore of TPL s networth in the past three years. While the company has reversed impairment losses for the project amounting to 2,320 crore resulting in a project level PAT of 2,163 crore, the under recovery in the fuel cost still hovers around 0.35/unit. Thus any further delay in tariff finalisation will negatively impact investor sentiments. Favourable CERC order might rerate the stock; upgrade to Buy Going ahead, we believe the upcoming CERC order w.r.t compensatory tariff can lead to rerating of the stock as Tata power has accumulated losses of over 3000 crore related to that. Improving performances of other subsidiaries augurs well for profitability going ahead coupled with low probability of extraordinary write-offs. We upgrade our SoTP based target price to 79 and rate the stock as Buy. Key risks would be delay/cancellation of stake sale process in coal SPV. ICICI Securities Ltd Retail Equity Research

2 Variance analysis Key highlights of results, conference call Q4FY16 Q4FY16E Q4FY15 YoY (%) Mundra s Q3FY16 fuel QoQ (%) cost Comments in Q4FY16 stood at 1.7/Kwh vs. 1.9/Kwh in each Energy sales net 9, , , in Q2FY16-Q3FY16 8, Power (this segment includes revenues logistic were higher charges) that estimates at 7025 crore (estimate Mundra s availability of 6624 during crore) the while quarter coal segment improved revenues came significantly in line at 2023 to crore 80% vs. Fuel cost under recovery estimate of during 2000 crorethe quarter stood at 0.25/unit vs Other Income (42.6) 0.52/unit 98.8 at the (57.9) time of filing the compensatory tariff petition. Total Income 9, , , Realisation 8,951.9 (freight 4.7 on board) at coal SPV declined to $41.1/tonne vs. Fuel 1, , ,028.6 (1.4) $43/tonne 2,021.7 in Q4FY15 (1.1) and $42.1/tonne in Q3FY16 Power purchase cost 2, , , The 2,128.0 cash cost 16.4 at the Power coal purchase SPV cost declined increased due to $28.3/tonne higher volumes in vs. TPTC $26.3/tonne by 73% YoY Employee expense YoY and $33.06.tonne QoQ (23.3) (19.3) Consolidated debt was at in FY16 vs. 40,842 crore YoY and Total expenses 7, , , There 6,847.4is a repayment 7.4 commitment worth ~ 25,00 over the next EBITDA 1, , ,961.7 (2.5) year. 2,094.7 Debt at Mundra (8.7) EBIDTA UMPP was below and expecatations Coal SPV as stands power purchase at costs impacted crore EBIT and margins 6000 crore, respectively EBITDA Margin (%) Tata Power s % stake sale in Arutmin mine (Indonesia) for ~$510 Depreciation million and 5% (4.2) stake in KPC mine for $250 million is taking longer Interest (4.9) than expected due to the legal tussle with lenders. The company, Other Income (131.1) however, 44.8 believes (160.2) it will seal the deal in FY17E. The proceeds ( 5000 PBT crore) will be (475.6) used to reduce its debt level Extraordinary expenses For the whole year, Maithon power plant exhibited revneies and 0.0profitability of crore and 189 crore. Tata power solar reported Extraordinary Income (99.1) strong FY given - its revenues grew from 1489 crore in FY16 from Total Tax (52.1) 873 crore in FY15. (34.4) APAT (12.8) 2, The PAT were ahead of estimates on account better topline growth and one off gain owing to regulatory assets Performance of subsidiaries in Q4FY16 Key Metrics Power 7, , , , Growth was driven by improved sales across TPTCL and Tata Solar segment Exhibit 1: Strong performance across all subsidiaries of Tata Power in Q4FY16 during the quarter Revenues EBITDA PAT Coal 2, , , , Coal volumes came in at 21.4 million tonne up 2.5% YoY YoY Growth YoY Growth YoY Growth Other crore Q4FY16 Q4FY15 /(Decline) Q4FY16 Q4FY15 / (Decline) Q4FY16 Q4FY15 / (Decline) Tata Source: power Company, Solar ICICIdirect.com Research NA 4.0 (24.0) NDPL Change Power Links estimates (1.7) (1.7) Tata Power Trading FY17E FY18E (15.7) ( Maithon Crore) Old New % Change 589 Old 587 New 0.3% Change Comments Revenue IEL 38,659 39, , , Estimates 77 kept 59 unchanged (24.1) EBITDA CGPL 9,015 8,284 (8.1) 15729, ,617.2 (1.8) (8.0) (2.0) 9 (76) NA EBITDA Total Margin (%) (182.3) (239.4) (227.4) PAT Source: Company, ICICIdirect.com 1,424 Research 1,244 (12.6) 1, ,371.2 (12.7) EPS ( ) (13.2) (20.7) Assumptions Assumptions Current Earlier Comments FY15 FY16E FY17E FY18E FY17E FY18E Mundra Generation (Crore) 2, , , , , ,692.8 Generation growth driven by better PLF, going ahead Coal SPV sales (MT) Coal realisation($/tonne) International coal prices likely to decline in FY16E but to revive in FY17E Cash cost($/tonne) Coal processing cost to decline due to less overburden and a better strip ratio. However, FY17E may see a slight uptrend due to inflationary concern ICICI Securities Ltd Retail Equity Research Page 2

