GroundedKestrel wrote:Well done TuskerLK! Right on the money.
Any thoughts from how it will go from here?
Don't expect a similar performance on the Q4.
Q4 will generally a dry season, thus the bottom line is also low. my workings indicates a group Q4 PAT for nearly 30mn. therefore we can safely assume that the EPS for the current year will be less than 1.25. thereby VPEL is trading at a PE of 6.5 times.
Going forward the tariff may come down owing to the low international crude oil prices, which is one important parameter in computing the avoided cost tariff, which is paid to all three power plants owned by VPEL. however the impact is not directly proportional to the crude oil price drop in the recent past, due to the fact that the actual avoided cost tariff paid is the average of last couple of years's computed tariffs.
Given that in mind i'm expecting a maximum of 10% reduction in the tariff,however the reduction of finance cost due to the repayment of facilities obtained from its last two projects would reduce the impact. Overall I expect a EPS of 1.03 for FY 2015/16 which would give a forward PE of 8 times. I'm still positive about the earning potential.
Although VPEL is quite a dividend paying company, they seems to have no plans to invest in any further projects, which limits the long term growth of the company.