MOSL: NTPC (Buy)-Under-recoveries continue dragging earnings-But capitalization may provide support
NTPC: Under-recoveries continue dragging earnings; But capitalization may provide support
(NTPC IN, Mkt Cap USD16.1b, CMP INR139, TP INR195, 41% Upside, Buy)
- Standalone (S/A) PAT increased by just ~1% YoY to INR23.8b (below our estimate of INR26.4b), as higher working capital led to an increase in interest cost. Higher working capital/cash requirements would have impacted the company’s other income as well, in our view, which declined by 40% YoY (45% miss). Moreover, fixed charge u/recoveries continued, given coal shortages/plant unavailability. PAT adjusted for prior period and u/recoveries declined ~8% YoY.
- Fixed charge u/recoveries declined 16% QoQ to INR2.8b in 3QFY19. Management guided for a decline in u/recoveries to ~INR7.5b in FY19 (v/s ~INR11b in 9MFY19 and ~INR14b in FY18), given the improvement in coal availability and the restart of Unchahar unit #6 (500MW).
- Interest cost rose 20% YoY to INR12.8b, as working capital increased due to higher receivables for the renewable business and ongoing advance to railways for preferential rake allotment.
- Core RoE (on adj. PAT) declined ~140-190bp YoY/QoQ to 18.5%.
- Commercial capacity declined ~500MW QoQ to 52.4GW, given decommissioning of Badarpur (705MW), partly offset by the acquisition of Barauni (220MW). FY19 target was maintained at ~4.8GW (our estimate: 3.6GW).
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.