>ADANI POWER (CITI)

■ 4QFY10 PAT ahead of expectation on other income — Adani Power’s 4QFY10 PAT at Rs983mn, up 36% QoQ, was ahead of CIRA expectations of Rs732mn on Rs319mn of other income which we had expected the company to capitalize in line with what was done in 3QFY10.

■ ASPs lower than expected — ASPs in 4QFY10 at Rs3.27/kWh were down 15% QoQ. If one assumes merchant sales at Rs6/kWh and GUVNL sales at Rs2.81/kWh then one can back calculate and find out that almost 76.5% of the FY10 sales has been to GUVL and 23.5% of the FY10 sales has been merchant.

Sell: Other Income Leads To Profit Beat

■ Lower fuel costs and higher O&M costs — 4QFY10 fuel costs at Rs1.05/kWh per unit generated were down 27% YoY which is a very big positive but this to some extent has been negated by higher O&M costs of Rs0.23/kWh per unit sold. As a consequence, the EBITDA per unit sold is Rs1.91/kWh which is below CIRA expectations of Rs2.14/kWh

■ Update on tax rates and SEZ duty — Effective tax rate is down to 11% in 4QFY10, from 22% in 3QFY10, on account of commissioning of unit 2 of 330MW. Our discussion with the company suggests it has not provided for the 16% SEZ duty in FY10 as the regulations are not clear yet.

■ 2 more units set to be commissioned — Adani Power has commissioned 2 units of 330MW each in Mundra so far. The company was set to commission unit 3 in April 2010, followed by unit 4 in June 2010.

To read the full report: ADANI POWER