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Sarda energy and minerals ltd

Q1 Results were really good and with the steel Cycle turning upwards, re-rating of valuations seems imminent sooner or later. Major Part of the Debt is for the hydro power plant and will not be impacted by covid in case of a third wave, so upcoming Q2-3 results should continue the current upward trend.

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any idea what would be the tariff from this 113 MW hydro plant, and what is the total energy going to be supplied from this plant (primary energy and secondary energy). the total project cost seems to be in the range of 12 cr/MW which means the tariff ideally should not be less than Rs 4.5 per unit. In one of the call i heard EBITDA on full year basis is estimated at 225-250 Cr which seems to be on a higher side. on standalone basis keeping 12% interest rate for this project, Interest cost in a year after COD should be around Rs 114 crores and depreciation approx 50 cr. even if we assume assume at 50% PLF, it should generate 49.4 Cr units, with Rs 4.5 per unit, the yearly revenue should be Rs 222 cr and 20 cr will be O&M, so EBITDA on this rate if its gets approved by the commission, then an EBITDA of Rs 200 can be expected. so from year 1 should be in cash positive keeping 1 year moratorium for principal repayment.

The provisional tariff rate is 6.5 per unit. It coulbe be anywhere between 6.5-7, but a minimum of 6.21 given on renewable energy products. Expected topline at 6.5 per unit is 225-240cr and EBITDA of 175-200cr. This is assuming the 50% capacity utilization. The biggest and probably the only risk with hydropower plants is monsoon rainfall. Therefore only 2 quarters produce at peak output levels? Also there are transmission charges of Rs 1 per unit. The interest rate on the project is 11% which they said would be refinancing and brought down.

Brief summary of the Petition.pdf (981.0 KB)