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Lanco Infratech – Edelweiss Securities

Lanco Infratech
Reco Price: Rs 420
Current market price: Rs 422
Target price: NA
Brokerage: Edelweiss Securities

Lanco Infratech (LITL) currently has over 7,195 MW of new generation capacity under various stages of execution. Over half of this is already under construction and the balance has secured offtake agreements and fuel linkages and is likely to attain financial closure over the next 12 months. Post-commercialisation of RIL’s KG gas basin, Lanco has been receiving 1.6-1.65 mmscmd of gas, enabling its 368 MW Kondapalli power plant stage 1 to operate at 94 per cent PLF. The 366 MW second stage of the plant is expected to be operational in September/October.

The company has indicated that it will finalise plans to expand the capacity by about 750 MW (phase III & IV) at the same location. It also said that the proximity to Krishna river and anticipated higher KG basin output will alleviate water and gas issues. The research house has assumed earnings of Rs 71.7 crore from this plant in its FY10 estimates assuming merchant tariff and sale of about 610 million units. If LITL is able to operationalise the plant, sourcefuel, and execute merchant sales for the entire capacity, then there could be upside risks to earnings forecasts. At recommended price of Rs 420, the stock is trading at 2.8x FY10E and 2.2x FY11E book value.

This entry was posted on Sunday, September 13th, 2009 at 7:47 pm and is filed under Short Term Investments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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