Indiabulls Power Synchronises 270 MW Capacity

Indiabulls Group Company Indiabulls Power (IB Power) has reported the synchronisation of the first unit (270 MW) of its 1350 MW (5X270MW) Amravati phase I thermal power project. This is for the first time that IB Power has achieved operational progress in its power project. The shares of the company in the Mumbai equity markets were up by over 3% on this news by the end of the day.

IB Power is currently executing four power projects namely Amravati phase I and II and Nashik phase I and II. Each project will have five units with an installed capacity of 270 MW. For both the projects, the company has signed the fuel supply agreement with Coal India subsidiaries South Eastern Coalfields (SECL), Western Coalfields (WCL) and Mahanadi Coalfields (MCL).

As this is the first operational capacity of the company, one can expect the company to start adding revenues in its topline, most probably by the next quarter. The project has a 25-year long-term purchase agreement with the Maharashtra State Electricity Distribution Company Limited. The next units of the Amravati project are expected to get commissioned by a gap of about three months each. The Nashik Project is also expected to kick off soon, which would also be a positive on the scrip. The tariffs for the power procured from Amravati project has been set at Rs 3.26 per unit while that in Nashik would be at Rs 3.42 per unit, which seems reasonable.

The stock has been seeing a bearish stance of investors in the last three years. The latest announcement may lead to some positivity on the stock. We would recommend this scrip for the risk takers, those who are risk averse should, however, completely ignore the stock.