Description
This is a PPT about financial analysis of IPO of Adani Power and NHPC. It uses various methods and financial statements to analyse it.
Critical Analysis of Adani Power and NHPC IPOs
Agenda
• Adani Power Limited (APL)
– About the company – Financial statement analysis
– Valuation techniques
– Leads and Concerns
• Market timing of IPOs • Conclusion
APL – About the Company
• APL will develop, operate and maintain power projects. • Currently has 4 thermal power plants under development. • Comparison with peers
Company NTPC Ltd NHPC Ltd Reliance Power Tata Power Adani Power Market Capital 1764537.00 442826.64 385917.00 286476.93 218000.00 Sales 417913.00 26888.60 0.00 72362.30 0.00 Other Income 34645.00 5512.20 3347.16 6323.50 0.00 PAT 82013.00 11298.00 2489.00 9675.00 -28.0
(In Million)
CMP(Rs) Capacity (MW)* 214 36 161 1293.7 100 48000 11353 12500 8035 6600
APL – Financial Statement Analysis
Year LIABILITIES Share Capital Reserve and Surplus Shareholders fund(Net Worth) Loans Current Liabilities Total Capital ASSETS Gross Block Less : Depreciation Net Block CWIP Investments Net Current Assets Total Capital Balance Sheet(Rs Million) FY05 FY06 FY07 10 0 10 0 0 10 0 0 0 10 0 0 10 10 98 108 0 29 137 2 0 2 121 0 14 137 2607 177 2784 1443 2310 6537 12 1 11 6019 0 507 6537 FY08 7382 6941 14323 10112 4097 28532 86 11 75 23956 832 3669 28532 FY09 18420 4364 22784 49897 5453 78134 3355 98 3257 62472 2721 9684 78134
APL – Financial Statement Analysis
Income Statement(Rs Million) Year Revenue Income from Operations Expenditure -23 -72 -28 FY05 FY06 FY07 FY08 FY09
PDBIT
Margin % Interest
0
0
-23
-72
-28
Depreciation
PBT Provision of Tax Tax Rate PAT 0 0 -23 -72 -28 0 0 -23 -72 -28 0
APL – Valuations
• Book Value per Share
Company Equity Shares CMP(Rs Per Share) 214.00 36.00 161 Net Worth Book Value (Rs Per Share) 69.58 14.62 57.54
(In Million)
Market Price Per Share/BV Per Share 3.08 2.46 2.80
NTPC Ltd NHPC Ltd Reliance Power Ltd Tata Power
8246 12300.74 2397
5,73,701.00 1,79,836.35 1,37,928.10
221.44 2,180.00
1293.7 100.00
81,098.90 26,784.00
366.23 12.29
3.53 8.14
Adani Power
APL – Valuations
• Market Capital Per Mega Watt
Company
(In Million)
CMP(Rs) Equity Shares Market Cap Capacity Market Capital (MW)* Per MW
NTPC Ltd
NHPC Ltd Reliance Power Tata Power
214.00
36.00 161 1293.7
8246
12300.74 2397 221.44
17,64,537.00
4,42,826.64 3,85,917.00 2,86,476.93
48,000
11353 12500 8035
36.76
39.01 30.87 35.65
Adani Power
100.00
2,180.00
2,18,000.00
6,600
33.03
APL – Valuations
• Discounted Cash Flow Method • Estimations adopted from various research papers
– Peak Load Factor: 85%
– Merchant Tariff: Rs 5 per Unit
– Full commencement of all projects by July 2011 – FY12 PAT is Rs. 8000 Million – Adani Power will operate with 6600MW only – Coal Cost: $36 – 39 per ton
– Interest Rate of loan: 11.5 – 12%
APL – Valuations
• Estimations adopted from various research papers
– PAT is decreasing by 10% per year after FY13 due to more operating expenses – Depreciation is fixed at 10% Straight line method – Discount rate is taken as 364 Day T Bill rate (4.5%) – Fixed asset is approx. Rs. 260000 Million
– Salvage Value is 10% of whatever asset has left in the end
– Expected life is 10 Years from FY12
• NPV per Share: Rs. 90.86
APL - Leads
• Secured fuel supply
– Coal mining in Indonesia – Two coal blocks in India
• Location advantage
– Close proximity to coal mines – Close proximity to Sea
• Power take-off agreement already in place
APL – Concerns
• Fuel sourcing from Indonesia
– Exposes to regulatory and commercial risk
• Import of equipments from china
– Quality of equipments
• All projects under development has DER 80:20 as compared to 70:30 followed by others
• Ability to acquire sufficient land area for Tiroda
questionable
Timing of IPOs
• Market gaining confidence after about 18 months • Grey market offering premium to new IPOs
– Adani Power – 12% – NHPC – 40%
• NHPC suffered lose being launched after Adani Power
– Blocked money with Adani Power
– NHPC grey market premium dropped due to below the mark
listing of Adani Power on 20th August, 2009
Conclusion
• Adani Power Limited
– Balance Sheet seems inflated – No Income source as on today – Market to book value very high – Risky call with no business up and running
References
• • Red herring prospectus: Adani Power Limited Red herring prospectus: NHPC Limited
•
• • • • • • • •
Prabhudas Lilladhar research papers
Reliance Money research papers Share Khan research papers www.moneycontrol.com money.rediff.com economictimes.indiatimes.com Annual report 2009: NTPC limited Annual report 2009: Reliance power limited Annual report 2009: Tata Power limited
Thank You
doc_828615152.pptx
This is a PPT about financial analysis of IPO of Adani Power and NHPC. It uses various methods and financial statements to analyse it.
