Description
overview of satluj jal vidyut nigam, porter five forces for Hydro-electric power sector, fiancial performance and key ratios of Satluj Jal Vidyut nigam. It also gives du point and valuation of satluj jal vidyut nigam.
Satluj Jal Vidyut Nigam
About the company - SJVN
?
Formerly Nathpa Jhakri Power Corporation Limited – NJPC:
? ? ?
Hydro-electric power generation company incorporated in 1988 JV between Central Govt. and State Govt. HP Financial assistance from World bank
?
Currently largest operational hydro-electric power generational facility (Aggregate
generation capacity : 1500 MW)
? ?
Another 412 MW Rampur Hydro Electric Project is under construction Future projects
? ? ?
Luhri Hydro Electric Project (775 MW) and Dhaulasidh HEP (66 MW) Includes projects outside India in Nepal and Bhutan Venturing into Wind Energy sector by adding 50MW of wind energy by 2012
?
Came out with IPO in 2010 as a part of Government disinvestment program
Porters Five Forces – Hydro-electric power sector
Buyer Power (Moderate ) Out of total energy , 12% supplied free of cost to home state HP Rest , sold as long term contracts to SEBs and distribution licensees based on tariffs rates prescribed by CERC Supplier power (Nil)
Industry Rivalry (Low) Huge demand-supply gap - Peak energy demand is about 12.7% more than the total available energy for consumption Generation capacity will need to be doubled over the next 10 years Competitors include NHPC, JP Power Ventures, KSK Energy Ventures New Entrants (High) Govt’s Hydro Power Policy 2008 aimed at attracting private investment By 2011, May be required to take part in competitive tender process conducted by distribution licensees
Substitutes (Moderate) Thermal Energy,Wind Energy, Solar energy
Financial Performance
?
Stable revenue stream through long-term power purchase agreements with state electricity boards and distribution licensees Strong cash position to support project development and operations Operating margin are very high Track record of operational excellence
?
? ? ?
SJVN has consistently exceeded the normative annual plant availability factor target of 85% required by CERC from 2007 to 2009. SJVN’s installed capacity is one-third that of its peer NHPC but its turnover is about 75% that of NHPC
?
Financial Indicators
Mar 10(12) Mar 09(12) Mar 08(12) Mar 07(12) Mar 06(12) Mar 05(12) Mar 04(12) Net Profit Sales Profit Margin Capital Employed Capital Turnover ROCE
?
972.72 1,911.57 50.89%
1,014.98 2,031.22 49.97%
716.84 1,462.28 49.02%
650 1,476.17 44.03%
585.44 1,350.94 43.34%
589.94 1,345.04 43.86%
-93.1 223.8 -41.60%
8,335.64 0.229 11.67%
8,189.78 0.248 12.39%
7,711.69 0.190 9.30%
7,784.36 0.190 8.35%
7,965.87 0.170 7.35%
8,111.21 0.166 7.27%
7,744.72 0.029 -1.20%
The return on capital employed has been increasing for the company for the years 2005-10.
Key Ratios
2010 EBIDTA 91.75 2009 105.23 2008 96.73 2007 94.92 2006 115.41 2005 97.06 2004 97.54
EBIT
67.26
91.97
79.05
77.49
93.52
79.98
20.84
• Company has very high EBIDTA (over 90%) for all the years which shows that company has very little operational expenditure. • Operational expenditure are constituted by wages and other administrative cost which makes this business a cash rich business.
2010 Depreciation Capex 3,259.9 (2,562.7) 2009 2,342.3 (6,247.0) 2008 2,399.2 (4,602.4) 2007 2,456.1 (2,560.8) 2006 2,325.6 (1,523.7) 2005 2,182.8 (882.4)
• Company has charged high depreciation which reduces its earnings. Capital expenditure of the company is significantly lesser with respect to depreciation. Earnings potential of company is more than the reported profit margin
Du Pont Analysis
Mar-10 PBIDT/Sales(%) Sales/Net Assets PBDIT/Net Assets PAT/PBIDT(%) Net Assets/Net Worth ROE(%)
?
