Emkay Global


Target: ₹91

CMP: ₹77.75

Q1-FY21 PAT declined 28.7 per cent y-o-y due to a fall in wind generation, increased fuel costs and high operating expenses. However, overall generation remained flat (+0.3 per cent y-o-y) at 1.21 billion units, led by higher generation at solar plants and the Vadodara -1 station.

Power generation dropped at the wind plant and Surat II station. Accordingly, the plant load factor (PLF) declined at Surat II unit and Wind plants, while it improved at solar plants. Vadodara II operated at a PLF of only 1.2 per cent, while it remained flat at the Surat I plant.

GIPCL's 100MW solar project secured under the Gujarat Urja Vikas Nigam tender is expected to be commissioned by Q4-FY21. Vadodara II PPA extension will continue to operate at a low level in FY21.

While the approval of the Gujarat Electricity Regulatory Commission for Vadodara II PPA extension with GUVNL is in place, the current in economic slowdown is unlikely to revive demand from the discoms, in our view

We maintain our Buy rating on GIPCL on the grounds of attractive valuations (0.3x FY22E P/BV), strong cash balance (31 per cent of market-cap) and risk-averse regulatory business model.