>JSW ENERGY

 1QFY13 adjusted PAT higher than estimates: During 1QFY13 adjusted PAT stood at INR1.9b v/s our estimate of INR1.6, consolidated PAT boosted by higher generation. JSWEL reported forex loss of INR2.3b pertaining MTM on Buyer's credit availed from bank (USD442m as at Jun-12) towards coal imports and is marked at INR56/USD as at June 2012. Subsidiaries performance was impacted by one-off charges as accelerated depreciation of INR100m led to losses of INR200m at SACMH and at Jaigad transmission, company booked reversal of arrears of INR240m. Raj West recorded improvement in performance with PAT loss INR100m for 1QFY13, vs ~INR450m YoY.


 Robust operating performance, gross margin on up move: JSWEL net generation during the quarter stood at ~4.7BUs units (up 95% YoY), led by better PLFs at all the projects. In 1QFY13 gross margin improved to INR2.1/ unit, vs lows of INR0.2/unit in 2QFY12. Fuel cost was flat QoQ as entire coal inventory of the last quarter was consumed and benefit of lower prices would be realized from 2QFY13.


 Key takeaways from Analyst meet: a) Target to commission all units of Raj West project by Sept-12, hopeful of getting clearance for ~7mtpa production from Kapurdi mines, all units to operate from 3QFY13E, b) Booked entire Vijaynagar capacity for next 12 months at ST realization of INR4.25/unit+, c) Limit Buyer's credit (USD442m as at Jun-12) exposure to USD400m mark to avoid huge forex exposure, and d) fuel cost to see moderation in 2QFY13 as high cost inventory at Ratnagiri is fully consumed in 1QFY13.


 Valuations and view: We JSWEL to report consolidated net profit of INR6.2b (up 88% YoY) in FY13E and INR10.5b (up 69% YoY) in FY14E. Stock trades at PER of 8.3x and P/BV of 1.3x (RoE of 16%) on FY14E basis. Maintain Buy.