>ADANI POWER: 3Q FY10 – A Mixed Bag (CITI)

■ 3Q FY10 PAT at Rs725m — In 3QFY10 Adani Power generated 670 mnkWh at a PLF of 92.8%, significantly higher than 37.7% in 2Q FY10 as the plant stabilized. We will monitor the monthly PLF over the next few months and then take a call if we should hike our PLF assumption to 90% across the board for all units from our current assumption of 85%. Realizations were ahead of expectations at Rs3.86/kWh (CIRA expectation of Rs3.34/kWh).

■ Fuel costs ahead of expectations — Adani Power’s fuel cost/ unit of generation at Rs1.45/kWh was ahead of our expectation of Rs1.03/kWh as the company initially imported expensive South African coal and blended the same with cheaper Indonesian (Bunyu) coal. According to the company, the plant is running exclusively on Indonesian coal currently and fuel cost is expected to come off in 4Q FY10. O&M cost per unit was more or less in line with our expectations

■ Mundra Phase I & II delayed marginally - Phase 3 & 4 on schedule — According to management Units 2, 3 & 4 of Mundra Phase I & II are delayed by 2-3 months due to restrictions on Chinese visas. However, Phases 3 & 4 are on schedule.

■ Update on tax rates — According to management the taxes shown in the profit & loss statement are deferred taxes (not cash taxes). The company has so far not started to avail the 10-year tax holiday (will not pay MAT also) under section 80IB and will start the same once all units are commissioned. The 10-year tax holiday can be availed in the first 15 years from the date of notification (Dec06). We have assumed MAT taxes in our numbers and will take a re-look at the same.

■ FY10E estimates are at risk — Given than the company has booked only Rs719m of PAT in 9M FY10, our FY10E estimates could be at risk.

To read the full report: ADANI POWER