India's Power Grid 3QFY15 profit surged 21% y/y at INR12.6bn

EBITDA was also in line with forecasts.

India-based Power Grid Corp. of India's 3QFY15 EBITDA at INR37.7bn and normalised PAT at INR12.6bn -- up 21% y-y -- were in line with Nomura and consensus forecasts.

According to a research note, further, reported PAT, after adjusting for prior-period items, stood at INR12.2bn, up 18% y-y.

Meanwhile, at INR43.5bn, total revenues came in marginally below Nomura's forecast,  primarily on account of transmission revenues (at INR41.8bn) coming in ~2% below Nomura's forecast, which was partially offset by higher consultancy income, typically lumpy in nature, at INR1bn (up 67% q-q, down 32% y-y) versus Nomura's assumption of 750mn.

Here's more from Nomura:

What do the results mean? By our calculations, the return on regulated equity (RoRE) on its transmission business (after treating deferred tax as ‘recoverable from the customers’ under the new tariff regulations) would be in the vicinity of 14.5-15% (vs. 15-15.5% in 2QFY15).

After our brief interaction with management, we understand that GFA stood at ~INR1,130bn as of Dec-14, implying asset capitalization – ie, commercial start-up of transmission capacity in 9MFY15 was ~INR166bn, including an  exchange rate variation (FERV) component of ~INR4bn (vs. INR95.5bn in 9MFY14, which included an FERV component of INR14bn).

For 3QFY15, the implied transmission capitalisation was ~INR70bn (up ~130% y-y on reported 3QFY14 figure) vs. INR47bn capitalisation in 2QFY15.

Considering that at the 12 Nov analysts’ meeting, management stated its YTD transmission capacity start-up in FY15 at ~INR132bn, incremental capacity start-up in the balance of 3QFY15 stood at ~INR34bn.

PWGR’s 9MFY15 revenues/EBITDA/normalised PAT form ~70% of our full-year forecasts.