MOSL: NHPC (Buy)-Strong operating performance-Cut estimates on delay at Parbati-II
NHPC: Strong operating performance; Cut estimates on delay at Parbati-II; Maintain Buy
(NHPC IN, Mkt Cap USD4.7b, CMP INR30, TP INR37, 24% Upside, Buy)
NHPC’s 3QFY18 underlying PAT grew 40% YoY to INR2.7b (ahead of our estimate of INR2b), led by higher incentive income, lower other expenses, and saving in interest cost. Underlying PAT is adjusted for (a) dividend income of INR2.4b from NHDC and (b) late payment surcharge of INR2.3b (gross tax).
- Generation was up 1% YoY to 3.4BU. PAF increased ~270bp YoY to 76.8%.
- Incentive income increased 59% YoY to INR1.1b.
- Interest cost saving of INR1.1b was achieved on repayment and refinancing of debt. Refinancing will generate annualized saving of INR340m, of which INR170m will be retained by NHPC.
Kishanganga on track, Parbati-II delayed; cut estimates on delay; Maintain Buy
NHPC Limited is engaged in electricity generation. The Company is engaged in electric power generation by hydroelectric power plants. The Company is also engaged in contracts, project management and consultancy works. Its power stations include Bairasiul, Salal, Chamera-I, Tanakpur, Dhauliganga, Rangit and Loktak. Its focuses on Teesta Low Dam-IV Hydroelectric Project (160 megawatt), West Bengal; Kishanganga Hydroelectric Project (330 megawatt), Jammu and Kashmir; Parbati- II Hydroelectric Project (800 megawatt), Himachal Pradesh, and Subansiri Lower Hydroelectric Project (2,000 megawatt), Assam/Arunachal Pradesh. It provides consultancy services in various fields of hydropower, including river basin studies, survey works, design and engineering, geological studies, geotechnical studies, hydraulic transient studies, hydrological studies, contract management, construction management, equipment planning, underground construction, testing, commissioning, and operation and maintenance.
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