MOSL: NTPC (Buy)-Fixed cost under-recoveries on coal shortage-Underlying performance strong; earnings cut on delays
NTPC: Fixed cost under-recoveries on coal shortage; Underlying performance strong; earnings cut on delays; Maintain Buy
(NTPC IN, Mkt Cap USD22.1b, CMP INR170, TP INR210, 24% Upside, Buy)
- NTPC’s standalone (S/A) 3QFY18 adj. PAT declined ~5% YoY to INR21.3b, despite ~19% YoY increase in regulated equity to INR505b. It missed our estimate due to INR5.4b under-recovery of fixed cost. Average plant availability at 83% dipped below the normative 85% due to shortage of coal at Kudgi, Solapur and Mouda. Reported PAT at INR23.6b was impacted by INR2.4b in accelerated leave encashment, offset by a gain of INR5.6b on reversal of prior-period tax.
- Kudgi-U2 800MW and Bongaigaon U2-250MW were commercialized in 3QFY18. 1.6GW (Kudgi-U3 800MW and Lara-U1 800MW) in S/A and Meja 660MW in JV will be commissioned in 4QFY18.
Underlying performance remains strong; Earnings cut on delays; Maintain Buy
- Some of the projects are running behind schedule, while the outlook on solar capacity addition is uncertain. Resultantly, we have cut commercial capacity addition estimate from ~8GW to ~4GW for FY19 and ~7GW to ~6GW for FY20, but increased from ~4GW to ~6GW for FY21 for NTPC group. Consolidated PAT estimate is cut by 4-9% for FY19-21E.
NTPC owns and operates power generation plants that supply power to state electricity boards throughout India. Co. also offers consultancy services related to infrastructure sector business such as: Fossil fuel based thermal power plants; Combined cycle power plants; Cogeneration plants; Water supply and treatment and Environment engineering and management. Co. runs a Power Management Institute (PMI), at NOIDA. PMI has over the years trained a number of professionals from Co., State Electricity Boards and other power utilities in the country. Also, participants in PMI programmes have come from various South Asian and Middle Eastern countries.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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