RPower UP Projects

Hyderabad: Lanco Infratech Ltd (LITL) has pipped Reliance Power, NTPC and Jindal Steel & Power to win two super critical power projects in Uttar Pradesh totalling 3,300 mw in installed capacity through competitive bidding.
L Madhusudhan Rao, chairman, said the company will invest about Rs 14,000 crore on the two projects, which takes the total capacity under various stages of implementation by LITL to 13,000 mw. The company, which had suffered a major setback when it had to give up the Sasan ultra mega power project after bagging it, has since won several large coal-fired projects.
With the Prayagraj and Sangam projects, Uttar Pradesh becomes the biggest client-state for LITL. Including the 1,200 mw Anpara project, the total capacity won by it in the state is a whopping 4,500 mw.
Almost 90% of the power produced by the 1,980 mw Prayagraj project and the 1,320 mw Sangam project must be sold to the government of Uttar Pradesh, with LITL free to sell the remaining through the merchant market.
All linkages for the two projects, which will be implemented on a 80:20 debt:equity basis, will be provided by the state government.
These include road, water, fuel and rail linkages. LITL was the lowest bidder for the two projects with a quote of Rs 2.88 per unit for Prayagraj compared with Rs 2.94 from Reliance, Rs 3.44 from NTPC and Rs 3.591 from Jindal.
Likewise for the Sangam project, which had five contenders in the fray, the company quoted Rs 2.838 per unit compared with Rs 3.051 by Reliance, Rs 3.389 by CESE and Rs 3.51 by JSPL.
LITL will have to raise Rs 2,800 crore in equity over the next 54 months for the two projects, apart from the Rs 11,200 crore in debt over the next 12 months, DV Rao, joint managing director, LITL said. “Raising funds is not an issue considering there are ample avenues for which we will be structuring accordingly,” he added.
“LITL has made significant progress towards adding 7,000 mw generation capacity with about 3,400 mw of power generation capacity already under construction (having achieved financial closure),” Kotak Securities analyst Aman Batra said in an earlier report, setting a target price of Rs 670 per share with a value of Rs 331 per share from the power portfolio.
LITL has a good mix of PPAbased and merchant projects at 75:25 ration, which is a good mix of secure cash flows and marketbased upsides, which should accrue from the tightening power demand-supply situation in the country, Edelweiss Securities analysts Shankar K and Shashikiran Rao said in a report.