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AMSEC
Power Fin. Corpn. (Buy)
CMP: Rs 149
Target: Rs 176
Power Finance Corporation Ltd (PFC) recorded strong growth in bottom-line in 4QFY12 led by healthy growth in NII and non-inclusion of forex gain/loss. NII grew 45 per cent y-o-y and 10.4 per cent q-o-q to Rs 1,200 crore led by the 51 bp y-o-y and 4bp q-o-q improvement in the yield on assets to 11.3 per cent and 14 bp q-o-q decline in the cost of funds to 8.99 per cent. However, asset quality continued to be stressed as the Rs 700 crore exposure to Maheshwar Hydro Electric Project was classified as an NPA during the quarter. Even so, loan book growth remained healthy at 30.7 per cent y-o-y and 10.4 per cent along with disbursement growth of 34.5 per cent y-o-y and 50.5 per cent q-o-q to Rs 15,940 crore..
IFCI Financial
PTC (Buy)
CMP: Rs 55
Target: Rs 77
During 4QFY12, PTC earned net rebate and surcharge of Rs 175 crore vs. Rs 10.9 crore in 3QFY12 and Rs 16.4 crore in 4QFY11.
Adjusted for these non-core earnings, 4QFY12 trading margins were up 25 per cent q-o-q to Rs 0.044/kWh against Rs 0.038/kWh in 3QFY12. Gross trading margin were robust and increased (+41 per cent Q-o-q, +4 per centY-o-y) at Rs 0.087/kWh.
On commencement of the 150MW tolling project in 1QFY13 and expected commissioning of Meenakshi tolling project in 3QFY13, we expect tolling margins of Rs 40 crore (Rs 1.4/share) in FY13.
These estimates are conservative and are built-in on a spread of Rs 0.5/kWh against potential spread of Rs 1.5/kWh considering that PTC sells this power on merchant/short term PPA in the southern grid and (current average sale price of Rs 7/kWh in “IEX/PXIL) has a cost of generation of Rs 4.5/kWh.
We have however not built-in our earnings model.
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