3 Company Analysis Largest integrated power player in country TPL is India s largest integrated power company with an installed capacity of 8,680 MW (912 MW renewable) and an international presence in coal mining (owns 30% stake in Arutmin mines in Indonesia) and the power sector (240 MW geothermal projects and various JVs in different countries to harness power projects). TPL has a presence in all segments of the power sector viz. generation (thermal, hydro, solar and wind), transmission, distribution and trading. It has a successful PPP in generation, transmission & distribution in India viz. Tata Power Delhi Distribution Ltd with Delhi Vidyut Board for distribution in North Delhi, Powerlinks Transmission with PGCIL for evacuation of power from the Tala hydro plant in Bhutan to Delhi and Maithon Power with DVC for a 1050 MW mega power project at Jharkhand. The company s installed capacity has grown at a CAGR of 44.4% over FY11-14 and has ~849 MW of capacity under execution and ~9.1 GW in the development stage. Going ahead it expects renewable to form 30-40% of its total portfolio by 2025 from 20% earlier. Exhibit 2: Trend in capacity addition MW Capacity FY11 FY12 FY13 FY14 FY15 FY16 TPL s revenue has grown at a CAGR of 10% over FY12-15, driven by commencement of the Mundra and Maithon projects. Going ahead, we expect revenues to grow at a CAGR of 5% over FY16-18E driven by better availability and generation across the Mundra UMPP over the period. However, the margin and PAT are likely to improve, going ahead, driven by declining losses at the Mundra plant. Exhibit 3: Revenue and PAT trend Exhibit 4: EBIDTA and margin trend 44,000 40,000 36,000 35,649 34,367 37,480 39,642 41,155 1,700 1,350 1,000 44,000 40,000 36,000 35,649 34,367 37,480 39,642 41,155 1,700 1,350 1,000 ( crore) 32,000 28, ( crore) 32,000 28, ,000 (50) 24,000 (50) 20,000 FY 14 FY 15 FY 16 FY 17E FY 18E (400) 20,000 FY 14 FY 15 FY 16 FY 17E FY 18E (400) Revenue PAT Revenue PAT ICICI Securities Ltd Retail Equity Research Page 3

