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NTPC Neutral
NTPC.BO, NTPC IN
Jun-q results a tad below expectations
NTPC reported Jun-q standalone PAT of Rs20.8bn (up 13% YoY),
~4% below our and Street estimates. Other income of Rs10bn (including
other operating income) was up 70% YoY and includes a write-back of
Rs2.64bn provision toward tariff adjustment made in the previous year –
excluding this positive impact, bottom-line performance was even weaker.
As usual, it was an accounting maze: Reported depreciation in 1Q was
down 6.1% YoY, a possible explanation lies in NTPC’s switch to lower
depreciation rates as notified by CERC vs. company’s act in Sep-q last year.
The company appears to have re-stated other operating income, other
expenditures and other income reported in 1QFY11. Tax was up 51% YoY,
despite a deferred tax credit in Jun-q, consol tax rate was up 300bps to
~27%.
Focus on per unit realizations: NTPC has an assured regulated return
model and prima-facie realizations are simply indicative of tariff and cost
trends. In Jun-q, tariff increased ~12% to Rs2.6/unit, whereas O&M (29p,
up 26.5% YoY) and fuel cost (Rs1.8, up 14%) increase was sharper. Jun-q
EBITDA was down 4% YoY.
Operating metrics weak. Based on monthly CEA data, we had estimated
PLF of 80% in 1QFY12 vs. 88% in Jun-q last year. Calculated PLF for coal
based capacity of 26.9GW was 83% (down 500bps) and sharply lower for
4GW gas based capacity at 62% (down from 79% in 1QFY11) [see July
edition of Know your Power]. Lower PLF could have impacted incentives
and contributed to the disappointment in operational performance, in our
view. At standalone level, operating capacity (~30.9GW) was 2GW higher
than Jun-q last year. In end-Jun NTPC commissioned its first supercritical
unit of 660MW at Sipat- taking total installed capacity (including JVs) to
34,854MW.
NTPC is hosting an analyst meet on 1 Aug (Monday) at 4:00PM, where
we expect to get more details on: a) progress vs. MoU target of 4.32GW
capacity addition in FY12 (we factor in 3.3GW addition); b) extent of backdown
by SEBs in relation to their weak financial position; c) reasons for
weak operating level performance, extent of incentives and UI related
income booked during the quarter. Within the regulated utility space, NTPC
has underperformed PGCIL (PWGR IN, Rs108.50, rated OW) over the last
1-12 months time frame, we expect the trend to continue, given the latter’s
relatively superior execution track record and absence of fuel risk.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NTPC Neutral
NTPC.BO, NTPC IN
Jun-q results a tad below expectations
NTPC reported Jun-q standalone PAT of Rs20.8bn (up 13% YoY),
~4% below our and Street estimates. Other income of Rs10bn (including
other operating income) was up 70% YoY and includes a write-back of
Rs2.64bn provision toward tariff adjustment made in the previous year –
excluding this positive impact, bottom-line performance was even weaker.
As usual, it was an accounting maze: Reported depreciation in 1Q was
down 6.1% YoY, a possible explanation lies in NTPC’s switch to lower
depreciation rates as notified by CERC vs. company’s act in Sep-q last year.
The company appears to have re-stated other operating income, other
expenditures and other income reported in 1QFY11. Tax was up 51% YoY,
despite a deferred tax credit in Jun-q, consol tax rate was up 300bps to
~27%.
Focus on per unit realizations: NTPC has an assured regulated return
model and prima-facie realizations are simply indicative of tariff and cost
trends. In Jun-q, tariff increased ~12% to Rs2.6/unit, whereas O&M (29p,
up 26.5% YoY) and fuel cost (Rs1.8, up 14%) increase was sharper. Jun-q
EBITDA was down 4% YoY.
Operating metrics weak. Based on monthly CEA data, we had estimated
PLF of 80% in 1QFY12 vs. 88% in Jun-q last year. Calculated PLF for coal
based capacity of 26.9GW was 83% (down 500bps) and sharply lower for
4GW gas based capacity at 62% (down from 79% in 1QFY11) [see July
edition of Know your Power]. Lower PLF could have impacted incentives
and contributed to the disappointment in operational performance, in our
view. At standalone level, operating capacity (~30.9GW) was 2GW higher
than Jun-q last year. In end-Jun NTPC commissioned its first supercritical
unit of 660MW at Sipat- taking total installed capacity (including JVs) to
34,854MW.
NTPC is hosting an analyst meet on 1 Aug (Monday) at 4:00PM, where
we expect to get more details on: a) progress vs. MoU target of 4.32GW
capacity addition in FY12 (we factor in 3.3GW addition); b) extent of backdown
by SEBs in relation to their weak financial position; c) reasons for
weak operating level performance, extent of incentives and UI related
income booked during the quarter. Within the regulated utility space, NTPC
has underperformed PGCIL (PWGR IN, Rs108.50, rated OW) over the last
1-12 months time frame, we expect the trend to continue, given the latter’s
relatively superior execution track record and absence of fuel risk.
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