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PLF improvement and one-offs boost earnings
* Gujarat Industries Power Co.’s (GIPCL) PAT jumped 135.5% yoy in Q4FY19, primarily due to higher other income from the revoking of Liquidated Damages on BHEL Ltd related to delay in equipment supply for Surat II unit.
* Generation rose 6.5% yoy, while revenues fell 2.7% yoy due to lower realizations. PLF improved for Vododara I and Surat I units, but was marginally down for Surat II unit. On the renewable front, PLF improved for wind plant but was down for the solar project.
* The company expects to commission another 75MW solar capacity won under the GUVNL tender by Q1FY20 (of this 55MW is ready for commissioning). It has also emerged as a successful bidder to set up a 100MW solar capacity in GUVNL’s recent tender.
* We raise earnings estimates by 25.0%/28.3% for FY20/FY21, factoring in the projected financials of 75MW solar project to be commissioned in Q1FY20. Given its attractive valuation, maintain Buy rating on the stock at a revised SoTP target price of Rs109.
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