Saturday, July 14, 2012
Reliance Power Outperforms Sensex By 40% Year To Date
Over the last one year, various brokerages (foreign as well as domestic) have come out with reports recommending 'Sell' on Reliance Power.
However, the company has outperformed the broader markets in the calendar year, mainly due to its robust operational performance of its existing plants and on track progress of the upcoming plants. The company's operational performance in its Rosa plant has been strong.
Its first project - Rosa has two operational units of 1200 MW each and works on a fixed return on equity model. This project together generated around 18% return on equity in FY12, which is quite high than its peers such as NTPC, Adani Power which are generated around only 13%.
The company's other projects - (Butibori, which has two units of 300 MW each) is close to completion. Its Samalkot gas project (2400 MW) is also well on track, with 50% capex also incurred.
Also its Sasan project (6 units of 660 MW units each) is well on track, with first unit due for commissioning in the fourth quarter of the current fiscal. Around 60% capex for this is already incurred and the work on the captive mine for this is progressing well.
As a result, Reliance Power's stock has outperformed the Sensex by 40% year to date and is commanding premium valuation over its peers. It is currently trading at a price to book value of 1.9.
Courtesy: Economic Times