X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 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.
Guj. Ind. Power: Technical snag mars performance - Views on News from Equitymaster
MidCapSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Guj. Ind. Power: Technical snag mars performance
Feb 13, 2015

Gujarat Industries Power Company (GIPCL) declared its results for the quarter and nine month period ended December 2014. During the quarter, the company reported an 18% YoY and 50% YoY increase in revenues and profits respectively. Here is our analysis of the results.

Performance summary
  • Revenues declined by 18% YoY during the quarter.
  • Operating profits declined by a fourth as margins fall by 3.3% YoY to 29.7%.
  • Lower other income, coupled with a poor operating performance and a higher tax outgo leads to a 50% YoY decline in profits.
  • During 9mFY15, the company's revenues and profits remain flat.

Standalone financial performance
(Rs m) 3QFY14 3QFY15 Change 9mFY14 9mFY15 Change
Net sales 3,494 2,861 -18.1% 9,870 9,667 -2.1%
Expenditure 2,341 2,011 -14.1% 6,662 6,501 -2.4%
Operating profit (EBDITA) 1,153 850 -26.3% 3,208 3,166 -1.3%
EBDITA margin (%) 33.0% 29.7%   32.5% 32.8%  
Other income 91 83 -9.5% 223 346 55.1%
Depreciation 398 276 -30.6% 1,190 947 -20.4%
Interest 219 208 -5.2% 672 651 -3.2%
Profit before tax 626 448 -28.5% 1,569 1,914 22.0%
Tax 201 234 16.7% 467 810 73.5%
Profit after tax/(loss) 426 213 -49.8% 1,102 1,103 0.1%
Net profit margin (%) 12.2% 7.5%   11.2% 11.4%  
No. of shares (m)       151.3 151.3  
Diluted earnings per share (Rs)*         12.3  
Price to earnings ratio (x)         6.9  
Source: Company, Equitymaster Research

What has driven performance in 3QFY15?
  • GIPCL's revenues were lower by 18% YoY despite a 3% YoY change in volumes during the quarter. As per the company, unit 1 (125MW) of the Surat Lignite power plant has been in shut down mode from 29th November 2014, due to technical snag in the stator winding of generator. The extent of the cost of such repair is being worked out by BHEL. As per the GIPCL, profits would have been higher by at least Rs 19.2 bn due to the expected short recovery of fixed costs. From the date of the issue starting, the plant is expected to be operational within a period of 90 days. Further, tax costs were higher during the quarter due to adjustments related to earlier periods.

  • The company's plant availability factor (PAF) remained mixed, ranging from 78% to 100%; PLFs were quite volatile raging from 1% (for Vadodara–II) to 88% for SLPP-II (Surat plant).

  • During 9mFY15, revenues and profits remain flat.
What to expect?

At the current price of Rs 85, the stock is trading at a multiple of over 6.9 times its trailing twelve month earnings and about 0.7 times its FY14 book value per share.

There is not much update from the previous quarter. We continue to believe the downside risk to the current price is capped given the attractive valuations, the 2.8% dividend yield as well as the strong cash flows of the business. However, given the uncertainties, we maintain our hold view on the company from a long term perspective.

We would like to reiterate to our subscribers that for the purpose of diversifying risk, no stock should form more than 5% of one's portfolio. Please visit our asset allocation page for more details.

To Read the Full Story, Subscribe or Sign In



DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group.
BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.
DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.
GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.
DETAILS OF ASSOCIATES:
  1. Quantum Information Services Private Limited (QIS) having its registered office at 103, Regent Chambers, Nariman Point, Mumbai 400021 is registered under SEBI (Investment Advisers) Regulations, 2013 vide Registration No. INA000000680. QIS provides information on mutual funds and personal financial planning, financial markets in general, and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services through its website www.personalfn.com
  2. Agora Holdings (Cyprus) Limited having its registered office at Akropolis, 59-61, 3rd Floor, Office 301 Strovolos 2012 Nicosia Cyprus belongs to Agro group (Agora) which owns www.agora-inc.com and is one of the largest and most successful consumer newsletter publishers in the world.
  3. Common Sense Living Private Limited (CSL) owns www.commonsenseliving.co.in and is an initiative that provides straightforward lifestyle and wealth-building ideas from wealth coach Mark Ford. CSL is 100% subsidiary Company of Equitymaster.
DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. Equitymaster has financial interest in the subject company.
  2. Equitymaster's Associates, Research Analyst or his/her relative have no financial interest in the subject company.
  3. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  4. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the investor could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the investor could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the investor should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the investor could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
Feedback:
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

GUJ.IND.POW SHARE PRICE


Dec 15, 2017 01:51 PM

TRACK GUJ.IND.POW

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

GUJ.IND.POW 5-YR ANALYSIS

COMPARE GUJ.IND.POW WITH

MARKET STATS