MOSL: NHPC (Neutral)-Higher generation drives earnings-Capex run-rate increasing
NHPC: Higher generation drives earnings; Capex run-rate increasing; Maintain Neutral
(NHPC IN, Mkt Cap USD3.2b, CMP INR23, TP INR26, 14% Upside, Neutral)
1QFY20 standalone performance was on expected lines. PAT grew 19% YoY to INR8.8b, led by 22% YoY increase in generation and benefit from new tariff regulations.
- The NGT has given a favorable order for the Lower Subansiri (2,000MW) project clearing the last legal hurdle for re-starting the project. According to the management, local people have been supportive of the various CSR initiatives undertaken by the company over the years. It expects to restart full- scale construction after the monsoon season. With clarity on the project, it has resumed capitalizing expenses (stopped w.e.f. 2QFY19) on the project.
- Parbati-II (800MW) is progressing well and commissioning is expected in FY22 (unchanged).
- The final approval for capital cost of the five projects is expected by Sep'19. We estimate this would boost revenues by ~INR2-3b p.a.
- Capex stood at INR0.3b for the quarter with full-year guidance at INR38b.
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.
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.
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