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NTPC
Q2 FY11 results: disappointing quarter
Recurring profit after tax (PAT) declined 34% YoY
In Q2 FY11, NTPC’s operating income from electricity sales grew 20% YoY to
Rs129.9bn and reported PAT declined 2% to Rs21.07bn. There were exceptional
items such as depreciation written back (Rs17.6bn), provisions (Rs12.6bn), sales
from the prior period (Rs1.81bn) and forex losses (Rs423m). Adjusted for these,
recurring PAT declined 34% YoY to Rs14.7bn. The results were below our
expectations.
Bulk tendering for 7,260MW to be completed in FY11
NTPC is confident that the 11x660MW BTG equipment bulk tendering would be
completed in H2 FY11. The company has already started work on Phase 2 of the
bulk tendering (nine units of 800MW each) and expects orders for these sets to be
placed in FY12. This would be positive for NTPC’s capacity expansion.
NTPC has scheduled an investor and analyst conference call on Wednesday, 27
October. We expect to get more details during the call. We understand the
company is aggressively pursuing new long-term regulated power purchase
agreements (PPA). It intends to sign long-term PPAs for another 25,000MW
before the regulatory regime expires in January 2011. Overall, it may have around
75,000MW under regulated returns.
Valuation: maintain Neutral rating
We maintain our DCF-based price target of Rs230.00. We view NTPC as a good
defensive stock.
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