Critical Analysis of Adani Power and NHPC IPOs
Agenda
• Adani Power Limited (APL)
– About the company – Financial statement analysis
– Valuation techniques
– Leads and Concerns
• Market timing of IPOs • Conclusion
APL – About the Company
• APL will develop, operate and maintain power projects. • Currently has 4 thermal power plants under development. • Comparison with peers
Company NTPC Ltd NHPC Ltd Reliance Power Tata Power Adani Power Market Capital 1764537.00 442826.64 385917.00 286476.93 218000.00 Sales 417913.00 26888.60 0.00 72362.30 0.00 Other Income 34645.00 5512.20 3347.16 6323.50 0.00 PAT 82013.00 11298.00 2489.00 9675.00 -28.0
(In Million)
CMP(Rs) Capacity (MW)* 214 36 161 1293.7 100 48000 11353 12500 8035 6600
APL – Financial Statement Analysis
Year LIABILITIES Share Capital Reserve and Surplus Shareholders fund(Net Worth) Loans Current Liabilities Total Capital ASSETS Gross Block Less : Depreciation Net Block CWIP Investments Net Current Assets Total Capital Balance Sheet(Rs Million) FY05 FY06 FY07 10 0 10 0 0 10 0 0 0 10 0 0 10 10 98 108 0 29 137 2 0 2 121 0 14 137 2607 177 2784 1443 2310 6537 12 1 11 6019 0 507 6537 FY08 7382 6941 14323 10112 4097 28532 86 11 75 23956 832 3669 28532 FY09 18420 4364 22784 49897 5453 78134 3355 98 3257 62472 2721 9684 78134
APL – Financial Statement Analysis
Income Statement(Rs Million) Year Revenue Income from Operations Expenditure -23 -72 -28 FY05 FY06 FY07 FY08 FY09
PDBIT
Margin % Interest
0
0
-23
-72
-28
Depreciation
PBT Provision of Tax Tax Rate PAT 0 0 -23 -72 -28 0 0 -23 -72 -28 0
APL – Valuations
• Book Value per Share
Company Equity Shares CMP(Rs Per Share) 214.00 36.00 161 Net Worth Book Value (Rs Per Share) 69.58 14.62 57.54
(In Million)
Market Price Per Share/BV Per Share 3.08 2.46 2.80
NTPC Ltd NHPC Ltd Reliance Power Ltd Tata Power
8246 12300.74 2397
5,73,701.00 1,79,836.35 1,37,928.10
221.44 2,180.00
1293.7 100.00
81,098.90 26,784.00
366.23 12.29
3.53 8.14
Adani Power
APL – Valuations
• Market Capital Per Mega Watt
Company
(In Million)
CMP(Rs) Equity Shares Market Cap Capacity Market Capital (MW)* Per MW
NTPC Ltd
NHPC Ltd Reliance Power Tata Power
214.00
36.00 161 1293.7
8246
12300.74 2397 221.44
17,64,537.00
4,42,826.64 3,85,917.00 2,86,476.93
48,000
11353 12500 8035
36.76
39.01 30.87 35.65
Adani Power
100.00
2,180.00
2,18,000.00
6,600
33.03
APL – Valuations
• Discounted Cash Flow Method • Estimations adopted from various research papers
– Peak Load Factor: 85%
– Merchant Tariff: Rs 5 per Unit
– Full commencement of all projects by July 2011 – FY12 PAT is Rs. 8000 Million – Adani Power will operate with 6600MW only – Coal Cost: $36 – 39 per ton
– Interest Rate of loan: 11.5 – 12%
APL – Valuations
• Estimations adopted from various research papers
– PAT is decreasing by 10% per year after FY13 due to more operating expenses – Depreciation is fixed at 10% Straight line method – Discount rate is taken as 364 Day T Bill rate (4.5%) – Fixed asset is approx. Rs. 260000 Million
– Salvage Value is 10% of whatever asset has left in the end
– Expected life is 10 Years from FY12
• NPV per Share: Rs. 90.86
APL - Leads
• Secured fuel supply
– Coal mining in Indonesia – Two coal blocks in India
• Location advantage
– Close proximity to coal mines – Close proximity to Sea
• Power take-off agreement already in place
APL – Concerns
• Fuel sourcing from Indonesia
– Exposes to regulatory and commercial risk
• Import of equipments from china
– Quality of equipments
• All projects under development has DER 80:20 as compared to 70:30 followed by others
• Ability to acquire sufficient land area for Tiroda
questionable
Timing of IPOs
• Market gaining confidence after about 18 months • Grey market offering premium to new IPOs
– Adani Power – 12% – NHPC – 40%
• NHPC suffered lose being launched after Adani Power
– Blocked money with Adani Power
– NHPC grey market premium dropped due to below the mark
listing of Adani Power on 20th August, 2009
Conclusion
• Adani Power Limited
– Balance Sheet seems inflated – No Income source as on today – Market to book value very high – Risky call with no business up and running
References
• • Red herring prospectus: Adani Power Limited Red herring prospectus: NHPC Limited
•
• • • • • • • •
Prabhudas Lilladhar research papers
Reliance Money research papers Share Khan research papers www.moneycontrol.com money.rediff.com economictimes.indiatimes.com Annual report 2009: NTPC limited Annual report 2009: Reliance power limited Annual report 2009: Tata Power limited
Thank You
doc_828615152.pptx