4 Exhibit 5: Long-term PPAs for power plants Model Capacity (MW) % of total capacity Returns Incentives Project type Offtake arrangement Regulated Returns % Fixed return on equity Savings on Norms + PLF incentive Renewables (Regulated tariff) 465 5% Fixed tariff + PLF driven Captive Power Plant 428 5% PPA driven (14-19%) Merchant/Bilateral Merchant: Market Project 120 1% Bilateral: PPA driven Savings on capex + CDM certificates / RECs as applicable Wind, Solar Merchant sales + saving on PPA terms + PLF incentive Mumbai Operations, Maithon, Jojobera (Unit 2 and 3), TPDDL Jojobera (Unit 1 and 4 ) and IEL BEST, TPTCL, TPDDL, DVC, NDPL, WBSEBL BESCOM, GUVNL, TPC-D, Tata Motors, TANGEDCO Tata Steel Merchant: No cap on returns Bilateral: Per PPA Haldia (120MW) Bilateral: PPA with WBSEDCL Case II bidding % Bid driven PLF incentives CGPL Belgaum (81MW), Lodhivali Others 121 1% Bid driven PLF incentives (40MW Total 8559 Gujarat, Maharashtra, Punjab, Rajasthan, Haryana PPAs have expired Exhibit 6: Fuel supply arrangement Projects Fuel requirement Source of fuel Contract details Term FSAs for 1.00 MTPA (+/- 0.25MTP, Till 2018 FSA for 1.00 MTPA (+/- 0.2MTPA), Till 2018 a) 3 MTPA of coal Purchase agreements FSA for 0.65 MTPA (+/- 10%) Till 2018 Trombay b) Oil From nearby refineries fuelled by pipeline c) 1MMSCMD of Gas GAIL Jojobera Coal West Bokaro coal fields (Tata Steel) and Mahanadi Coalfields Limited (MCL) Tata Steel - Till 2014 MCL Till 2018 IEL Furnace and coke oven gases Tata Steel Coal West Bokaro coal fields (Tata Steel) MoU for 0.5 MTPA Mundra 12 MTPA of coal Purchase agreement FSA for MTPA (+/- 20%) Till 2021 FSA for 1.66 MTPA Till 2015 Maithon 4.5 MTPA of coal Coal Linkage FSA for 1.98 MTPA Till 2032 FSA for MTPA Till 2015 Haldia Hot flue gases Tata Steel Fall in international coal prices improve Mundra s profitability The recent fall in international coal prices has benefited the operating and financial performances at Mundra UMPP. The project reported a marginal profit of 9 crore in Q4FY16 vs. 76 crore loss in Q4FY15. For FY16, total revenues and loss for Mundra UMPP stood at 5819 crore and 306 crore, respectively. At the coal mining business, production increased 2.5% QoQ at 21.4 million tonne in Q4FY16. However for FY16, total coal sales decline to 80 million tonne vs million tonne in FY15. The average realisation for Q4FY16 stood at $41.1/tonne. The total debt at coal SPV as of FY16 stood at $900 million, flat YoY. ICICI Securities Ltd Retail Equity Research Page 4

5 Exhibit 7: Average sale price, cash cost trend Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 $ per tonne. Q3FY16 Q4FY16 Average selling price ($/tonne) Cash cost ($/tonne) Exhibit 8: Production, sales level from coal SPV MT Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Production volume (MT) Sales volume (MT) Exhibit 9: Cash margin for the coal mining business 40 $ per tonne Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Cash margin ($ / tonne) Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 ICICI Securities Ltd Retail Equity Research Page 5

6 Stake sale at PT Arutmin and KPC to ease pressure on cash flow Along with a 30% stake in the PT Arutmin Indonesia coal mines for $510 million (~ 3,200 crore) to the Indonesian mining conglomerate, Bakrie Group, TPL has also signed an option agreement to sell its 5% stake in PT Kaltim Prima Coal (KPC) Indonesia coal mines for $250 million (~ 1,500 crore) to the same group. The transaction will attract a ~10% withholding tax on sale and the proceeds will be used for reducing its consolidated debt (~ 35,177 crore). The agreement also includes the entire 30% stake sale in the companies associated with KPC, operating in the coal trading and infrastructure business. The option, if exercised, would reduce TPL s holding to 25% in the KPC mine. However, it will not impact the contracted coal supplies for its Mundra plant. The coal SPV business has a debt of $790 million. The company had bought a 30% stake in Bumi Resources (Indonesia) in June 2007, which owns two thermal coal mines - PT Arutmin and PT Kaltim Prima Coal (KPC) for $1.1 billion. While a KPC mine has a reserve of 1,562 million tonnes (MT), PT Arutmin has reserves of 557 MT. The stake sale is part of the management s ongoing restructuring effort to bring down TPL s consolidated debt level by hiving off its stake across non core asset and improve its cash flow and D/E position (currently 2.4x). However, the ongoing stake sale process is facing delays in receiving approval from lenders due to weak prices of international coal. Still, the price is not subject to renegotiation. We believe any further delay could negatively impact the company s cash flow, going ahead. ICICI Securities Ltd Retail Equity Research Page 6

