1
Please refer to important disclosures at the end of this report
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1
Torrent Power is engaged in the business of generation, transmission and
distribution of power and manufacture & sales of Cables. The company’s 5
years sales CAGR is was a slow 8.8%. Nonetheless the company’s TTM
revenue growth speeded up to 11.4%, aided by rise in spot tariffs to 1.3-1.4x
of RTC for evening peaks due to supply constraints. In 1QFY20 The Gujarat
Electricity Regulatory Commission (GERC) approved the 278MW long-term
PPA between Torrent Power’s (TPW) UnoSugen gas plant (total
capacity:383MW) and its Ahmedabad and Surat distribution circles. The PPA
is for the remaining life of the plant of 19 years. Outlook for TPW’s gas
plants has improved with the sourcing of imported LNG and the recent
offtake of UnoSugen PPA. This, along with continued capitalization within
regulated distribution and RE investment, is likely to drive earnings CAGR of
19% over FY19-22. Besides, TPW remains well poised to capitalize on
opportunities from distribution privatization and consolidation in the
generation sector.
The stock is currently trading at 1.4x of its book value and generates an
ROCE of 12.1%. The company also pays dividend of average 25%.
Considering the demand-supply scenario and strong outlook for the
company, we recommend BUY.
BUY
CMP `304
1.0
Reuters Code
TOPO.BO
TPW IN
10
BSE Sensex
37,018
Nifty
10,980
Face Value (`)
Utilities
Market Cap (` cr)
14,596
52 Week High / Low
314/212
Avg. Daily Volume
34,384
Jaikishan Parmar
022 – 3935 7600 Ext: 6810
jaikishan.parmar@angelbroking.com
Torrent Power Ltd
Others |Utilities
Aug 01, 2019
2
Torrent Power Ltd| Utilities
2
Research Team Tel: 022 - 39357600 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Torrent Power Ltd
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)