JSW Energy reported PAT of Rs7.45B in FY10, ~8% ahead of our est. (Rs6.85B). The performance was primarily on account of high PLF and higher-than-expected merchant sale at the flagship Vijaynagar plant. The regulated Barmer unit (135MW) however reported a loss, as it was unable to recover fixed charges, facing operational challenges.
Vijaynagar (860MW) recorded a 94% PLF, vs. 91% est., resulting in higher merchant sales (3.68B units, vs. 3.22B units est.) and better than expected profits of Rs7.7B. Fuel cost was broadly in line (Rs1.85/kwh vs. 1.76/Kwh est). Overall blended realization was Rs4.5/KWH, with average merchant tariffs of Rs4.86/KWH.
On the other hand, Barmer (135MW) reported weak PLF of 44% in Mar-q on account of water shortages. The implied loss reported in FY10 is ~Rs230M, on account of partial recovery of fixed cost. The implied fuel cost was Rs3.74/unit (US$128/ton) vs. our est. of Rs1.96/unit (US$67/MT). While fuel cost is pass-through, resolution of water issues is key to the project earning 16% guaranteed RoE.
JP Morgan has a target of Rs 127 while Goldman Sachs has a target of Rs 135.
