Gayatri projects surged with news of TPCIL’s power purchase deal with Telangana Government

Gayatri Projects informed stock exchanges on Thursday that Thermal Powertech Corporation India (TPCIL) which owns and operates a 1,320 megawatt coal fired power plant in Krishnapatnam in Andhra Pradesh’s SPSR Nellore district, has signed a long term power purchase agreement (PPA) with the Telangana Power Distribution Companies. 

Thermal Powertech is a joint venture 67.4 per cent owned by Sembcorp Utilities, a wholly-owned subsidiary of Sembcorp Industries Ltd., and 32.6 per cent owned by Gayatri Energy Ventures, a wholly-owned subsidiary of Gayatri Projects. 

Under the power purchase agreement, 570 megawatts of power will be sold to the Southern and Northern Power Distribution Companies of Telangana for a period of 8 years. Together with the 500 megawatts of power supplied to the Andhra Pradesh and Telangana Power Distribution Companies under a 25 year power purchase agreement, TPCIL has secured more than 85 percent of its net total generating capacity under long term power purchase agreements. 

The approximately US$1.5 billion coal fired power plant, which has a total capacity of 1,320 megawatts, completed its first 660 megawatt unit in March 2015 and second 660 megawatt unit in September 2015. 

On financial front, the consolidated net revenue from operations of Gayatri reached to Rs 422 crores in Q3FY16 compared to Rs 393 crores in Q3FY15 an increase of 7.43 per cent year on year (YoY). The EBITDA stood at Rs 60 crores this quarter compared to Rs 33 crores in Q3FY15 an increase of 83 per cent YoY. The EBITDA margin of company stood at 14.26 per cent this quarter compared to 8.38 per cent in Q3FY15. The substantial increase in EBITDA is on back of decrease in consumption of raw materials by 12.5 per cent to Rs 337 crores compared to Rs 386 crores in Q3FY15. The net profit stood at Rs 12 crores in Q3FY16 compared to Rs 2.73 crores in Q3FY15 an increase of 346 per cent YoY. 

On valuation front the trailing twelve month (TTM) P/E of Gayatri is at 43.33 compared to industry P/E of 20.88. The stock of company is currently trading at Rs 558.40 an increase of 2.21 per cent from previous close.