7 Outlook & valuation Going ahead, we believe the upcoming CERC order w.r.t compensatory tariff can lead to rerating of the stock as Tata power has accumulated losses of over 3000 crore related to that. Improving performances of other subsidiaries augurs well for profitability going ahead coupled with low probability of extraordinary write-offs. We upgrade our SoTP based target price to 79 and rate the stock as Buy. Key risks would be delay/cancellation of stake sale process in coal SPV. Exhibit 10: Consolidated valuation Value crore No of shares ( crore) Value per share ( ) Valuation Methodology Capacity Status/ Expected CoD Mumbai generation + distribution 1927 MW Operational x FY16E regulated equity Belgaum 81 MW Operational FCFE with 13% CoE Merchant (Trombay & Haldia) 200 MW Operational FCFE with 13% CoE Merchant+ 20MW PPA Jojobera existing 428 MW Operational FCFE with 12% CoE IEL 120 MW Operational FCFE with 13% CoE Jojobera expansion 120 MW Operational FCFE with 13% CoE Maithon 1050 MW Operational FCFE with 13% CoE for 74% stake Wind Energy 375 MW Operational FCFE with 13% CoE Solar 30 MW Operational At replacement cost of 7 crore Wind Energy further additional 100 MW 50 MW in FY At replacement cost of 5 crore/mw since 1 PPAs have not been signed NDPL Operational FCFE with 10% CoE for 51% stake (higher COE 0 due to tariff recovery in installments) Tala Transmission Operational FCFE with 12% CoE for 51% stake Power Trading Operational x FY13E PAT PT Bumi Resources & Mundra UMPP 4000 MW x EV/Reserves for Bumi(factoring weak realisations), positive valuation for Mundra UMPP (post CERC verdict) Dagachu HEP 126 MW x Book value for 26% stake 0.0 (in line valuation given for NHPC) Other business 2.6 NELCO % holding company discount SED x FY13E sales Tata BP Solar x investments Value of investments (Telecom) 5.0 TTML Tata Communication Target Price 79 ICICI Securities Ltd Retail Equity Research Page 7

8 Company snapshot Target Price: Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Oct-09 The company announces its plan to buy coal from a mine in Mozambique being developed by Australia s Riversdale Mining Ltd to secure fuel supplies Sep-11 Indonesia adopts new pricing method last week, aligning its rates with international markets under benchmark prices called the HBA Index, taking the price of coal Feb-12 PMO directs Coal India to sign fuel supply agreement (FSA) with power plants commissioned post March 2009 Mar-12 Tata Power commissions first 800 MW unit at Mundra UMPP. Consequently, consolidated debt rose to 32,000 crore in FY12 vs 23,600 crore YoY Dec-12 Mundra reports loss of 830 vs loss of 1050 crore YoY crore as the company continues to provide impairment loss in Q3FY13 to the tune of 600 crore Mar-13 Tata synchronises fifth and last unit of Mundra UMPP taking the group's total capacity to ~8,100 MW Apr-13 CERC allows compensatory tariff for the 4,000 MW Mundra UMPP against its petition for tariff revision Jul-13 Tata enters into negotiation with lenders to avoid penalties after it failed to meet conditions on $2.3 bn of loans taken to build its largest plant. The company was in violation of loan covenants as of March 31, 2012, and won waivers from fines, which lapsed on June 30, 2013 Nov-13 CERC appoints a committee recommended 0.45/Kwh /Kwh hike in tariff as a compensatory tariff for Mundra. However, final verdict is still awaited Jan-14 Tata Power's 100% subsidiaries sign agreement for sale of their 30% stake in Arutmin Coal Mines. Feb-14 CERC announced its final verdict related to Mundra tariff and announced a 0.52/Kwh as compensatory tariff hike along with recovery of past under recoveries Mar-14 Offers right issue at a price of 60/share and would be alloted in the ratio of 7:50 i.e. every holder of 50 share will be entitled to receive seven shares at the offered Apr-14 Right issue closes, which was subscribed 1.96x. The company manages to collect 3,916.4 crore Sep-14 The company loses its Mandakini & Tubed coal blocks post SC verdict, which termed entire allocation process of coal mines between 1993 and 2010 as illegal Top 10 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Tata Group of Companies 31-Mar Life Insurance Corporation of India 31-Mar Matthews International Capital Management, L.L.C. 31-Dec First State Investments (Singapore) 29-Feb Stewart Investors 31-Mar New India Assurance Company Ltd. 31-Mar General Insurance Corporation of India 31-Mar Aberdeen Asset Management (Asia) Ltd. 31-Dec BlackRock Institutional Trust Company, N.A. 30-Apr The Vanguard Group, Inc. 30-Apr Source: Reuters, ICICIdirect.com Research Shareholding Pattern (in %) Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Promoter FII DII Others Recent Activity Investor name Investor name Investor name Value Shares Investor name Value Shares Tata Group of Companies Stewart Investors (43.2) (44.3) Henderson Global Investors Ltd SBI Funds Management Pvt. Ltd. (2.2) (2.2) ICICI Prudential Asset Management Co. Ltd Reliance Capital Asset Management Ltd. (1.8) (1.8) Amundi Asset Management HDFC Asset Management Co., Ltd. (1.1) (1.1) BlackRock Institutional Trust Company, N.A JM Financial Asset Management Pvt. Ltd. (0.7) (0.7) Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 8

