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Here's my optimistic case: MYT raised $80m in an IPO 5/6 years ago when it made no money and had no assets (more than the market cap is now). Since then senior management have built one of the biggest IPPs in India with assets worth hundred of millions (won't debate the figure). They are also one of the fastest growing IPPs - nearly doubling in size last year and setting an even more ambitious target of 700MW this year. They now have a proven track record (reduces risk) and have a route to 4000MW by doing more of the same. All of this is supported by ambitious government targets in one of the fastest growing economies in the world (which was already in need of more of electricity). MYT have taken a fresh approach to building wind farms by using their own systems and data to select sites and improve margins. The market has become much more competitive but most of MYT's PPA prices have already been agreed for 10-25 years. And even then, falling electricity prices (a) means renewables are here to stay; (b) lower margins make it harder for new, smaller entrants - and may lead to buying opportunities; (c) the cost of the technology is falling too and is becoming increasingly efficient - e.g. taller towers, longer blades, turbines that talk to each other, etc. It was a smart move to diversify into solar - maybe a year late but they're there. Personally, I put a lot of emphasis on what I think of senior management as people. I've never met Ravi or Vikram but they come across as smart and honourable men in their writings and videos - especially Ravi. I can imagine the trusting relationships Ravi has created with lenders. I can imagine a decent culture at MYT. And I can see why they have won a number of awards. The Kailas family own a lot of shares and Ravi, in particular, has invested considerable amounts of his own money (just not recently). Vikram has spoke about their focus and decision making being on building a company to last 50+ years. So an optimistic valuation? MYT is more like a fast growing tech-start up than an old, sluggish utility company. IMO the debt looks worse than it is because the interest payments are being made before the assets are fully operational i.e. some of the assets constructed last year did not get the full benefit of a monsoon season. They will this year but the new assets won't until the year after and so on. I've written before about ReNew (2000MW) being valued at $2bn so $1bn could be fair. If you look at the comparison table for last year's results and add back in the refinance cost and the new shares issued, underlying profit was closer to $10m. A very conservative 10x would justify MYT being worth DOUBLE what it is now. And they could achieve that if they just stopped growing! For me I've come to an optimistic / I-think-reasonable estimate of $30m average profit if MYT used cash flow to pay off debt. A multiple of only 10 would justify MYT being worth 6x today at £240m.
Good to see you back saintpeter7 - so you're not the big seller then!? ;) I agree - and likes others said before - with the results out (even if they weren't as good as they are) we really expected the share price to jump. I know I've been hogging the message board a bit this week and I don't want to be tarred as a "ramper". For the record, I am a long-term investor in MYT, have continued to buy (even though a lot of my buys show up as sells on this website) and have no intention to sell any time soon. I have followed the company for 4 years and first bought at around 80p (which I thought was good value). I've been investing for 12 years and this is probably only the second time I think I've found a company that is truly undervalued (the other was Electronic Arts). I'd really like anyone reading this - especially anyone who has a negative view of the company - to share what you think the cons of MYT are as I must be missing something and need some sense talking into me! Here's my pessimistic case: MYT are currently loss making and have a lot of debt so it's not worth anything (let's assume the assets aren't worth what they are)! Even if you take profit or underlying profit at best, $4.76m on a multiple of 10 (for a utility company) would only be worth $50m. And that's conveniently what the market cap is. The other problem is it's getting increasingly competitive, prices are falling and so will margins. The company may also overextend itself by trying to grow too fast. Optimistic case to follow...
