MOSL: NTPC (Buy)-Strong perf. on RAB growth, efficiencies and incentives-EPS CAGR of ~14% over FY17-20E
​NTPC: Strong perf. on RAB growth, efficiencies and incentives; EPS CAGR of ~14% over FY17-20E; valuations attractive; Buy
(NTPC IN, Mkt Cap USD22.3b, CMP INR177, TP INR211, 19% Upside, Buy)
NTPC’s 2QFY18 PAT adjusting for prior periods and reversals (net of tax) increased 21% YoY to INR28.4b, well ahead of our estimate of INR24.4b, driven by regulated equity growth, efficiency gains and higher PLF incentive. Reported PAT was down 2% YoY at INR24.4b.
- 2.6GW capacity was capitalized in S/A, driving a 15% YoY increase in regulated equity (RAB) to INR488b in 2Q. Including 445MW capitalized in JVs, the group’s declared capacity is 50.6GW and installed capacity is 51.6GW.
- Unit fuel cost was down 9% YoY at 1.93/kWh, led by GST savings, lower specific consumption and grade adjustment by Coal India.
- Efficiency gains were driven by lower auxiliary consumption/SHR and some benefit from changes in grid norms for compensation for part load operation of plants. PLF incentive increased from INR30m in 2QFY17 to INR660m in 2QFY18.
- The hearing on GCV measurement based on report submitted by CEA is scheduled on 21st November 2017. Any relaxation would drive some earnings upside.
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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