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MOSL: NTPC (Buy)-Under-recoveries to vanish by end-FY19; Analyst meet takeaways

NTPC: Under-recoveries to vanish by end-FY19; Analyst meet takeaways; Maintain Buy

(NTPC IN, Mkt Cap USD18.7b, CMP INR155, TP INR194, 25% Upside, Buy)

 

Fixed-cost under-recoveries to vanish by end-FY19

There will be no major fixed-charge under-recoveries by the end of FY19, as:

(a) The Unchahar power plant, which is shut down post the unfortunate blast incident, should restart by October 2018 or at least before the end of CY18.

(b) The government has permitted coal imports, which will assist in coal availability at non pit-head plants.

(c) Coordination with Railways and Coal India has improved. It has given an advance of INR50b to Railways, which gives NTPC assured coal rake availability.

(d) Logistic bottlenecks at the Mouda power plant remain, which could be a risk factor. It is in engagement with Railways for smooth rake availability.

 Targeting ~5GW commercialization in FY19, but some slippages possible

NTPC is targeting commercialization of ~5GW in FY19. It includes Kudgi U3 800MW, Lara U1 800MW, Bongaigaon U3 250MW, Gadarwara U1 800MW, Solapur U2 660MW in standalone, and Nabinagar U3 250MW, Meja U1 660MW, and NPGCL U1 660MW in subsidiaries and JVs. We expect some slippages and are building in commercialization of ~4.2GW in FY19.