JSW Energy commissions 300MW capacity from Ratnagiri
Srujani Panda / 18 Oct 2011
JSW Energy Ltd has commissioned Unit IV of 300MW of its power plant in Ratnagiri, Maharashtra State. This is the last unit of the 1200MW capacity of Ratnagiri power plant. Unit III of this plant was commissioned in the month of May. This project is supplying 300MW the electricity to State electricity board and 900MW on short term basis. With the commissioning of this 600MW total capacity has gone up to 2330MW. Company currently has a total 4670MW capacity under implementation and 5070MW of capacity under planning.
On October 10, 2011 Company also commenced supply of its lignite block from Kapurdi, Rajasthan. This mine block will supply the fuel to JSW Energy’s 1080MW power plant in Barmer for 30 years. 270 MW capacity of this plant is already commissioned, while 810 MW of the remaining capacity will be operational sometime in this fiscal.
With the addition of the new capacity, company will be able to sell more power through short term route. In the first quarter JSW Energy sold 72% of its power generated through short term contracts and 28% through long term contracts. Merchant realization declined to 5.27 compared to 5.79 in the first quarter in FY11.
This is the time of the year when country is facing severe power cuts due to which there is very high growth in the short term power contracts. When we analyzed the data of volumes traded on the power exchanges (PXIL) for last two months we found that, volumes have gone up by about 34 times in October compared to volumes traded in the last month.
Merchant prices which were falling below Rs 4 have risen sharply close to Rs 6. Growth in the volumes and the prices however would be a short lived impact. Government is stepping up to resolve the matter. As soon as the matter is resolved prices and volumes will come back to its normal level. We also believe that this would not have any large impact on the profitability of JSW Energy.
In fact when we analyzed quarterly reports of JSW Energy, we found that its EBITDA margins declined to 32% in Q1FY12 from 50% in Q1FY11. This is stark contrasting as its revenues rose by 34% on YoY basis. Company also reported decline in its EPS to Rs 0.83 in Q1FY12 from Rs 2 in corresponding quarter last year.
We are still not positive on the stock since company buys coal from Indonesia, which has recently increased its coal prices to benchmark prices. It is wise to watch the movements in the coal market. Presently we believe it is advisable to stay away from the scrip.
On October 10, 2011 Company also commenced supply of its lignite block from Kapurdi, Rajasthan. This mine block will supply the fuel to JSW Energy’s 1080MW power plant in Barmer for 30 years. 270 MW capacity of this plant is already commissioned, while 810 MW of the remaining capacity will be operational sometime in this fiscal.
With the addition of the new capacity, company will be able to sell more power through short term route. In the first quarter JSW Energy sold 72% of its power generated through short term contracts and 28% through long term contracts. Merchant realization declined to 5.27 compared to 5.79 in the first quarter in FY11.
This is the time of the year when country is facing severe power cuts due to which there is very high growth in the short term power contracts. When we analyzed the data of volumes traded on the power exchanges (PXIL) for last two months we found that, volumes have gone up by about 34 times in October compared to volumes traded in the last month.
Merchant prices which were falling below Rs 4 have risen sharply close to Rs 6. Growth in the volumes and the prices however would be a short lived impact. Government is stepping up to resolve the matter. As soon as the matter is resolved prices and volumes will come back to its normal level. We also believe that this would not have any large impact on the profitability of JSW Energy.
In fact when we analyzed quarterly reports of JSW Energy, we found that its EBITDA margins declined to 32% in Q1FY12 from 50% in Q1FY11. This is stark contrasting as its revenues rose by 34% on YoY basis. Company also reported decline in its EPS to Rs 0.83 in Q1FY12 from Rs 2 in corresponding quarter last year.
We are still not positive on the stock since company buys coal from Indonesia, which has recently increased its coal prices to benchmark prices. It is wise to watch the movements in the coal market. Presently we believe it is advisable to stay away from the scrip.
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