MOSL: NTPC (Buy)-PAT growth muted on change in GCV measurement-Capacity addition to accelerate and drive earnings
​NTPC: PAT growth muted on change in GCV measurement; Capacity addition to accelerate and drive earnings growth; Maintain Buy
(NTPC IN, Mkt Cap USD21.1b, CMP INR156, TP INR198, 27% Upside, Buy)
- NTPCsa (NTPC standalone) 4QFY17 PAT, adjusted for investment write-off of INR7.8b and employee wage hike provision of INR3.2b (not considered as pass-through in tariff for now), was up 14% YoY to INR31.8b. However, on a like-to-like basis, adjusting for prior-period items, we estimate PAT was broadly flat YoY at INR26.6b (est. of INR24.1b), primarily due to the impact of change in measurement of GCV. Regulated equity (RAB) increased 6% YoY to INR440b. For FY17, adjusted for one-offs/prior-period items, PAT rose 1% YoY to INR96b.
- Pay revision impacts reported performance: Of the pay revision provision of INR8.7b, NTPC has conservatively recognized INR3.5b (50% of ex-gratuity hike) as non-recoverable through tariff. However, we estimate the regulator, like in the past, would allow complete pass-through of wage hike.
- Commercialization of 4.7GW (NTPCsa ex-solar) (Exhibit 3) and capitalization of 5.3GW are guided for FY18. We estimate commercialization would be lower at 3.3GW (NTPCsa ex-solar), still an increase from 1.4GW in FY17.
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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