[T.S.R:16806] NB Ventures-Sinking Merchant Power Realisations Slash Into Profits; Sell With A Target of Rs 200

NBVL reported weak numbers mainly due to lower merchant realizations (Rs3.36/unit) vs our est. (Rs4.5/unit).

 

Mgmt said- contracts have been signed at Rs3.8-4.3/unit in Q411/ Q112E- suggesting some pick up.

Revenues (down 7% yoy) were inline but EBITDA margins (23.1%, down 3100bps yoy) and EBITDA took a hit. Ergo RPAT was lower at Rs493mn versus our estimate of Rs856mn.

Cut earnings by 5-20% - factoring in higher fuel cost, coal trading in Zambia from Q312E (Indonesia dropped from projections) and Rs4.3/unit merchant tariffs in FY12E.

Implied long term merchant tariff of Rs3.3/unit, relatively lower. maintain accumulate on relatively cheaper valuations, natural hedge, fuel security with use of washery rejects

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