The third quarter ended December 2013 is likely to be weak one for the utilities sector in the country, according to outlook presented by Credit Suisse India Research.
Providing insight into the third quarter ahead of the corporate sector coming out with their earnings reports, Credit Suisse expects states, “We expect the third quarter of 2013 to be another weak quarter for most Indian utilities. While Adani Power, JPVL, KSK and Lanco are likely to report losses, NTPC and NHPC's profitability is expected to decline anywhere between 1-5 per cent year on year. And that of the Tata Power's profitability is expected to decline year on year.”
Adani Power is likely to report a loss as Mundra project Power purchase agreements (PPAs) have to be honoured status quo pending Central Electricity Regulatory Commission (CERC's) final decision on compensatory tariff. For Lanco, low plant load factor (PLF) and Griffin's continuing losses could result in loss in during third quarter.
With regards to NTPC, the analysts from Credit Suisse in their report state that the recurring profit after tax (PAT) to remain almost flat year on year. The status on captive coal production, imported coal supplies to Farakka/Kahalgaon projects, railway infrastructure issues at Mouda project along with any update on discussions with CERC on upcoming tariff regulations are key factors to watch.
In the case of Reliance Power’s Rosa project profitability is expected to remain robust but with Sasan ultra mega power project (UUMP's) units presently getting capitalised, recurring profit is expected to grow.
In the case of Tata Power, losses in Mundra UMPP's are expected to continue. Pending CERC's final decision and the profitability in the coal business is expected to decline due to correction in international coal prices.
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