I've listened too - thanks for asking the questions share_talk. I have to say I was surprised you asked all of them! And you got the pronunciation of the company's name right by the end of the interview ;) For me, I thought Bob answered them sufficiently to put my mind at ease. Receivables will always be a risk but, inaction to what Bob said, I have read elsewhere about the Indian government guaranteeing payments (and improving the system). And MYT will be able to charge interest / penalties on late payments too. IF there is an IPO in the future (I have a feeling it's less appealing than it once was) then MYT will own 100% of the listed Indian company. Great! Because they're not going to raise less than £40m doing an IPO :) Just another reason this company is a bargain IMO. I also accept the reasoning for reissued shares now - to keep good staff (for at least 3 years) in a very competitive industry. Given the choice of that or losing key members of the team at this stage of growth, I'd take the hit every time. And at least it wasn't all one sided - they did cancel nearly half the total number of options. Still, I'd have preferred some sort of exercise price as a gesture to shareholders e.g. 30p.
Have just listened to Bob Smith's interview and having digested the results, I do not profess to understand why there has been such a lack of a positive market response. I suppose the share is off the radar. Thank you for giving ShP the shareholder's questions, which were well considered. I just hope that the large seller has finished because they have certainly not helped. Actually, I don't hold any shares any longer as my stop loss was taken last week and I made a 55% loss or thereabouts. I shall keep watch to see if the SP does come to life again sometime so that I can recover some or all of my loss. GL in the meantime.
Some bad news that the Indian government are preventing a way of raising money that MYT was about to use. I don't know much about but I suppose all I need to know is that the interest rate of the money they do raise will be higher than they were planning. You can see the story if you click on MYT share news at the top of the page.
Absolutely - great set of results! Reinvesting to fund / build more wind and solar then... repeat, repeat, repeat. A normal monsoon season this year with more assets working and growing by 70%+ in 2017/18. I can only imagine the pace of change. They've done an incredible job in my view. The main risk has been debt but, as I see it, they are handling that well (better than ever). The other risk has been falling costs but the majority of their portfolio is locked in to 10-25 year power purchase agreements at a fixed price. Falling costs of turbines and solar as well as becoming more efficient will help offset falling prices and, overall, it's better for renewables as they become even more attractive. I'm pleased there haven't been any shocks due to the new accounting. With MYT's structure I was concerned about how the new accounting would impact the "offshore" part of the company - and how hard that would hit net profit. It seems (and please do add to this or challenge me if you disagree) that MEIPL is "paid" for building the wind farms, which means some of those "earnings" were not subject to local tax. The new Indian accounting brings adds the construction revenue and cost in because this is completed locally. That means some of the earnings for building the wind farms ($16m) is back and subject to Indian tax. How do others interpret it? And for those who know more about accounting (I've set the bar very low), where could this have shown-up previously? "Other income"? Faster depreciation costs are a good thing in my eyes - especially at this stage - as (a) it is more realistic for the pace of technological change and (b) it allows MYT to write them off quicker while it's growing. I can't fault the company at this point. Better investor relations / updates would have helped over the past 6 months (I'm looking at you, Bob Smith) but they'll argue that they were nearly doubling in size. Just want more of the same this year and the order book, finance and staff who have done it before are already in place. Shouldn't the company be worth at least double this and probably closer to 10x?
Yes. Really cannot understand the share price ??
More or less as expected on the old basis but new accounting needs to be digested further. No mention of IPO, refinancing or operational performance in 2017. Very strongly cash generative. If they stopped building now they could pay off their debt in 7 years or so.
Agree not long to wait I now, expecting an announcement with the week with a date of when results will posted and possible 2017 trading update with it then the long awaited results within a week after that
Thanks for your posts SMTrading. Like you I would assume they should be closing 1,500MW - but where are the RNSs? I came to a similar valuation on a very crude DCF basis. However, I have a suspicion recent PPAs are not so profitable. They are clearly up to something - IPO/refinancing/investor exit. Probably all three but it is unnerving not knowing what. Bob Smith I have always felt presents very well but I am not sure how much of a finance person he is which makes me a bit wary. I agree that a move up to the main market would at some point be desirable but only if they are around FTSE 250 size or would get there rapidly. Otherwise better to be a bigger fish in the smaller AiM pond. I suspect the new listing they are contemplating is in India or on Singapore - both not hives of liquidity for small companies to my knowledge.
