Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NTPC
PRICE: RS.167 RECOMMENDATION: BUY
TARGET PRICE: RS.220 FY12E P/E: 14.2X
q Generation during the quarter has remained flat due to fuel supply constraints
as well as low demand from state utilities.
q Company plans to commission 4980 MW in FY12 but expect capacity addition
to remain at 3820 MW.
q We prefer NTPC in view of the strong balance sheet, dependence on domestic
coal and a fixed return model. We maintain BUY with a DCF price
target of Rs 220 (unchanged), thus valuing the stock at 2.4x FY12 BV.
q Concerns: continued to delay in capacity additions and fuel supply risk.
Highlights
n Power generation volume remained muted during the July-Aug 2011 period
partly due to grid restrictions as several SEBs backed away from buying power.
Most of the company's gas based units operated at lower PLF due to low demand
from state distribution utilities.
n Coal shortage continues to constrain power generation in the country. During the
April-Aug 2011 period, thermal power generation from coal was constrained due
to 89% realization of the overall coal requirement. During the month of August
2011, as against a coal estimated requirement of 31.3 MT only 27.9 MT of coal
was made available to the thermal power station. In case of NTPC, its
Kahalgaon unit continues to operate at sub-optimum levels due to shortage of
coal.
n The unit 6 of 500 MW at Farakka was commissioned in FY11 and is yet to stabilize
hence COD (Commercial Operation Date) has been delayed.
n Since mid-September, supply to NTPC's Ramagundam super thermal power
project, located in Andhra Pradesh, has been disrupted due to agitation by miners
at Singareni collieries (SCCL). The SCCL miners are agitating in support of
separate statehood of Telangana. The Ramagundam unit has a capacity of 2600
MW, of which it was generating about 1,520 MW with six units.
n During the quarter, the company commenced commercial operation of unit 3 of
500 MW at Simhadri. The company also declared commercial operation of unit 1
of phase II of 660 MW at Sipat in Q3 FY12, which was originally scheduled for
completion in FY11.
n So far as capacity addition in FY12 is concerned, the company has a plan of
adding 4320 MW consisting of 1320 MW at Sipat, 500 MW each at Simhadri
and Mauda and 1000 MW each at Vallur and Jhajjar. Out of this, the completion
of Mauda unit is on best-efforts basis.
n The company is contemplating reworking of capacity addition targets. It now
plans to add 4980 MW (660 MW spillover from FY11) in FY12. Instead of 1000
MW each at Vallur and Jhajjar, the company plans to commission 500 MW each
at these locations. The balance 1000 MW would be contributed Vindhyachal and
Rihand. In view of the company's past track record of missing out on capacity
addition targets, we expect the company to add 3820 MW in FY12.
n There has been some increase in receivables however there has not been any
cases of defaults by state utilities. By not paying on time these state distribution
utilities are forgoing rebate on timely payment. Recent tariff hikes 5-25% by
state utilities is a significant positive so far as restoring the financial health of
power sector is concerned.
n The company incurred a capex of Rs 101.4 bn in FY10 and had envisaged a
capex of Rs 223.5 bn in FY11. However, actual capex was much lower at Rs 128
bn. For FY12, the utility plans to spend Rs 264 bn towards capacity additions.
n With a view to expedite capacity addition and at the same time ensure competitive
price, the company placed orders on a bulk basis. During the quarter, the
company completed the awarding of 9 units of 800 MW on a bulk basis to 2-3
players.
Valuation and Recommendation
n NTPC is currently trading at 14.2x FY12 earnings and on a P/BV basis, the stock
trades at 1.9x FY12 book value.
n We maintain BUY with an unchanged DCF based price target of Rs 220, thus
valuing the stock at 2.4x FY12 BV.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NTPC
PRICE: RS.167 RECOMMENDATION: BUY
TARGET PRICE: RS.220 FY12E P/E: 14.2X
q Generation during the quarter has remained flat due to fuel supply constraints
as well as low demand from state utilities.
q Company plans to commission 4980 MW in FY12 but expect capacity addition
to remain at 3820 MW.
q We prefer NTPC in view of the strong balance sheet, dependence on domestic
coal and a fixed return model. We maintain BUY with a DCF price
target of Rs 220 (unchanged), thus valuing the stock at 2.4x FY12 BV.
q Concerns: continued to delay in capacity additions and fuel supply risk.
Highlights
n Power generation volume remained muted during the July-Aug 2011 period
partly due to grid restrictions as several SEBs backed away from buying power.
Most of the company's gas based units operated at lower PLF due to low demand
from state distribution utilities.
n Coal shortage continues to constrain power generation in the country. During the
April-Aug 2011 period, thermal power generation from coal was constrained due
to 89% realization of the overall coal requirement. During the month of August
2011, as against a coal estimated requirement of 31.3 MT only 27.9 MT of coal
was made available to the thermal power station. In case of NTPC, its
Kahalgaon unit continues to operate at sub-optimum levels due to shortage of
coal.
n The unit 6 of 500 MW at Farakka was commissioned in FY11 and is yet to stabilize
hence COD (Commercial Operation Date) has been delayed.
n Since mid-September, supply to NTPC's Ramagundam super thermal power
project, located in Andhra Pradesh, has been disrupted due to agitation by miners
at Singareni collieries (SCCL). The SCCL miners are agitating in support of
separate statehood of Telangana. The Ramagundam unit has a capacity of 2600
MW, of which it was generating about 1,520 MW with six units.
n During the quarter, the company commenced commercial operation of unit 3 of
500 MW at Simhadri. The company also declared commercial operation of unit 1
of phase II of 660 MW at Sipat in Q3 FY12, which was originally scheduled for
completion in FY11.
n So far as capacity addition in FY12 is concerned, the company has a plan of
adding 4320 MW consisting of 1320 MW at Sipat, 500 MW each at Simhadri
and Mauda and 1000 MW each at Vallur and Jhajjar. Out of this, the completion
of Mauda unit is on best-efforts basis.
n The company is contemplating reworking of capacity addition targets. It now
plans to add 4980 MW (660 MW spillover from FY11) in FY12. Instead of 1000
MW each at Vallur and Jhajjar, the company plans to commission 500 MW each
at these locations. The balance 1000 MW would be contributed Vindhyachal and
Rihand. In view of the company's past track record of missing out on capacity
addition targets, we expect the company to add 3820 MW in FY12.
n There has been some increase in receivables however there has not been any
cases of defaults by state utilities. By not paying on time these state distribution
utilities are forgoing rebate on timely payment. Recent tariff hikes 5-25% by
state utilities is a significant positive so far as restoring the financial health of
power sector is concerned.
n The company incurred a capex of Rs 101.4 bn in FY10 and had envisaged a
capex of Rs 223.5 bn in FY11. However, actual capex was much lower at Rs 128
bn. For FY12, the utility plans to spend Rs 264 bn towards capacity additions.
n With a view to expedite capacity addition and at the same time ensure competitive
price, the company placed orders on a bulk basis. During the quarter, the
company completed the awarding of 9 units of 800 MW on a bulk basis to 2-3
players.
Valuation and Recommendation
n NTPC is currently trading at 14.2x FY12 earnings and on a P/BV basis, the stock
trades at 1.9x FY12 book value.
n We maintain BUY with an unchanged DCF based price target of Rs 220, thus
valuing the stock at 2.4x FY12 BV.
No comments:
Post a Comment