9 Financial summary Profit and loss statement Crore (Year-end March) FY15 FY16 FY17E FY18E Total operating Income 34,367 37,480 39,642 41,155 Growth (%) (3.6) Raw Material Expenses 9, , , ,531.1 Coal processing Chgs 2, , , ,189.0 Cost of Power purchased 7, , , ,205.5 Royalty towards coal mining 1, Other expenses 7, , , ,644.4 Total Operating Expenditure 27, , , ,537.4 EBITDA 6,940 9,031 8,284 8,617 Growth (%) (9.9) 30.1 (8.3) 4.0 Depreciation 2, , , ,435.6 Interest 3, , , ,706.7 Other Income+ excep PBT 1, , , ,674.9 Others (289.4) (256.0) (350.0) (100.0) Total Tax 1, , ,203.7 PAT ,244 1,371 Growth (%) EPS ( ) Cash flow statement Crore (Year-end March) FY15 FY16 FY17E FY18E Profit before Tax 1, , , ,674.9 Add: Depreciation 2, , , ,435.6 (Inc)/dec in Current Assets (1,460.3) (619.1) (1,976.2) (1,129.5) Inc/(dec) in CL and Provisions (222.0) Others (808.5) (2,168.7) (869.3) (1,203.7) CF from operating activities 5,981 6,502 1,699 3,850 (Inc)/dec in Investments (60.9) (Inc)/dec in Fixed Assets (3,493.6) (2,500.0) (2,500.0) (2,500.0) Others CF from investing activities (3,875) (1,850) (2,000) (2,500) Issue/(Buy back) of Equity (25.5) Inc/(dec) in loan funds (171.0) Dividend paid & dividend tax (512.1) Inc/(dec) in Sec. premium Others (3,620.3) CF from financing activities (2,160) (5,028) 808 (506) Net Cash flow (53.8) (376.0) Opening Cash 1, , , ,632.2 Closing Cash 1,501 1,125 1,632 2,477 Balance sheet Crore (Year-end March) FY15 FY16 FY17E FY18E Liabilities Equity Capital Reserve and Surplus 12, , , ,125.7 Total Shareholders funds 12, , , ,396.2 Total Debt 37, , , ,382.3 Others 4, , , ,774.6 Minority Interest / Others 2, , , ,307.2 Total Liabilities 56,918 53,477 56,177 57,860 Assets Gross Block 55, , , ,806.4 Less: Acc Depreciation 17, , , ,818.4 Net Block 37, , , ,988.0 Capital WIP 3, , , ,000.0 Total Fixed Assets 41, , , ,988.0 Goodwill on consolidation 6, , , ,991.0 Investments 3, , , ,838.1 Inventory 1, , , ,885.2 Debtors 5, , , ,765.1 Loans and Advances 5, , , ,407.8 Other Current Assets 9, , , ,880.9 Cash 1, , , ,476.8 Total Current Assets 23, , , ,415.8 Creditors 5, , , ,944.6 Other Liabilities 11, , , ,169.5 Provisions 1, , , ,958.5 Total Current Liabilities 18, , , ,072.6 Net Current Assets 5, , , ,343.3 Others Assets Application of Funds 56,918 53,477 56,177 57,860 Key ratios (Year-end March) FY15 FY16 FY17E FY18E Per share data ( ) EPS Cash EPS BV DPS Cash Per Share Operating Ratios (%) EBITDA Margin PBT / Total Operating income PAT Margin Inventory days Debtor days Creditor days Return Ratios (%) RoE RoCE RoIC Valuation Ratios (x) P/E EV / EBITDA EV / Net Sales Market Cap / Sales Price to Book Value Solvency Ratios Debt/EBITDA Debt / Equity Current Ratio Quick Ratio ICICI Securities Ltd Retail Equity Research Page 9

10 ICICIdirect.com coverage universe (Power) Sector / Company CMP Target Rating M Cap EPS ( ) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) ( ) TP( ) Rating ( Cr) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E NHPC (NHPC) Hold 23, Power Grid (POWGRI) Buy 76, PTC India (POWTRA) Hold 1, CESC (CESC) Buy 7, Tata Power (TATPOW) Buy 19, ICICI Securities Ltd Retail Equity Research Page 10

11 RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 11

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