Indiabulls power is one of the youngest power producing company in India. The company is currently developing thermal power projects with an aggregate capacity of 5400 MW. Both the current projects are in Maharashtra, Amravati and Nashik. For more info check, http://www.indiabulls.com/power/default.htm
Started in the year 2007, Indiabulls power belongs to the Indiabulls group which also run successful business in the areas of Housing finance, Real estate and Stock broking. This group is renowned for making regular and liberal dividend payouts which also indicates that all their business are operating profitably.
PRESENT DAY NUMBERS
CMP on Day04 May2014: Rs 7.90 Market cap: 2085 crores BV: 20.5 FV: 10
Revenue Q3FY14: 91 cr Revenue Q2FY14: 102 cr
Both projects being implemented by the company are greenfield projects (started from scratch). Since the inception of the company, there have been no revenues. The last 2 quarters (Q2 and Q3 FY2014) are the first time they are having operational revenues.
MULTIBAGGER POTENTIAL
1. Phase 1 (2700 MW) construction almost complete. Various units will go towards commission in both Amravati and Nashik over the next few quarters.
2. Land, water and coal clearances all in place for entire 5400 MW generation capacity
3. Annual run rate of around 40 billion units will be achieved by the completion of Phase 1
4. Tariff for 1200 MW tied up with long term PPA with Maharashtra SEB at rs 3.26 / unit
5. Full financial closure achieved for total capex for development of entire capacity of 5400 MW
6. Assuming 1 rupee per unit as margin, cash generation for average 25 billion units per year would be around 3600 crore.
INTERESTING INFO: Recent dividend payouts of Indiabulls group company's
1. Indiabulls HF (FV: 2 rs): 450% (Apr14), 350% (Jan14), 350% (Oct13), 300% (Jul13)
2. IB securities (FV: 2 rs): 50% (Apr14), 50% (Feb14), 50% (Oct13), 50% (Aug13), 50% (May13), 50% (Jan13)
3. IB Real estate (FV: 2 rs): 50% (Apr14), 50% (Oct13), 50% (Aug13), 100% (May13)
Looking at the track record of dividend payout of the various group companies, it is highly probable that even Indiabulls power could become a regular and rich dividend paying company. At the current CMP range of 7 - 9 rs; the future dividend payout could be very rewarding.
MY TAKE
India is one of the most power deficit countries in the world. Looking at the demography of India and the overall growth prospects of the country, the demand for power will be immense and will grow for at least the next one decade. Despite this reality, the power sector has been plagued by problems since last 2 - 4 years. Everything that could have gone wrong, has went wrong. Coal problems, discom problems, gas problems, governance issues, etc etc. The worst seems to be over. Speed in the sector reforms and decision making over the last few months will continue for the next 1 - 2 years.
Given this backdrop, Indiabulls power is well placed to grow its revenues and profitability over the next 4 - 8 quarters. The stock is available at a throwaway price. A 5400 MW power producer at around 2000 crores; a steal. The future can only be better. This is almost like a small plant which has the right prospects and environment to grow up to become a large tree.
A strong potential multibagger and future dividend story!!
Disclosure: I first bought Indiabulls Power around 14 months ago, and have been consistently adding to my holding since then.
Started in the year 2007, Indiabulls power belongs to the Indiabulls group which also run successful business in the areas of Housing finance, Real estate and Stock broking. This group is renowned for making regular and liberal dividend payouts which also indicates that all their business are operating profitably.
PRESENT DAY NUMBERS
CMP on Day04 May2014: Rs 7.90 Market cap: 2085 crores BV: 20.5 FV: 10
Revenue Q3FY14: 91 cr Revenue Q2FY14: 102 cr
Both projects being implemented by the company are greenfield projects (started from scratch). Since the inception of the company, there have been no revenues. The last 2 quarters (Q2 and Q3 FY2014) are the first time they are having operational revenues.
MULTIBAGGER POTENTIAL
1. Phase 1 (2700 MW) construction almost complete. Various units will go towards commission in both Amravati and Nashik over the next few quarters.
2. Land, water and coal clearances all in place for entire 5400 MW generation capacity
3. Annual run rate of around 40 billion units will be achieved by the completion of Phase 1
4. Tariff for 1200 MW tied up with long term PPA with Maharashtra SEB at rs 3.26 / unit
5. Full financial closure achieved for total capex for development of entire capacity of 5400 MW
6. Assuming 1 rupee per unit as margin, cash generation for average 25 billion units per year would be around 3600 crore.
INTERESTING INFO: Recent dividend payouts of Indiabulls group company's
1. Indiabulls HF (FV: 2 rs): 450% (Apr14), 350% (Jan14), 350% (Oct13), 300% (Jul13)
2. IB securities (FV: 2 rs): 50% (Apr14), 50% (Feb14), 50% (Oct13), 50% (Aug13), 50% (May13), 50% (Jan13)
3. IB Real estate (FV: 2 rs): 50% (Apr14), 50% (Oct13), 50% (Aug13), 100% (May13)
Looking at the track record of dividend payout of the various group companies, it is highly probable that even Indiabulls power could become a regular and rich dividend paying company. At the current CMP range of 7 - 9 rs; the future dividend payout could be very rewarding.
MY TAKE
India is one of the most power deficit countries in the world. Looking at the demography of India and the overall growth prospects of the country, the demand for power will be immense and will grow for at least the next one decade. Despite this reality, the power sector has been plagued by problems since last 2 - 4 years. Everything that could have gone wrong, has went wrong. Coal problems, discom problems, gas problems, governance issues, etc etc. The worst seems to be over. Speed in the sector reforms and decision making over the last few months will continue for the next 1 - 2 years.
Given this backdrop, Indiabulls power is well placed to grow its revenues and profitability over the next 4 - 8 quarters. The stock is available at a throwaway price. A 5400 MW power producer at around 2000 crores; a steal. The future can only be better. This is almost like a small plant which has the right prospects and environment to grow up to become a large tree.
A strong potential multibagger and future dividend story!!
Disclosure: I first bought Indiabulls Power around 14 months ago, and have been consistently adding to my holding since then.
