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Add NHPC: Result impacted by CERC norms, capacity ramp up next trigger…
NHPC reported sales of | 709 crore. In Q3FY10, there was one-time
additional income of | 655 crore on account of revision of tariff in the
Dulhasti project. Hence, YoY, numbers are not comparable. However, on
a normalised basis, net sales grew 28% (generation higher by 15%).
NHPC reported an EBITDA of | 538.9 crore. For Q3FY11E, there was a
reduction in depreciation to the tune of | 99.74 crore as there was a
change in the method of depreciation. The tax rate was higher (30% vs.
20%) due to a change in depreciation affecting deferred tax. Due to a
change in advance against depreciation, reported PAT was lower by |
40.33 crore. PAT was reported at | 300 crore vs. normalised PAT of | 55
crore (Q3FY10). Due to a delay in capacity addition and adjusting one
time gain (reported in Q4FY10), we have revised our earnings estimates
downwards by 20% in FY11 and FY12.
ƒ Capacity addition of 1,212 MW in FY12E
NHPC has commissioned the 120 MW Seva II plant during the quarter
taking total capacity to 5295 MW. Although the company is confident
of achieving 1,212 MW, we have factored in a delay of three months
in each of the projects. Subansiri Lower (2000 MW) is expected to be
commissioned by August 2014 delayed by over a year.
Valuation
At the CMP of | 24, the stock is trading at FY11 P/BV of 1.2x and FY12E
P/BV of 1.2x, which makes NHPC attractively valued. The likely triggers for
the stock in the near term would be progress on the appeal to the
Ministry of Power (MoP) regarding RoEs on CWIP. Since ~4992 MW is
under construction, we believe a favourable outcome could re-rate the
stock. A delay in capacity addition especially Subansiri Lower (2000 MW)
from FY13 to FY15 looms large on the stock. Due to a delay in capacity
addition, we have revised our target price from | 33 to | 26. We maintain
our ADD rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Add NHPC: Result impacted by CERC norms, capacity ramp up next trigger…
NHPC reported sales of | 709 crore. In Q3FY10, there was one-time
additional income of | 655 crore on account of revision of tariff in the
Dulhasti project. Hence, YoY, numbers are not comparable. However, on
a normalised basis, net sales grew 28% (generation higher by 15%).
NHPC reported an EBITDA of | 538.9 crore. For Q3FY11E, there was a
reduction in depreciation to the tune of | 99.74 crore as there was a
change in the method of depreciation. The tax rate was higher (30% vs.
20%) due to a change in depreciation affecting deferred tax. Due to a
change in advance against depreciation, reported PAT was lower by |
40.33 crore. PAT was reported at | 300 crore vs. normalised PAT of | 55
crore (Q3FY10). Due to a delay in capacity addition and adjusting one
time gain (reported in Q4FY10), we have revised our earnings estimates
downwards by 20% in FY11 and FY12.
ƒ Capacity addition of 1,212 MW in FY12E
NHPC has commissioned the 120 MW Seva II plant during the quarter
taking total capacity to 5295 MW. Although the company is confident
of achieving 1,212 MW, we have factored in a delay of three months
in each of the projects. Subansiri Lower (2000 MW) is expected to be
commissioned by August 2014 delayed by over a year.
Valuation
At the CMP of | 24, the stock is trading at FY11 P/BV of 1.2x and FY12E
P/BV of 1.2x, which makes NHPC attractively valued. The likely triggers for
the stock in the near term would be progress on the appeal to the
Ministry of Power (MoP) regarding RoEs on CWIP. Since ~4992 MW is
under construction, we believe a favourable outcome could re-rate the
stock. A delay in capacity addition especially Subansiri Lower (2000 MW)
from FY13 to FY15 looms large on the stock. Due to a delay in capacity
addition, we have revised our target price from | 33 to | 26. We maintain
our ADD rating on the stock.
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