Mar-09 105.23
Mar-08 96.73
Mar-07 94.92
Mar-06 115.41
Mar-05 97.06
91.75
0.21
0.19
0.21
0.23
0.18
0.17
0.18
0.17
0.13
0.15
0.16
0.15
59.91
1.25 15.32
54.83
1.35 17.3
54.63
1.35 13.09
48.58
1.48 12.82
47.75
1.63 12.51
47.58
1.81 14.03
The company has been earning a high return on equity for the period 2005-10
Target Price based on Debt Capacity
? ?
Currently share has been trading at Rs 22.65 (as on 25th November) Cash flow and interest figures are in Rs crores
Comparison of stock to a AAA bond
?
?
?
Based upon the operating cash flows, earnings capacity can be compared to a bond which pays steady coupon Firm has average cash flow of Rs1400 crore for last 6 years. Assuming an interest of 10 % and perpetual stream of cash flow, this would be worth Rs 14000 crore Current market cap of firm is Rs 9369.66 crore along with many growth opportunities in pipeline like Rampur and many MOUs with state and Nepal and Bhutan governments
Single Asset Company
?
?
?
Risk arising due to single asset company can be mitigated at the portfolio level by investing in a broad spectrum of companies. Firm sells power to state electricity boards at Rs 2.15 per unit with respect to Rs 4 per unit market rate. Prices can be managed in favor of company as state electricity boards are not concerned with price as they can pass it on to customers Company has the capacity to adjust to slight price fluctuations
Is it a good business – Debt Free
Figures in Rs Million Inventories Sundry Debtors Cash and Bank Balances 2010 2009 2008 2007 2006 2005
611.5 558.5 2,660.40 3,645.50
536.3 3,169.60
587.1 2,508.30
6,210.40 228.8 5,605.20 2007
625.5 7,578.90
1,333.50 33.8 4,346.70 2006
337.2 3,332.20
3,427.70 32.5 2,224.50 2005
14,871.50 12,714.40 6,936.00 335.5 6,633.80 2008
825.7 Other Current Assets 401.8 Loans and Advances 6,210.50 4,624.60 2010 2009 Figures in Rs Million Secured Loans Unsecured Loans Income Received in Advance Current Liabilities Provisions
11,305.10 13,075.10 17,109.30 21,868.30 26,828.40 31,371.50 6,393.70 8,349.30 3,091.50 3,373.70 3,998.90 4,945.50 8,493.50 8,493.50 4,118.90 4,995.30 6,741.50 7,434.20 6,491.10 5,447.10 5,389.50 4,488.70 3,386.20 4,747.40 2,526.60 3,356.20 3,637.00 538.7 2,718.80 1,845.80
Company has sufficient cash and current assets to offset both long and short term debts
Is it a good business?
?
•
Positives
Presence of Liquidity - High operating cash flows as a proportion of income
Decreasing debt to equity ratio over the years Supported by Central government and huge demand and supply gap
Mar-10 Mar-09
0.35 1641.11 1,014.98
• •
Mar-08
0.41 1645.86 716.84
Mar-07
0.55 1874.75 650
Mar-06
0.72 941.47 585.44
Mar-05
0.88 892.06 589.94
Debt to Equity
0.3
Operating Cash 1522.43 Flows Net Profit 972.72
Potential Reasons of failure
?
Reasons that can affect future stream of revenues
Company financial performance is dependent on the NJHPS, which is the only operational project, and only source for revenues and operating cash flows and to finance the
?
development of other hydroelectric power projects.
?
Environmental compliance, technological changes, geological, weather and hydrological conditions affecting projects
?
Over utilization of Plant (more than 100% capacity), silt levels can
be potential problem area, natural disaster like flood or war can have negative effect on company.
?