Look up Greenko it was India renewables Co that went private due to stock being undervalued, I think mytrah may have double listing and possible main market listing within 5 years all going well
I'm with you, SMTrading. Have you bought in yet? I'd like it if the directors bought some shares but appreciate they won't be able to at this time. On balance an IPO should be good for us... shouldn't it? Cross-listing will allow the company to be re-valued in a market that will value it considerably higher. They'll be able to refinance and raise more capital to help keep up with their rapid expansion, which is much bigger and faster than in the start-up days as they're growing the size of the old Mytrah every year now.
One other point if you go to mytrah website and look at what jobs are available the an interesting one there. "Key role in driving IPO process" Senior Manager / AGM -Equity Finance Location: Hyderabad Roles and Responsibilities: Candidate having worked with business consulting/advisory, project finance, equity funds, investment banking firms in infrastructure sector. Analytical & logical thought flow, Excellent communication & Interpersonal skills and a team player. Play key role in driving IPO process including preparation of DRHP document, finalization of investors’ related documents/consents etc. Qualification: CA/MBA/CFA Experience: 8-10 Years
ME posted their accounts on June 24 in 2013 when they changed their year end (I think without going back and checking). The most likely scenario for me is that the Indian accounting change has caused a similar delay. The changes seem to be designed to stop moving local profits abroad to avoid tax but I don't think that will affect ME. At this point we're expecting a significant non-cash charge. I'll take the criticism that I'm comparing apples with oranges here but it surprises me that ME can be valued similarly to Good Energy in the UK <£40m. Good has a low margin energy sales business and 30MW of energy generation whereas ME has 1000MW and 3000MW in the pipeline. India electricity is approx. 1/3 of the cost of that in the UK but I imagine the costs to produce are relative with that. As long as they've managed their debt / cash flow wisely, I think there's still far more upside than down. And a note on that... More of my buys in May/June have shown up on this website as sells rather than buys!
Spoke to Bob Smith last week he phoned me from India said company is do good and they will let us know before they release results and he repeated what the said in February, if you ask me those big trades that went through the other day was a buy and I seeing alot of unusual trades going through, Bob was very positive about the company. Just doing a few calculations back of fag pack, October they said they had 1000Mw, my guess is they are close to 1500Mw now with 200 coming from solar and that will generate another half what they made last year, asset close to a billion pounds minus half that for debt minus 10% gives me a company Value of 400 million within 5 years, India renewables is a hot market with lots finace being offer and lots of big energy companies globally want a piece of it, Mytrah are one of the main players in the market and could get snapped up, 72% not in public hands leave very little shares so this going move quick just in the news if result being posted
I agree Hounddog - I'd have just released a statement to say the accounts will be released on X of June. RE: the big seller... why sell before the results when we're they're supposed to be "in line with expectations"? I have a few conspiracy theories!
This is getting really very poor. Accounts have to be out by month end or suspension. There is also a complete absence of other news e.g. Successful tenders. It might be expected by now that some of the solar projects would have been built.
Thanks saintpeter7 - so, in theory, would that mean that the sale of the £1.64m shares in April didn't all complete on that day (because there weren't enough buyers). So the mms have to then keep selling as the days go on until the £1.64m share have all changed hands? Thanks again
Hi Monkf6 - when a large sale goes through, as I understand it, the mms, in having to sell them on to buyers, raise the SP to enable them to make sufficient profit on doing so. In doing so, the rise in the SP can also lead to potential buyers deciding that they need to buy now to avoid having to pay more if the SP goes up further. Mind you, they have a hell of a lot of shares to move on! Interestingly, the same happened £1.64m of shares were sold on 10 April 2017 as you may recall. Love to know which institution is the large seller and whether they will have more to sell. The Chairman did say a number of months back that the SP was being depressed by a large seller. I don't know whether it has anything to do with the Indian subsidiary's possible IPO and debt refinancing. Don't suppose we will ever know.
