>POWER SECTOR: Q1FY11 Preview

Flat quarter expected
At the operating level, with the exception of PTC India, utilities under coverage are expected to see flattish performance, as no major capacity addition occurred during the quarter.

■ Sales to decline: Sales are likely to decline marginally by 4.9% QoQ, as no major capacity additions took place in the year. Utilities are likely to see a marginally declining trend on a YoY basis, due to lower tariff assumption on the back of lower fuel cost assumptions.

■ PTC India’s volumes to improve: We expect PTC India’s volumes to improve 26.6% YoY due to higher volumes from long-term trading. PTC’s long-term trading volumes are expected to more than double to 1100 MU.

■ Flat EBITDA expected: EBITDA to remain flat YoY for utilities like NTPC and Tata Power, while CESC is likely to witness YoY growth of 21.8% due to the commercialization of Budge Budge during the last quarter of FY10. On the back of higher volumes, we expect PTC’s EBITDA to grow 33.3% YoY to Rs207mn.

■ PAT likely to fall: With the exception of NTPC, most utilities are likely to see a fall in PAT, despite better operating performance, due to lower other income. We expect PTC’s PAT to fall 6.5% YoY despite higher volumes due to lower other income. In the case of CESC PAT is expected to fall by 6.2% YoY to Rs985mn.

To read the full report: POWER SECTOR