X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Neyveli Vs Tata Power Vs Reliance Energy - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jan 7, 2004

    Neyveli Vs Tata Power Vs Reliance Energy

    With the power reforms gaining momentum, all major power companies are planning to take maximum benefit and add generation capacities. With the stringent anti theft regulations, even private distribution companies have plans to increase their distribution circles. In this article, let's have a look at the relative strengths and weaknesses of majors like Neyveli Lignite, Tata Power and Reliance Energy.

    Neyveli Lignite Corporation (NLC), a 94% subsidiary of Tamil Nadu state government, has power generation capacity of 2,070 MW. Tata Power Company (TPC) on the other hand, is the largest private player in the power sector, with a generation capacity of 2,278 MW, which is 52% of the total power generation capacity of the private sector in the country. Out of Tata Power's total installed capacity, 79% lies in the Mumbai circle. Where as, Reliance Energy (REL) was formerly into distribution of power in the northern suburbs of Mumbai but since 1995-96 has entered into power generation and currently has a capacity of around 885 MW.

    NLC is expanding its thermal power generation capacity by 210 MW, which is expected to commence operations by the end of FY04. The company's expansion plans include a Thermal Power Plant at Tuticorin with a capacity of 1,000 MW as a joint venture with Tamil Nadu Electricity Board (TNEB). Apart from Tamil Nadu, the company is in talks with various state governments to add another 3,500 MW.

    TPC on the other hand, is planning to add another 1,500 MW generation capacity by FY09. As per the company's estimates, the expansion will raise the topline of the company by around 70% over next five years. The company's addition of 120 MW of generation capacity at Jojobera is expected to be operational by October 2005. The company also plans to increase its exposure to distribution circles and transmission networks going forward.

    On the other hand, Reliance Energy has more aggressive plans. The company has planned a 9,000 MW generation capacity by 2012, almost 10 times its current capacity. Talking about green field projects, the management is waiting for the state government's nod to begin its 3,000 MW gas power project in Vidarbh region of Maharashtra. The company has already announced merger of Reliance Salgaocar Company Limited (RSPCL) and BSES Andhra Power Limited (BAPL) with REL. With this merger, the generation capacity of the company will increase to 1,150 MW.

    As is apparent from the graph above, the stock prices of all the three power majors have gained substantially in last one year. Going forward, we believe Tata Power is likely to get hit in its operating margins due to the open excess provision. Conversely, Reliance Energy is expected to improve its operating margins by around 2% from the current levels. Though the long-term growth prospects of both the private power majors are good, but in the medium term, it seems that growth has been factored in the current valuations.

    (Rs m) Neyveli Lignite Tata Power Reliance Energy
    Net Sales 12,470 21,466 12,713
    PAT 5,619 2,704 1,771
    Operating Margins (%) 35.2% 29.2% 19.9%
    Net Profit Margins (%) 45.1% 12.6% 13.9%
    P/E (x) * 11.3 13.0 20.0

    All fig of 1HFY04
    * annualised

    On the other hand, Neyveli is expanding its lignite mining capacity, which will augur well with generation capacity increase. Consequently, we expect its operating margins to improve from the current levels. The company has received its outstanding dues worth Rs 26 bn from the state government in the form of tax-free power bonds, under power dues securitisation scheme, redeemable by 2008 . Till then, the company will get interest on the said bonds. The sorting of the outstanding dues issue is a big boost to the company's fundamentals. The table above clearly reflects Neyveli's strengths vis-a-vis REL and TPC.

     

     

    Equitymaster requests your view! Post a comment on "Neyveli Vs Tata Power Vs Reliance Energy". Click here!

      
     

    More Views on News

    NTPC: Higher Tax Provision Impacts Profits (Quarterly Results Update - Detailed)

    Mar 30, 2017

    NTPC declared results for the quarter ended December 2016. The company reported revenue growth of 10.9% while profits declined by 7.5% YoY.

    Tata Power: Higher regulatory & taxation costs hit bottomline (Quarterly Results Update - Detailed)

    Dec 28, 2015

    Tata Power declared its results for the quarter ended September 2015. The company's standalone revenues rose 16.3% YoY. However, net profits declined 9% YoY.

    Tata Power: Higher tax & finance costs hit bottomline (Quarterly Results Update - Detailed)

    Oct 6, 2015

    Tata Power declared its results for the quarter ended June 2015. The company's standalone revenues and profits fell by 3% and 5.3% YoY during the quarter.

    Tata Power: Nothing exciting on the cards... (Quarterly Results Update - Detailed)

    May 28, 2015

    Tata Power declared its results for the quarter and year ended March 2015. During the quarter, the company's standalone revenues grew by 19% YoY, while profits were up by 154% YoY.

    Power Mech Projects Limited (IPO)

    Aug 6, 2015

    Equitymaster analyses the Initial Public Offering (IPO) of Power Mech Projects Limited.

    More Views on News

    Most Popular

    New IIP Shows Demonetisation Slowed Down Indian Manufacturing Growth Big Time(Vivek Kaul's Diary)

    May 16, 2017

    The manufacturing growth between December 2016 and March 2017 fell to 1.6 per cent as against 6.9 per cent between April and October 2016.

    Why We Skipped This 70% Gainer(The 5 Minute Wrapup)

    May 18, 2017

    Underreporting of bad loans by some private sector banks casts a cloud over the sector's clean image so far.

    Just Like Before, the Market is about to Crash(Outside View)

    May 17, 2017

    Markets are at record highs. Fear is at record lows. How does this end? When does this end?

    Double Your Money with Derivatives(Daily Profit Hunter)

    May 19, 2017

    Asad Dossani discusses how you can double your money with derivatives.

    The Rise and Fall of Shilpi Cable Technologies(Chart Of The Day)

    May 19, 2017

    How Shilpi Cable lost over 70% of its market cap in one month.

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-6143 4055. Fax: +91-22-2202 8550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    TATA POWER SHARE PRICE


    May 26, 2017 (Close)

    TRACK TATA POWER

    • Track your investment in TATA POWER with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    TATA POWER 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE TATA POWER WITH

    MARKET STATS