MOSL: NTPC (Buy)-Weakness in core RoE due to seasonal factors-Recent capacity additions auger well for earnings growth
​NTPC: Weakness in core RoE due to seasonal factors; Recent capacity additions auger well for earnings growth; Maintain Buy
(NTPC IN, Mkt Cap USD21.1, CMP INR164, TP INR198, 21% Upside, Buy)
NTPC standalone 1QFY18 est. adjusted PAT grew 7% YoY to INR25.7b (inline) on higher other income. Other income was ~4x YoY to INR6.6b on recovery of interest on delayed payments. The core generation RoE was down 9% YoY to est. INR20.7b due to lower PLF incentives, wage hike, GCV measurements and higher planned shutdowns’ expenses. The under recovery of wage provision (~INR500m) is likely to be reversed once the regulator approves, like in the past. The O&M expenses would normalize in the coming quarters.
- NTPC group installed capacity increased by 1.1GW QoQ to 51.6GW. It has commissioned Solapur 660MW, RE 227MW and Nabinagar (JV) 250MW in the quarter. Declared capacity was unchanged QoQ at 47.2GW.
- Capitalization to accelerate NTPC is targeting capitalization of ~4.7GW capacity in FY18. It has already commissioned projects of ~3.7GW and plans to commission an additional ~2.6GW before end of FY18. NTPC also targets to capitalize 250MW in JV companies in FY18.
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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