IGI Logo

Minority interest jumps, operating performance stable

TARGET PRICE (Rs): 2,550 AGEL’s consol. Q2FY25 EBITDA rose 25% YoY to Rs22.7bn (down 6% QoQ), led by stable operating performance and a jump in equipment sales. Consol. PAT (after minority interest and share from associates-JVs) came in at Rs2.76bn in Q2FY25, down 26% YoY and 38% QoQ due to jump in MI to Rs2.4bn from asset transfer to Total JV. Net debt rose 9% H-o-H to Rs582bn as of Sep-24-end. Management estimates 2GW/4GW RE capacity to get commissioned in Q3FY25/Mar-25, besides the annual RE capacity addition target of >6GW. It also guided to an annualized EBITDA run-rate of Rs108/160bn for current 11.2GW/17GW FY25-end capacity. We have trimmed FY25E EBITDA 7% to reflect H1 run-rate, while largely retaining FY26-27E EBITDA. We retain BUY with an unchanged Sep-25E TP of Rs2,550.

Result Highlights

AGEL reported Q2FY25 consol. revenue of Rs30.6bn, up 38% YoY and 8% QoQ. Core power supply revenue rose 16% YoY but fell 9% QoQ to Rs23.1bn due to seasonality. Share of merchant and infirm power rose to 25% vs 22% QoQ. Book realization was stable at Rs3.4/kwh in Q2FY25. Power supply EBITDA was up 17% YoY and down 10% QoQ to Rs21.4bn with EBITDAM steady at ~93%. Finance cost fell 5% QoQ to Rs13.7bn. There was forex gain of Rs670mn, while exceptional loss stood at Rs970mn, of which Rs600mn was written-off legal & professional cost wrt a bond issuance that was called off. Share of profit from assoc-JVs was 45% lower QoQ at Rs990mn (up 29% YoY). ETR was lower at 6%. Capacity stood at 11.2GW as of Sep-24-end. Solar/wind/hybrid CUFs were at 23.9%/35.7%/42.9% in Q2FY25 vs 23.5%/41.6%/43.5% YoY.

Management KTAs

6GW capacity addition in FY25 would have 1GW wind (80% of which would be merchant) and 5GW solar. It has already commissioned 250MW wind capacity at Khavda in FY25. AGEL has seen wind CUFs of >44% in the last two months (from recent 250MW commissioning) and forecasts wind CUFs of >35% in FY25. Khavda solar CUFs are likely to be >32% from FY26 onwards and it would help to improve current overall solar CUFs from 24%. Power evacuation infrastructure remains key for AGEL and it has clear visibility for the next 2-3 years. The Google C&I opportunity is expected to commence in Q3CY25 and its tariff is significantly higher than current PPA. AGEL is working toward BESS opportunities (where costs are down), and they could materialize by FY26. Valuation We value AGEL at 15x FY30E EV/EBITDA, discounted at 12% (CoE) to Sep-25E which is reasonably conservative and backed by the 30-60% revenue-earnings CAGR. We reduce FY25E AEPS 35% due to MI adjustment, although over the long term, the impact is not significant (~2% on TP). Key risks: project execution, policy, equipment inflation, technology, and resource yield-related.

For More  Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354