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C a p a c i t y a d d i t i o n i s t h e k e y …
We met the management of NHPC to get an insight into the company’s
growth and future. Currently, the company is less affected by headwinds
that the sector is facing in terms of back-downs by SEBs, no fuel risks and
100% regulated model. While the company earns core RoE of 20%+,
RoNW is in single digits due to high capital work in progress. Capacity
addition and RoE on capital work in progress are key catalysts for the
stock to get re-rated. We maintain our BUY rating on the stock.
Key highlights of the meeting
• The management expects capacity of ~690 MW in FY12 by
commissioning the first unit of Parbati III (130 MW) in FY12.
However, we have modelled in 515 MW capacity addition in FY12
• The company has 4502 MW of projects under construction and
5965 MW projects under development (additional 3620 MW in JVs)
• The first unit of 44 MW of Chutak (11 MW) is already ready for
commissioning. The entire project will be commissioned in Q3FY12
• The company will be grossing RoEs on normal tax rate instead of
MAT in FY12 and FY13
• Capex for FY12 and FY13 stands at | 5000 crore
• The company remains hopeful that the regulator (CERC) will allow
RoE on capital work in progress (CWIP) (currently the company has
| 15797 crore as CWIP)
V a l u a t i o n
At the CMP of | 23.6, the stock is trading at P/E of 13.8x and 11.2x on
FY12E and FY13E EPS, respectively. Similarly, on P/BV multiple, the stock
is trading at 1.1x and 1.1x FY13E, respectively. We maintain our BUY
rating as the company is insulated from current headwinds, which the
sector is facing (back-downs, higher interest rate, lower merchant rates).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
C a p a c i t y a d d i t i o n i s t h e k e y …
We met the management of NHPC to get an insight into the company’s
growth and future. Currently, the company is less affected by headwinds
that the sector is facing in terms of back-downs by SEBs, no fuel risks and
100% regulated model. While the company earns core RoE of 20%+,
RoNW is in single digits due to high capital work in progress. Capacity
addition and RoE on capital work in progress are key catalysts for the
stock to get re-rated. We maintain our BUY rating on the stock.
Key highlights of the meeting
• The management expects capacity of ~690 MW in FY12 by
commissioning the first unit of Parbati III (130 MW) in FY12.
However, we have modelled in 515 MW capacity addition in FY12
• The company has 4502 MW of projects under construction and
5965 MW projects under development (additional 3620 MW in JVs)
• The first unit of 44 MW of Chutak (11 MW) is already ready for
commissioning. The entire project will be commissioned in Q3FY12
• The company will be grossing RoEs on normal tax rate instead of
MAT in FY12 and FY13
• Capex for FY12 and FY13 stands at | 5000 crore
• The company remains hopeful that the regulator (CERC) will allow
RoE on capital work in progress (CWIP) (currently the company has
| 15797 crore as CWIP)
V a l u a t i o n
At the CMP of | 23.6, the stock is trading at P/E of 13.8x and 11.2x on
FY12E and FY13E EPS, respectively. Similarly, on P/BV multiple, the stock
is trading at 1.1x and 1.1x FY13E, respectively. We maintain our BUY
rating as the company is insulated from current headwinds, which the
sector is facing (back-downs, higher interest rate, lower merchant rates).
has comany anyway affected by earthquake in Sikkim ? If yes then at what extent
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