SPA Securities
Nava Bharat Ventures (Buy)
CMP: ₹148.50
Target: ₹261
Nava Bharat Ventures registered subdued set of numbers owing to tepid performance reported by ferro alloy due to stoppage of ferro chrome conversion contract for Tata Steel. While the top-line degrew by 11 per cent, net profit declined by 49.8 per cent on account of 1,312 bps decline in operating margins to 8.7 per cent as power realisations declined by 12.3 per cent to ₹4.81/unit.
Though with some negatives, NBVL continues to remain an ideal play on firm merchant power tariffs in Southern India. Domestic power segment will continue to be driven by visibility in merchant power realisations. Commencement of Orissa operations in addition to 150 MW power plant in Andhra Pradesh will drive the near-term growth. Improving probability of commencing new 300-MW Zambian power plant from Q2FY17 (+80 per cent work complete) will result in significant growth in consolidated earnings.
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