MOSL: NTPC (Buy)-Late payment surcharge boosts profitability; Capitalization picking up
NTPC: Late payment surcharge boosts profitability; Capitalization picking up; Maintain Buy
(NTPC IN, Mkt Cap USD16.3b, CMP INR117, TP INR163, 39% Upside, Buy)
Standalone (S/A) 2QFY20 adj. PAT increased ~24% YoY to INR34.8b (16% beat to our est.). PAT has been adjusted for INR3.3b fixed charge (FC) under-recovery (u/r) this quarter. The beat was on account of rise in late payment surcharge income. Also, reported PAT was up ~34% YoY to INR33b.
- FC u/r stood at INR3.3b (flat YoY). U/r in 2QFY20 was on account of coal availability issues at Talcher/Sipat and capital overhaul at Farakka. On YoY basis, the number was flat given the restart of Unchahar and better coal availability at Mauda/Solapur. NTPC expects to recover FC in 2HFY20 and plans to supply imported coal to plants facing continued shortage.
- Given the rise in over-dues, NTPC has booked late payment surcharge income of INR6.5b. Correspondingly, its interest cost was impacted by INR3.3b given the higher WC related borrowings. Company has noted that it has received timely payments for its billed revenue post implementation of the LC mechanism. Over-dues >45 days now stand at INR70-75b.
- Share of JV PAT stood at INR1.2b (v/s INR1.4b in 2QFY19). Performance of subsidiaries improved with profit of INR0.2b (v/s loss of INR0.9b).
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.
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