Adani Power's worsening losses leave analysts aghast

It exceeded Nomura's forecast by 14%.

It has been noted that once again, the net finance cost of India-based Adani Power (APL) (up 10% q-q and 10% above Nomura's forecast) dented the bottom line – normalized net loss at INR8.7bn was 14% higher vs. Nomura's forecast (INR7.6bn).

According to a research note from Nomura, this was also significantly worse off vs. consensus net loss forecast of INR5.2bn.At INR8bn, reported net loss was 5% / 43% higher than Nomura's/consensus forecast.

Meanwhile, the company's 2QFY15 normalized revenue (at INR40.6bn) and normalized EBITDA (at INR11.4bn) came in 5% / 4%, respectively, above Nomura's forecasts – the beat was driven by Additional Compensatory Tariff (ACT) booked by the company in respect of its long-term PPAs from the Tiroda facility. Normalized EBITDA was 4% below consensus.

Here's more from Nomura:

We normalize APL’s 2QFY15 reported financials for [1] prior-period ACT – as broadly suggested by the management and corroborated by unit-wise net generation data, we assume 50% of the INR1.7bn ACT booked for 1HFY15 relates to 2QFY15, the balance being extraordinary for the quarter, and [2] exchange fluctuation loss on fuel creditors (which we include in net finance cost) + MTM gain/loss on derivative instruments.

Leverage: Consolidated debt on books stood at INR471bn as of Sep-2014 (INR360bn long-term loans + INR62bn loan from the promoter + INR49bn working capital loans), up from ~INR441bn (as of Mar-2014 (INR343bn long-term loans + INR62bn loan from the promoter + INR36bn working capital loans).

Net debt/equity (excluding working capital loans and promoter loans) stood at 6.3x as of 1HFY15 vs. 5.1x as of FY14.

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