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India Equity Research Reports, IPO and Stock News
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NTPC’s 1Q12 standalone recurring PAT at Rs21.3 bn was up
13% YoY and was almost in line with our estimates. Tax was
grossed up at the full corporate tax rate, providing incentives from
tax arbitrage. Management guided that this arbitrage will continue
during FY12 as it expects an actual tax rate of 20.7%.
● Generation declined 2% YoY despite a 2% YoY increase in
capacity, mainly led by load-shedding by SEBs. However, as
expected, this had marginal impact on NTPC’s profits given the loss
of PLF-linked incentives. Assured RoE, recovery of fixed costs and
most incentives are dependant on PAF, which was marginally lower
for coal projects (-24 bp YoY) and better for gas projects (+389 bp).
● NTPC is confident of procuring its FY12 coal needs of 164 mn t, but,
we see a risk to its coal supplies through MoU and bilateral contracts
as neither of these is backed by assured coal supply contracts.
● NTPC and the Power Ministry are confident that the company’s
captive coal blocks would be reallocated. NTPC maintained its
guidance to produce 47 mmtpa captive coal by 2017. While we
expect its coal blocks to be reallocated, we estimate delays in its
coal production plans
1Q12 was almost in line with our estimates
NTPC’s 1Q12 recurring PAT at Rs21.3 bn (up 13% YoY) was almost
in line with our estimates. Tax during 1Q12 was grossed up at the full
corporate tax rate, providing incentives from tax arbitrage.
Management guided that this arbitrage will continue during FY12 as it
expects the rate of actual tax outgo at 20.7%.
Generation impacted by SEBs’ load-shedding
Generation at 54.6 bn kWh declined 2% YoY despite a 2% YoY
increase in capacity, mainly led by lower power purchases by SEBs,
as reflected by a YoY fall in PLF for its projects. As per NTPC,
generation could have been 1.36 bn kWh higher (implying flat
generation YoY) if SEBs hadn’t resorted to load-shedding. However,
we note that fall in PLF only marginally impacts NTPC’s earnings (loss
of PLF-linked incentives). However, we are concerned about the fall in
coal projects’ PAF (availability), as PAF determines the calculation of
NTPC’s assured RoE and pass-through of fixed costs. But we reckon
that the fall in coal projects’ PAF was marginal (24 bp YoY) and was
more than offset by a 389 bp YoY increase in PAF for gas projects
NTPC confident of meeting coal requirements during FY12
NTPC expects its FY12 coal needs of 164 mn t to be met (Figure 3).
Coal receipts during 1Q12 at 34 mn t increased by 2.5% YoY. However,
we see a risk to coal supplies under MoU and bilateral contracts as
neither of these is backed by legally enforceable contracts
NTPC/power ministry confident for coal blocks reallocation
At the analyst meet, NTPC and the representatives from the Power
Ministry were confident that Ministry of Coal’s decision to de-allocate
NTPC’s captive coal blocks would be reversed as they believe NTPC
would be able to prove that it has achieved a substantial progress in
developing these blocks. NTPC maintained its guidance of producing 47
mmtpa of coal by 2017, sufficient to meet 20% of its coal needs then.
We expect coal blocks to be reallocated but estimate 35 mmtpa of coal
production by 2017, as we expect delays in its coal production plans.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NTPC’s 1Q12 standalone recurring PAT at Rs21.3 bn was up
13% YoY and was almost in line with our estimates. Tax was
grossed up at the full corporate tax rate, providing incentives from
tax arbitrage. Management guided that this arbitrage will continue
during FY12 as it expects an actual tax rate of 20.7%.
● Generation declined 2% YoY despite a 2% YoY increase in
capacity, mainly led by load-shedding by SEBs. However, as
expected, this had marginal impact on NTPC’s profits given the loss
of PLF-linked incentives. Assured RoE, recovery of fixed costs and
most incentives are dependant on PAF, which was marginally lower
for coal projects (-24 bp YoY) and better for gas projects (+389 bp).
● NTPC is confident of procuring its FY12 coal needs of 164 mn t, but,
we see a risk to its coal supplies through MoU and bilateral contracts
as neither of these is backed by assured coal supply contracts.
● NTPC and the Power Ministry are confident that the company’s
captive coal blocks would be reallocated. NTPC maintained its
guidance to produce 47 mmtpa captive coal by 2017. While we
expect its coal blocks to be reallocated, we estimate delays in its
coal production plans
1Q12 was almost in line with our estimates
NTPC’s 1Q12 recurring PAT at Rs21.3 bn (up 13% YoY) was almost
in line with our estimates. Tax during 1Q12 was grossed up at the full
corporate tax rate, providing incentives from tax arbitrage.
Management guided that this arbitrage will continue during FY12 as it
expects the rate of actual tax outgo at 20.7%.
Generation impacted by SEBs’ load-shedding
Generation at 54.6 bn kWh declined 2% YoY despite a 2% YoY
increase in capacity, mainly led by lower power purchases by SEBs,
as reflected by a YoY fall in PLF for its projects. As per NTPC,
generation could have been 1.36 bn kWh higher (implying flat
generation YoY) if SEBs hadn’t resorted to load-shedding. However,
we note that fall in PLF only marginally impacts NTPC’s earnings (loss
of PLF-linked incentives). However, we are concerned about the fall in
coal projects’ PAF (availability), as PAF determines the calculation of
NTPC’s assured RoE and pass-through of fixed costs. But we reckon
that the fall in coal projects’ PAF was marginal (24 bp YoY) and was
more than offset by a 389 bp YoY increase in PAF for gas projects
NTPC confident of meeting coal requirements during FY12
NTPC expects its FY12 coal needs of 164 mn t to be met (Figure 3).
Coal receipts during 1Q12 at 34 mn t increased by 2.5% YoY. However,
we see a risk to coal supplies under MoU and bilateral contracts as
neither of these is backed by legally enforceable contracts
NTPC/power ministry confident for coal blocks reallocation
At the analyst meet, NTPC and the representatives from the Power
Ministry were confident that Ministry of Coal’s decision to de-allocate
NTPC’s captive coal blocks would be reversed as they believe NTPC
would be able to prove that it has achieved a substantial progress in
developing these blocks. NTPC maintained its guidance of producing 47
mmtpa of coal by 2017, sufficient to meet 20% of its coal needs then.
We expect coal blocks to be reallocated but estimate 35 mmtpa of coal
production by 2017, as we expect delays in its coal production plans.
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