MOSL: NHPC (Neutral)-Higher operating cost drives a miss-Earnings growth muted, capex run-rate increasing
NHPC: Higher operating cost drives a miss; Earnings growth muted, capex run-rate increasing; Maintain Neutral
(NHPC IN, Mkt Cap USD3.6b, CMP INR25, TP INR26, 5% Upside, Neutral)
Standalone (S/A) adj. PAT of INR36m in 4QFY19 was below our estimate of INR1.6b due to higher-than-expected operating cost. This also implies a sharp fall from INR1.9b in 4QFY18, particularly because the company no longer capitalizes expenses (as part of regulatory deferral account) for the Lower Subhansiri power project. However, reported PAT was higher at INR4.9b, boosted by prior-period revenue of INR4.8b.
- Revenue grew 29% YoY to INR14.6b (our estimate: INR14.9b) in the quarter, led by a 60% YoY increase in generation to 3.4BU. EBITDA (incl. rate regulatory reserve) growth, however, was much lower at 4% YoY to INR5.7b due to higher operating cost and the drag from the Lower Subhansiri power project.
- For FY19, S/A adj. PAT declined 19% YoY to INR22.2b due to lower other income and the drag from the Lower Subhansiri project. Reported PAT, however, declined at a lower rate of 5% YoY to INR26.3b, supported by prior-period revenue of ~INR4.1b. Consol. adj. PAT was down 13% YoY to INR21.8b, while reported PAT grew 4% YoY to INR25.9b.
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.
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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