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Utilities: CESC wins 100MW in BEST's PPA, Tata Power at loss

  • CESC's Dhariwal is L1 for 100MW at a price of ~INR3.5/kWh. Being a medium-term PPA, it will be eligible for coal linkage under the SHAKTI policy. We estimate additional EBITDA contribution of INR0.9-1.1b.
  • Dhariwal was recently L1 for another 185MW short-term PPA under the flexible coal policy by Maharashtra (report link).
  • Together, the Dhariwal plant will now be fully secured with PPAs (existing -100MW TN, 187MW Noida, and new – 100MW BEST and 185MW MAH).
  • We estimate Dhariwal's EBITDA will increase from INR0.1b in FY17 to INR4.6b in FY19 with the full benefit of all the PPAs. It will turn PAT positive, and FCF generation will improve. This should also drive savings in interest cost (it was 12.9% in FY17). CESC's consol. PAT will get upgraded by ~13% for FY19/20E.