Brokerages maintain 'sell' on Adani Power, stock down

Moneycontrol Bureau
 
Brokerages are negative on Adani Power post its dismal fourth quarter (January-March) earnings. The firm reported consolidated net loss at Rs 586 crore as against net loss of Rs 285 crore in a year ago period. Consolidated net sales increased 79 percent year-on-year to Rs 1,888 crore during the quarter.

Nomura has maintained 'reduce' rating with a target Rs 35. The brokerage cites that medium and longer-term earnings outlook for Adani Power continued to hinge on the final outcome of regulatory and legal events relating to power purchase agreement (PPAs) and fuel sourcing. It also adds that the 'compensatory tariff' awarded by CERC could still be challenged in the Appellate Tribunal. Imminent equity infusion by the promoters would lower leverage but entail imply EPS dilution.

Meanwhile, Citi has maintained a 'sell' rating with a target of Rs 36. Recurring standalone loss of Rs 490 crore in fourth quarter took the full-year loss to Rs 1920 crore. "This was primarily on account of a rise in fuel costs to Rs 2.15/kwh from Rs1.65/kwh a year earlier, an increase in depreciation due to capitalisation of assets and higher interest expenses," Citi says in a report.

According to Citi, the company is currently burdened with several issues such as mounting losses, uncertainty of coal, rising fuel costs, non-clarity on the exact nature and quantum of compensatory tariff and high debt burden. "Until these issues reverse, it is difficult to turn positive on the stock," it adds.

At 10:51 hrs Adani Power was quoting at Rs 48.20, down Rs 0.15, or 0.31 percent.