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Adani Transmission receives LOI for 200ckt kms transmission Network in Rajasthan

ATL’s cumulative transmission network of ATL to reach ~12,000 ckt kms

Adani Transmission Ltd (ATL) has received a Letter of Intent (LOI) for a transmission network project. The Fatehgarh-Bhadla transmission project would consist of ~200 ckt kms of line at voltage level of 765 KV and one substation at voltage level of 400 KV. The LOI states that project would be in the Build, Own, Operate and Maintain format. With this project, ATL will expand its presence in Rajasthan with 2 operational transmission projects 4 more assets under construction. With this new addition, ATL’s cumulative transmission network of ATL would reach ~12,000 ckt kms, out of which ~9,000 ckt kms are under operation. The transformation capacity of ATL will also increase to 19,300 MVA from 35 substations (including 8 EHV Substations under acquisition).

Adani Transmission manages electricity distribution, transmission and generation assets across the country. In January 2018, the company acquired the Mumbai generation, transmission and distribution business of R-Infra for a total consideration of Rs12,101cr. This acquisition has increased the size of the company quite significantly. The transmission business now has a capacity of 12,000 circuit kms with 9,540 circuit kms under operation. The new distribution business has a customer base of over 3 million customers with an annual demand of ~10,800mn units. Moreover, the company also acquired a power generation project of 500MW.

We expect the company to report revenue CAGR of 2.9% over FY17-20E aided by addition of ~540 ckt kms in transmission capacity. EBITDA margins are likely to expand by 174bps over FY17-20E aided by efficiency gains in the transmission business. The stock is currently trading at 10.5x FY20E EV/EBITDA.

Adani Transmission Ltd is currently trading at Rs209.95 up by Rs2.4 or 1.16% from its previous closing of Rs207.55 on the BSE. The scrip opened at Rs210.10 and has touched a high and low of Rs214.30 and Rs208.90 respectively. The BSE group ‘A’ stock of face value Rs10 has touched a 52 week high of Rs252 on 18-Jan-2018 and a 52 week low of Rs60.50 on 09-Mar-2017. Last one week high and low of the scrip stood at Rs214.95 and Rs192 respectively.

The promoters holding in the company stood at 74.92 % while Institutions and Non-Institutions held 22.1 % and 2.98 % respectively.