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NTPC (NATP)
Utilities
Another year of missed capex and capacity addition targets. NTPC reported
provisional revenues of Rs145 bn (17% yoy, 8% qoq) and PAT of Rs25 bn (24% yoy,
6% qoq) for 4QFY11. NTPC commissioned 2,490 MW of power capacities against a
target of 4,150 MW and incurred a capex of Rs128 bn against a guidance of Rs223 bn,
signaling continued slippages in project execution. We retain our REDUCE rating with a
target price of Rs195/share and will revisit our estimates post the detailed results.
Earnings growth disappoint as capacities miss commissioning guidance
NTPC reported provisional revenues of Rs145 bn (17% yoy, 8% qoq) and PAT of Rs25 bn (24%
yoy, 6% qoq) for 4QFY11. We note that reported profits for NTPC will likely include prior-period
items such as re-imbursement of tax expense at the marginal tax rate, details of which are not
available in the provisional result. NTPC’s full year sales and PAT were Rs537 bn (16% yoy) and
Rs88 bn (2% yoy). We highlight that even after adjusting for prior period items and one-offs,
earnings growth has been disappointing as NTPC added just 2,490 MW in incremental capacity,
of which only 1,610 MW was commercialized.
Capex and capacity additions continue to lag guidance
NTPC continues to fall considerably short of its capex guidance having incurred a capex of Rs128
bn (at standalone level) in FY2011 against a guidance of Rs223 bn, signaling slippages in execution
of projects. Further, capacity addition of 2,490 MW (at group level) in FY2011 was significantly
lower than the guidance of 4,150 MW. NTPC’s consolidated capex for FY2011 was Rs163 bn.
NTPC has guided for capacity addition of 4,320 MW and capex outlay of Rs267 bn (standalone)
and Rs308 bn (consolidated) for FY2012E. Continued slippage in capex and commissioning of
capacities reaffirms our cautious view on NTPC’s project execution. Exhibit 3 highlights the status
of capacities under construction while Exhibit 2 highlights the trend of actual versus planned capex
outlays of NTPC (standalone).
Retain REDUCE with a target price of Rs195/share
We retain our REDUCE rating on NTPC with a target price of Rs195/share. In our view, at 2.1X
FY2012E book value and 16X FY2012E EPS, NTPC is fairly valued and we see limited potential
upside from current levels. NTPC’s earnings growth is contingent upon commissioning of new
capacities and given the continued slippages in execution (added just 60% of its FY2011E target),
we believe that accentuated risk to earnings growth will likely keep stock performance muted in
the near term.
Operations highlights for FY2010
We highlight some key operational details of NTPC for FY2011
PLF of NTPC’s coal plants declined from 90.81% in FY2010 to 88.29% in FY2011. We
note that NTPC recorded a PLF lower than 90% for the first time in four years.
Generation increased marginally by 0.8% yoy to 220 BU in FY2011 from 219 BU in
FY2010.
Availability of coal stations increased from 91.4% in FY2010 to 91.6% in FY2011.
NTPC’s gas station achieved a PLF of 71.77% (down from 78.38% achieved in FY2010)
Total coal receipt for FY2011 was 137 mn tons as compared to 136 mn tons in
FY2010. Out of this, 126.6 mn tons was domestic coal and balance 10.5 mn tons was
imported.
Total gas receipt decreased from 13.88 mcm/d in FY2010 to 13.77 mcm/d in FY2011..
Jhajjar Unit 1 (500 MW) and Dadri Unit 6 (490 MW) achieved COD within CERC
stipulated time line making them eligible for additional 0.5% RoE.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NTPC (NATP)
Utilities
Another year of missed capex and capacity addition targets. NTPC reported
provisional revenues of Rs145 bn (17% yoy, 8% qoq) and PAT of Rs25 bn (24% yoy,
6% qoq) for 4QFY11. NTPC commissioned 2,490 MW of power capacities against a
target of 4,150 MW and incurred a capex of Rs128 bn against a guidance of Rs223 bn,
signaling continued slippages in project execution. We retain our REDUCE rating with a
target price of Rs195/share and will revisit our estimates post the detailed results.
Earnings growth disappoint as capacities miss commissioning guidance
NTPC reported provisional revenues of Rs145 bn (17% yoy, 8% qoq) and PAT of Rs25 bn (24%
yoy, 6% qoq) for 4QFY11. We note that reported profits for NTPC will likely include prior-period
items such as re-imbursement of tax expense at the marginal tax rate, details of which are not
available in the provisional result. NTPC’s full year sales and PAT were Rs537 bn (16% yoy) and
Rs88 bn (2% yoy). We highlight that even after adjusting for prior period items and one-offs,
earnings growth has been disappointing as NTPC added just 2,490 MW in incremental capacity,
of which only 1,610 MW was commercialized.
Capex and capacity additions continue to lag guidance
NTPC continues to fall considerably short of its capex guidance having incurred a capex of Rs128
bn (at standalone level) in FY2011 against a guidance of Rs223 bn, signaling slippages in execution
of projects. Further, capacity addition of 2,490 MW (at group level) in FY2011 was significantly
lower than the guidance of 4,150 MW. NTPC’s consolidated capex for FY2011 was Rs163 bn.
NTPC has guided for capacity addition of 4,320 MW and capex outlay of Rs267 bn (standalone)
and Rs308 bn (consolidated) for FY2012E. Continued slippage in capex and commissioning of
capacities reaffirms our cautious view on NTPC’s project execution. Exhibit 3 highlights the status
of capacities under construction while Exhibit 2 highlights the trend of actual versus planned capex
outlays of NTPC (standalone).
Retain REDUCE with a target price of Rs195/share
We retain our REDUCE rating on NTPC with a target price of Rs195/share. In our view, at 2.1X
FY2012E book value and 16X FY2012E EPS, NTPC is fairly valued and we see limited potential
upside from current levels. NTPC’s earnings growth is contingent upon commissioning of new
capacities and given the continued slippages in execution (added just 60% of its FY2011E target),
we believe that accentuated risk to earnings growth will likely keep stock performance muted in
the near term.
We highlight some key operational details of NTPC for FY2011
PLF of NTPC’s coal plants declined from 90.81% in FY2010 to 88.29% in FY2011. We
note that NTPC recorded a PLF lower than 90% for the first time in four years.
Generation increased marginally by 0.8% yoy to 220 BU in FY2011 from 219 BU in
FY2010.
Availability of coal stations increased from 91.4% in FY2010 to 91.6% in FY2011.
NTPC’s gas station achieved a PLF of 71.77% (down from 78.38% achieved in FY2010)
Total coal receipt for FY2011 was 137 mn tons as compared to 136 mn tons in
FY2010. Out of this, 126.6 mn tons was domestic coal and balance 10.5 mn tons was
imported.
Total gas receipt decreased from 13.88 mcm/d in FY2010 to 13.77 mcm/d in FY2011..
Jhajjar Unit 1 (500 MW) and Dadri Unit 6 (490 MW) achieved COD within CERC
stipulated time line making them eligible for additional 0.5% RoE.
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