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FY03
FY04
FY05
FY06
FY07
FY08
FY09
Institutional Equities
FY10
FY11
FY12E
FY13E
FY14E
FY15E
Power segment: Capacity up, but operational issues hurt future valuation
During the past two years, the power sector witnessed a slowdown in investments due to delay in obtaining
environmental clearances, financial closure issues relating to equity contribution, timely supply of critical
components for thermal projects, sourcing of fuel linkage and deteriorating SEBs’ financial status leading to
low demand. All these factors postponed the investment plans of the government as well as private players.
We expect the issues related to land acquisition, obtaining various clearances and fuel security to persist.
However, we have analysed the project portfolios which are at development and planning stage on certain
landmarks like financial closure, land clearance and equipment order placement. Based on our analysis, we
have come to the conclusion that around 76GW of projects are going to be commissioned by FY15 even after
considering 20% to 25% of slippage in ongoing projects. This translates into a CAGR of 20% and completion
of around 21GW/year of incremental capacity in the first three years of the 12th Plan period. This provides
strong visibility of accelerated capacity addition in the next three years. Apart from this, the postponed capacity
would give a push to announcement of new projects during FY12-15.
Exhibit 42: Achievement ratio of power capacity addition
Five Year Plan Target (MW) Deficit (MW) Achievement ratio (x)
7th Plan 22,245 1,193 0.95
8th Plan 30,538 13,808 0.55
9th Plan 40,245 20,994 0.48
10th Plan 41,110 13,827 0.66
FY08 16,335 7,072 0.57
FY09 11,061 7,608 0.31
FY10 14,507 4,922 0.66
FY11 21,441 9,281 0.57
Source: CEA
Exhibit 43: Plan-wise capacity addition
Break-up (MW) Central sector State sector Pvt sector Total Pvt sector (%)
FY04 3,035 798 974 4,807 20%
FY05 2,210 1,169 70 3,449 2%
FY06 1,420 1,488 661 3,569 19%
FY07 4,630 1,671 552 6,853 8%
FY08 3,240 5,273 750 9,263 8%
FY09 750 1,850 853 3,453 25%
FY10 2,180 3,118 4,287 9,585 45%
FY11 4,280 2,759 5,121 12,160 42%
FY12E 4,750 1,000 6,698 12,448 54%
FY13E 7,300 3,500 10,780 21,580 50%
FY14E 7,212 3,500 10,450 21,162 49%
FY15E 6,600 4,000 10,360 20,960 49%
Source: CEA, Nirmal Bang Institutional Equities Research
Exhibit 44: 21 Capacity addition trend
(GW)
25
20
21.5 21.0 21.0
15
10
6.8
9.2
9.5
12.1 12.5
5
3.0
3.9 3.4 3.5
3.4
0
Source: CEA, Nirmal Bang Institutional Equities Research
19 Infrastructure Sector