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Change Change %
-0.85 -0.97%

Updated:19 Apr, 2018, 15:51 PM IST

Change Change %
-0.75 -0.86%

Updated:19 Apr, 2018, 16:01 PM IST

Research Report Detail

Report Date Call Price@Call Target Price
Stop Loss
Current Status Time Horizon
Motilal Oswal
31-08-2017 Sell 79.00 71.00
Open Long (1Y)

Motilal Oswal maintains sell on Tata Power

CGPL's (Coastal Gujarat Power, Mundra) EBITDA declined 58% YoY to INR5.4b in FY17, as fuel under-recoveries nearly doubled to INR0.58/kwh (INR15b). Finance cost declined 48% YoY to INR6.8b on conversion of INR45b in quasi equity. FCF generation improved due to a sharp increase in trade payables to 145 days, historical low capex of INR467m, and lower interest payments. Consolidated net debt to EBITDA ratio rose from 5.1x to 6.4x under Ind-AS on exclusion of JVs. We expect leverage to decline due to the lack of value accretive re-investment opportunities, as management highlighted pulling back from investment opportunity in RE due to intense competition. Net worth has become volatile due to fair value accounting under Ind-AS. It no longer represents the historical meaning of shareholders' contribution and retained earnings. Therefore, we abandon P/BV basis for valuations and switch to SOTP-based valuation. Maintain Sell rating with an SOTP of INR71.

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