Is it right time to invest in gipcl?
CURRENT M/CAP: 1500 Crores
EXISTING CAPACITY: (As of 31/3/18: 1009.4 MW)
Gas Based: 310 MW (Gas Supply Dependent on GAIL & GSPL)
Lignite Based: 500 MW (Captive MIne)
Wind Energy: 112.4 MW (Installed during FY 16-17 in phased manner)
Solar Energy: 87 MW (80 MW new capacity installed during FY 17-18)
EXPANSION: 75 MW Solar Power Plant to be installed during FY 18-19.
Therefore by 31/3/19 Projected Total Capacity will be atleast 1084.4 MW
As at 31/3/16: 431.70 Crores
As at 31/3/17: 376.58 Crores (No debt increase inspite of huge capex of 661 Crores during FY 16-17)
Plans to reduce debt further.
Almost all electricity is sold to GUVNL (One of the Promoter of GIPCL)
2015-16: 4046.597 Million Units Sold @ Rs.3.3257 p.u.(Approx)
2016-17: 4031.365 Million Units Sold @ Rs.3.2341 p.u.(Approx)
Sales were lower due to Gas Supply issues at Vadodra Station 2 (165MW) and expiry of PPA with GUVNL.
At present Spot Power Prices were Rs. 3.98 p.u. on April 2018. And I believe Spot prices will not fall from here as already there is lot of NPA in power sector and govt. do not wants to increase it further.
FY 2015-16: PAT 187 Crores (Depreciation:112 Crores; Cash Profits:300 Crores(Approx)
FY 2016-17: PAT 251 Crores (Depreciation:125 Crores; Cash Profits:375 Crores(Approx)
Therefore 350-400 crores cash profits are reasonable for solar capacity addition without increase of Debt.
GIPCL has 24.36% stake in Bhavnagar Energy Co. Ltd.(500 MW Lignite Based Capacity) whose results are not included in GIPCL Balance Sheet.
Current Dividend Yield is around 2.78%(Better than keeping idle funds in S/B Account Considering the tax benifit on dividends). Further, it has consistency in paying dividend regularly at same rate, irrespective whether its earnings increase or decrease.
At 1500 crore M/Cap it seems a safe long-term bet. Not necessary a multi-bagger but returns better than atleast Nifty can be expected.
Great to see a post on this company. Despite a very stable performance, the stock has under-performed for a while. Maybe Q4 results can be a positive trigger for the counter.
Even if the results are average (as expected), what is the downside risk from here.
Adani Power M/Cap 9200 Crores
Capacity 10,000 MW
Debt 50,000 Crores
Means around Rs.5-6 Crores /MW Valuation.
And GIPCL at Rs.1.5-2 Crore/MW Valuation.
What worse can you expect from this level?
I agree and if you look at even NTPC its close to 5-6 cr/MW. Why do you think is this company so undervalued? Are we missing something.
As per some insider sources may be ICICI Prudential Life Insurance Co. is selling…though I am not very sure about it…
Gas Based Power plants (310 MW) have not been doing well.
Viability of setting up of Wind Energy and Solar Energy Plants, in India is also not clear. Currently, most of the plants are running at around 15-20% CUF,ie. 1 MW produce roughly around 1.5 million units of electricity.
Do share any information if you get from some where…
It is the share of losses in its~25% associate company, Bhavnagar Energy co. Ltd. I am not sure but, seems like the company has just commenced its operations.
are there any more details available why BECL is in loss?
Commercial Operations of Bhavnagar Energy Company Limited commenced in the month of March 2017 and it is the first year of operation post capitalization. As per Equity method, the share of loss of Associate company viz. Bhavnagar Energy Company Limited (BECL) has been captured in the Consolidated Audited Financial Results for the year ended 31st March 2018.
Therefore, carrying value of Investment in BECL has come down from 206.08 crores to 127.61 crores.
I just found credit rating of BECL. It is rated CARE D. It gives some insights into the current situation. We will have to wait to see if the overall performance improves.