ADANI POWER

Dalal Street Investment Journal - - QUERYBOARD -

Adani Power Lim­ited is the power busi­ness sub­sidiary of In­dian con­glom­er­ate Adani Group with head of­fice at Ahmed­abad , Gu­jarat . The com­pany is In­dia’s largest pri­vate power pro­ducer, with to­tal ca­pac­ity of 10,440 MW and also the largest so­lar power pro­ducer of In­dia with a ca­pac­ity of 688 MW.

Adani Power board has re­cently passed a res­o­lu­tion to hive off its flag­ship Mun­dra power sta­tion to its sub­sidiary so that it can fo­cus on in­vest­ment and power gen­er­a­tion separately. Adani Group had lost all its in­vest­ment in the debt-rid­den Mun­dra ther­mal power plant, the coun­try’s largest coal-fired project.

On the fi­nan­cial front, Adani power posted a 6.63 per cent de­crease in its rev­enue to ₹ 2,682.07 crore in Q1FY18 from

₹ 2,872.79 crore in Q1FY17. Also, the com­pany’s PBDT de­clined from ₹ 150.77 crore in the first quar­ter of FY17 to ₹ -236.89 Crore on a yearly ba­sis. The com­pany’s net profit also de­clined from ₹- 5.28 crore in Q1FY17 to ₹- 515.85 crore in Q1FY18.

On an an­nual ba­sis, the com­pany’s rev­enue rose 16.85 per cent to ₹ 11,017.97 crore in FY17 com­pared to the pre­vi­ous fis­cal. The com­pany’s PBDT de­clined 628.86 per cent to ₹ -5,016.85 crore in FY17 on yearly ba­sis. The com­pany’s profit af­ter tax also de­clined from ₹ 5.62 crore in FY16 to ₹ -6,054.34 crore in

FY17.

The com­pany’s fi­nan­cial per­for­mance has not been up to the mark with de­cline in PBDT and PAT. Com­pany has low in­ter­est cover­age ra­tio. Pro­moter’s stake has also de­creased.

Pro­mot­ers have pledged a con­sid­er­able part of their hold­ing. Com­pany has a low re­turn on eq­uity of -10.98 per cent for last 3 years. Con­sid­er­ing all th­ese fac­tors, we rec­om­mend our reader-in­vestors to EXIT the stock.

Should I buy, hold or Sell the share of Adani Power? - Roshni Jain

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