Tata Power Company (TATAPOWER) Q4 05/06 earnings summary

Executive summary

• FY06 revenue from operations rose 16% to Rs. 4,562.79 crore and PAT increased 11% to Rs. 610.54 crore; operating profit fell to Rs. 835.46 crore from Rs. 952.72 crore.

• Generation reached a record 13,746 MUs, up 3.5%; higher hydro output during a strong monsoon helped balance thermal generation and fuel costs.

• Consolidated total income was Rs. 6,004.66 crore and profit after tax, statutory appropriations, minority interest and associate profit was Rs. 712.11 crore.

Financial highlights

• Total income increased 13% to Rs. 4,888.40 crore; PAT grew 11% to Rs. 610.54 crore, while PBT eased to Rs. 747.45 crore from Rs. 758.79 crore.

• Basic EPS on PAT rose 11% to Rs. 30.82; distributable profits were Rs. 575.25 crore versus Rs. 555.09 crore.

• Other income included Rs. 131.97 crore gain on sale of the broadband business and Rs. 22.43 crore gain on sale of the Power Systems Division.

• Fuel cost increased to Rs. 2,396.51 crore from Rs. 1,863.98 crore, mainly due to higher oil prices; power purchase cost rose to Rs. 583.20 crore from Rs. 415.70 crore.

• Depreciation declined to Rs. 278.34 crore from Rs. 359.62 crore; interest and finance charges fell to Rs. 165.28 crore from Rs. 191.44 crore.

Outlook and guidance

• A 250 MW Trombay coal plant was under implementation, with commissioning targeted for FY09; 100 MW diesel sets were planned as an interim supply measure, subject to approvals.

• The 1,000 MW Maithon project, with a 74% stake, targeted commissioning in FY10; around 50% of its coal requirement was tied up.

• A 120 MW Tata Steel captive plant was under construction at an estimated cost of Rs. 490 crore; a 1,000 MW coastal Maharashtra plant remained at an early development stage.

• Long-term investment prospects depend on distribution reforms, fuel linkages, power offtake risk and transmission evacuation capacity; implementation pace remained uncertain.