It looks like someone sold nearly £500K this morning and yet someone how the sp is up nearly 10%. There were several smaller buy orders (the most we've seen in weeks) after the big sale but I don't understand how that can happen - that much more is sold than bought and yet the price goes up. Any ideas? Or can someone with a better understanding than me explain? Thanks
Extract from RNS of 19 December 2016 from chairman - "I am delighted to report that we are on track to achieve the expectations for the current calendar year as set out at the time of our 2015 results in March 2016. While we continue to grow our renewable energy portfolio, we will remain selective and focused on maintaining a balanced portfolio that maximises value for our shareholders. I look forward to updating the market on our 2016 results in early 2017." Well early 2017 in my view has gone. I expect the delay in announcing the results has to do with the refinancing, the subsidiary's proposed IPO and the change in accounting policy, which I suspect are all linked. Love to have a crystal ball as to what will be next announced and when! Could be transformational for the SP one way or the other. I do wish the Bod would let us have an idea when the Accounts may be published so that we are not completely in the dark.
DealStreet Asia reported on April 11, 2017 that Mytrah Energy India Pvt. Ltd was in advanced talks to raise Rs1,800 crore in structured debt funding from Piramal Capital’s structured finance group (SFG), two people directly aware of the development said on condition of anonymity. According to them, the deal is at a term-sheet level and will be one of the largest structured debt investments by Piramal group till date. Mytrah plans to use the funds to refinance its debt and provide exits to some of its current investors such as IDFC Alternatives, AION Capital and Merrill Lynch International before its planned initial public offering (IPO). “The transaction will go towards refinancing the company’s debt in various special purpose vehicles (SPVs),” said the first of the two people cited above. “Apart from refinancing, the funds will also go towards funding projects at various stages of development,” the person added. I posted the above back then from another source, LiveMint. As time goes on and we still await Mytrah Energy' s 2016 results, ME being the parent of Mytrah Energy India Pvt. Ltd, I am inclined to think that they may be delayed until the refinancing with Piramal Capital has been arranged, assuming it proceeds. If it does, IMHO, MYT's shares will get a major boost as probably the primary reason for the sharp fall in the SP has been the uncertainty surrounding the debt refinancing. I'm certainly holding on to the shares I bought at 49p and then 30p with a view to recovering all of my paper loss and more before the Autumn.
We may have to wait a little longer yet... from what I can see 2012's results were released in June 2013 and 2013's are not on the website in the comms. section (so no idea when they were released) but they are there in the annual report - and that was a very good year. I agree that it's bad they don't just give us a date (something they can easily achieve). You'd think we'd have had them by now when the chairman said in December: "I look forward to updating the market on our 2016 results in early 2017". Has anyone ever tried emailing them and got a response before? I emailed over a year ago about land - do they own any of the land, do they lease it or is it "rent free" on the condition they build quickly. I never got a reply but didn't follow it up. At least the accounting update in February reiterated the trading in line with expectations mantra. Admittedly that's really loose and I do start thinking worst case (e.g. what have they uncovered by changing their over to the Indian accounting). Still, more assets working in a better monsoon season means I'm also of the view that this is a cheap valuation for a company that appears to be doing what it needs to do very well. Do you think the only (but understandable) fear is about the falling wind and solar prices? This seems to be driven by some smaller players desperate to get a foothold in the market before they're left behind. Not sustainable. Some Indian state governments are reportedly refusing to sign power purchase agreements for rates they have agreed to because they now want a better price (the recent auction rate price). I imagine these are isolated incidents by a few state government chancers who think contracts don't matter. But maybe there's more risk here than there used to be. Still... IMO a good company at a great price and I agree that I think (aka guess) we'll get a re-rating when the results are released. I can't imagine anything other than a big increase in revenue reinvested into much higher finance costs to build more wind and solar farms. Then the same next year and so on. Any other predictions?
Well I guess there is nothing to be announced until the results. Although, they could I suppose at least let us know when they will be.
To be frank the silence from the company is unacceptable - poor investor relations