Thank you
doc_801601586.pptx
overview of satluj jal vidyut nigam, porter five forces for Hydro-electric power sector, fiancial performance and key ratios of Satluj Jal Vidyut nigam. It also gives du point and valuation of satluj jal vidyut nigam.
Satluj Jal Vidyut Nigam
About the company - SJVN
?
Formerly Nathpa Jhakri Power Corporation Limited – NJPC:
? ? ?
Hydro-electric power generation company incorporated in 1988 JV between Central Govt. and State Govt. HP Financial assistance from World bank
?
Currently largest operational hydro-electric power generational facility (Aggregate
generation capacity : 1500 MW)
? ?
Another 412 MW Rampur Hydro Electric Project is under construction Future projects
? ? ?
Luhri Hydro Electric Project (775 MW) and Dhaulasidh HEP (66 MW) Includes projects outside India in Nepal and Bhutan Venturing into Wind Energy sector by adding 50MW of wind energy by 2012
?
Came out with IPO in 2010 as a part of Government disinvestment program
Porters Five Forces – Hydro-electric power sector
Buyer Power (Moderate ) Out of total energy , 12% supplied free of cost to home state HP Rest , sold as long term contracts to SEBs and distribution licensees based on tariffs rates prescribed by CERC Supplier power (Nil)
Industry Rivalry (Low) Huge demand-supply gap - Peak energy demand is about 12.7% more than the total available energy for consumption Generation capacity will need to be doubled over the next 10 years Competitors include NHPC, JP Power Ventures, KSK Energy Ventures New Entrants (High) Govt’s Hydro Power Policy 2008 aimed at attracting private investment By 2011, May be required to take part in competitive tender process conducted by distribution licensees
Substitutes (Moderate) Thermal Energy,Wind Energy, Solar energy
Financial Performance
?
Stable revenue stream through long-term power purchase agreements with state electricity boards and distribution licensees Strong cash position to support project development and operations Operating margin are very high Track record of operational excellence
?
? ? ?
SJVN has consistently exceeded the normative annual plant availability factor target of 85% required by CERC from 2007 to 2009. SJVN’s installed capacity is one-third that of its peer NHPC but its turnover is about 75% that of NHPC
?
Financial Indicators
Mar 10(12) Mar 09(12) Mar 08(12) Mar 07(12) Mar 06(12) Mar 05(12) Mar 04(12) Net Profit Sales Profit Margin Capital Employed Capital Turnover ROCE
?
972.72 1,911.57 50.89%
1,014.98 2,031.22 49.97%
716.84 1,462.28 49.02%
650 1,476.17 44.03%
585.44 1,350.94 43.34%
589.94 1,345.04 43.86%
-93.1 223.8 -41.60%
8,335.64 0.229 11.67%
8,189.78 0.248 12.39%
7,711.69 0.190 9.30%
7,784.36 0.190 8.35%
7,965.87 0.170 7.35%
8,111.21 0.166 7.27%
7,744.72 0.029 -1.20%
The return on capital employed has been increasing for the company for the years 2005-10.
Key Ratios
2010 EBIDTA 91.75 2009 105.23 2008 96.73 2007 94.92 2006 115.41 2005 97.06 2004 97.54
EBIT
67.26
91.97
79.05
77.49
93.52
79.98
20.84
• Company has very high EBIDTA (over 90%) for all the years which shows that company has very little operational expenditure. • Operational expenditure are constituted by wages and other administrative cost which makes this business a cash rich business.
2010 Depreciation Capex 3,259.9 (2,562.7) 2009 2,342.3 (6,247.0) 2008 2,399.2 (4,602.4) 2007 2,456.1 (2,560.8) 2006 2,325.6 (1,523.7) 2005 2,182.8 (882.4)
• Company has charged high depreciation which reduces its earnings. Capital expenditure of the company is significantly lesser with respect to depreciation. Earnings potential of company is more than the reported profit margin
Du Pont Analysis
Mar-10 PBIDT/Sales(%) Sales/Net Assets PBDIT/Net Assets PAT/PBIDT(%) Net Assets/Net Worth ROE(%)
?
