RattanIndia Power Ltd: Buy
CMP: Rs.3.85
Major Triggers:
💥The widening of the consolidated loss in the December quarter was due to non-operation of Nashik Thermal Power Plant (Sinnar Thermal Power Ltd).
That exposure has no bearing on parent RattanIndia Power Ltd, as Sinnar Thermal Power Limited (STPL), is a subsidiary of RattanIndia Power Ltd and is a separate SPV holding Sinnar Thermal Power Plant. Photo: Just Dial.
💥All units of Sinnar Thermal Power Plant at Nashik are commissioned, but not operational at present.
💥STPL's debt exposure is ring fenced and has no bearing on the parent RattanIndia Power Ltd. There are no obligations of RattanIndia Power Ltd on debt repayment of STPL in any manner whatsoever.
💥The company's standalone net profit jumped three-fold to Rs 104.44 crore in the third quarter of FY22 from Rs 33.44 crore in the quarter ended in December 2020.
💥RPL has demonstrated excellent operating performance in current FY 2021-22 amidst COVID-19 and acute coal shortage in the country affecting coal based thermal power plants.
Hence, now when the coal prices are falling across board, we can expect excellent performance by the company.
💥Amravati Thermal Power Plant has achieved the Plant Load Factor (PLF) of 74 per cent and Plant Availability Factor (PAF) of 85 per cent up to Q3FY22 and stands out as one of the best thermal power plants in Maharashtra.
💥The 1,350 MW Amravati Thermal Power Plant has been supplying its entire power to MSEDCL under 25-year term PPAs (power purchase agreement) based on long-term coal linkage from South-Eastern Coalfields Limited for the entire contracted capacity.
💥Pursuant to debt rationalization in December 2019, RPL has successfully paid back Rs.2,001 crore (principal and interest) in the last eight quarters (January 2020 to December 2021) including Rs.450 crore as prepayment.
💥 According to a report published in ET on 21 January, 2022, RattanIndia Power Ltd (RPL) expects to become debt-free in nearly 2 (two) years based on revenue from its thermal power plant at Amravati in Maharashtra and accumulated dues from power distribution companies.
💥The company is working on debt resolution with the lenders to its 1,350-Mw power project at Nashik in Maharashtra.
The company has Rs.4,000 crore regulatory assets and receivables from Maharashtra, some of which are at final stages of realisation, expected to accelerate the deleveraging process.
💥As on December 31, 2021, the external secured-term debt obligations of the company stand at Rs.1,953 crore on a networth of Rs.5,000 crore.
💥The ministry of power on May 5 notified that all imported coal-based plants must run on full capacity under Section 11 of the Electricity Act to meet rising electricity demand.
💥 According to a report published in the Financial Express on 15 May, 2022, plans for *Capital Infusion* in coal-based plants such as Rattan India’s Sinnar plant in Nashik and Reliance Power’s Vidarbha power plant are being worked out and operations may start soon.
💥The Power Ministry on May 11 directed PFC and REC to take necessary action to arrange short term loans for a period of 6 (six) months with adequate safeguards, for imported coal-based plants which are under stress or in NCLT, at the earliest.
💥Following the successful recast of debt for the 1,350 MW Amravati power plant, RattanIndia Power, backed by Aditya Birla ARC and Varde Partners, is in talks with a consortium of lenders led by PFC for the recast of around Rs.7,100 crore debt of its thermal power plant in Nashik, Maharashtra, according to a Financial Express report.
💥Aditya Birla ARC, which is backed by Varde Partners, has purchased a 15% stake in RattanIndia's Amravati power plant.
💥Furthermore, Q4FY22 standalone numbers only include the operational Amravati power plant and exclude the Nashik Plant, which is owned by Sinnar Thermal Power, a subsidiary of Sinnar. RattanIndia Power is not obligated to pay the Nashik power plant's debt.
💥The company has paid Rs.2,000 crore in dues of the Amravati plant in the last two (two) years and has an outstanding due of Rs.1,950 crore, which the company expects to pay off in the near future given the annual Ebitda of around Rs.1,000 crore and the recovery of regulatory assets of over Rs.4,000 crore.
💥The India Express reported on June 10, 2022, that banks, taking cues from the Reserve Bank of India (RBI), are likely to decide against funding the working capital requirements of 13 imported coal-fired power plants — key to the Union power ministry's proposal to revive these units as part of a broader range of measures to address the country's ongoing electricity shortage.
Power Outages: As temperatures rise, demand for electricity reaches a new high of 209.8 GW (gigawatts) on June 8, surpassing the previous high of 207 GW set on April 29 this year.
This increase in demand has been met in part, owing to a 16% annual increase in domestic coal dispatches to thermal plants, as well as coal imports and increased hydro and wind power generation. While the demand spike has been managed thus far, demand is expected to peak at 220 GW between July and September, when the monsoon has an impact on coal mining and dispatches.
Financial Results (Year Ended FY2022) - YoY Comparison:
The company has reported total income of Rs.3669.16 crores during the Financial Year ended March 31, 2022 as compared to Rs.2634.16 crores during the Financial Year ended March 31, 2021.
The company has posted net profit / (loss) of Rs.(-)1981.45 crores for the Financial Year ended March 31, 2022 as against net profit / (loss) of Rs.(-)941.61 crores for the Financial Year ended March 31, 2021.
Conclusion: RPL is a turn-around story in the Indian power sector with superlative operating performance. The company has showcased how stressed thermal assets can be resolved efficiently and put to use in the service of the nation.
The Rs.10, Face Value shares are trading at a dirt cheap price of Rs.4.
The prudent investors, need to accumulate the stock of RattanIndia Power Ltd, for good ROA in the next 3/6 months time frame.
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