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Case Study for Valuation of Thermal Power Plant

By December 26, 2023January 11th, 2024Case Studies1 min read
Thermal Power Plant

Introduction

A Thermal Power Plant in India, operating for over 28 years, has an installed capacity of 500 MW, strategically located with efficient access to fuel and transmission infrastructure.

Situation:

Consistently operating at full capacity, regular maintenance, and upgrades conducted. Primarily coal-fueled with reliable supply contracts. Measures implemented for operational efficiency and emission reduction.

Key Questions:

  • Will the Plant continue operating?
  • Will there be profit or positive revenue?
  • Are alternative power plants more economical?
  • Decision to Buy, sell, or hold?

Answers:

  • Continuous demand due to the Plant’s monopoly in the region.
  • 100% market share with no competition.
  • Well-maintained plant, expected to remain operational.
  • Positive revenue indicated by Discounted Cash Flow (DCF).
  • Outperforming similar plants in capacity, efficiency, and financial performance.

Conclusion:

This Case Study provides a comprehensive framework for evaluating the Thermal Power Plant’s Valuation, considering operational, financial, and market factors.

 

Read More: Valuation of an under-construction commercial project by Discounted Cash Flow (DCF)