Mar-09 105.23
Mar-08 96.73
Mar-07 94.92
Mar-06 115.41
Mar-05 97.06
91.75
0.21
0.19
0.21
0.23
0.18
0.17
0.18
0.17
0.13
0.15
0.16
0.15
59.91
1.25 15.32
54.83
1.35 17.3
54.63
1.35 13.09
48.58
1.48 12.82
47.75
1.63 12.51
47.58
1.81 14.03
The company has been earning a high return on equity for the period 2005-10
Target Price based on Debt Capacity
? ?
Currently share has been trading at Rs 22.65 (as on 25th November) Cash flow and interest figures are in Rs crores
Comparison of stock to a AAA bond
?
?
?
Based upon the operating cash flows, earnings capacity can be compared to a bond which pays steady coupon Firm has average cash flow of Rs1400 crore for last 6 years. Assuming an interest of 10 % and perpetual stream of cash flow, this would be worth Rs 14000 crore Current market cap of firm is Rs 9369.66 crore along with many growth opportunities in pipeline like Rampur and many MOUs with state and Nepal and Bhutan governments
Single Asset Company
?
?
?
Risk arising due to single asset company can be mitigated at the portfolio level by investing in a broad spectrum of companies. Firm sells power to state electricity boards at Rs 2.15 per unit with respect to Rs 4 per unit market rate. Prices can be managed in favor of company as state electricity boards are not concerned with price as they can pass it on to customers Company has the capacity to adjust to slight price fluctuations
Is it a good business – Debt Free
Figures in Rs Million Inventories Sundry Debtors Cash and Bank Balances 2010 2009 2008 2007 2006 2005
611.5 558.5 2,660.40 3,645.50
536.3 3,169.60
587.1 2,508.30
6,210.40 228.8 5,605.20 2007
625.5 7,578.90
1,333.50 33.8 4,346.70 2006
337.2 3,332.20
3,427.70 32.5 2,224.50 2005
14,871.50 12,714.40 6,936.00 335.5 6,633.80 2008
825.7 Other Current Assets 401.8 Loans and Advances 6,210.50 4,624.60 2010 2009 Figures in Rs Million Secured Loans Unsecured Loans Income Received in Advance Current Liabilities Provisions
11,305.10 13,075.10 17,109.30 21,868.30 26,828.40 31,371.50 6,393.70 8,349.30 3,091.50 3,373.70 3,998.90 4,945.50 8,493.50 8,493.50 4,118.90 4,995.30 6,741.50 7,434.20 6,491.10 5,447.10 5,389.50 4,488.70 3,386.20 4,747.40 2,526.60 3,356.20 3,637.00 538.7 2,718.80 1,845.80
Company has sufficient cash and current assets to offset both long and short term debts
Is it a good business?
?
•
Positives
Presence of Liquidity - High operating cash flows as a proportion of income
Decreasing debt to equity ratio over the years Supported by Central government and huge demand and supply gap
Mar-10 Mar-09
0.35 1641.11 1,014.98
• •
Mar-08
0.41 1645.86 716.84
Mar-07
0.55 1874.75 650
Mar-06
0.72 941.47 585.44
Mar-05
0.88 892.06 589.94
Debt to Equity
0.3
Operating Cash 1522.43 Flows Net Profit 972.72
Potential Reasons of failure
?
Reasons that can affect future stream of revenues
Company financial performance is dependent on the NJHPS, which is the only operational project, and only source for revenues and operating cash flows and to finance the
?
development of other hydroelectric power projects.
?
Environmental compliance, technological changes, geological, weather and hydrological conditions affecting projects
?
Over utilization of Plant (more than 100% capacity), silt levels can
be potential problem area, natural disaster like flood or war can have negative effect on company.
?
Thank you
doc_801601586.pptx