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● Post adjustments for one-off items, NTPC’s 2Q12 recurring PAT
stood at Rs16.1 bn, which was up 21% YoY but was 11% below
our estimates. Despite 9% higher-than-expected sales, operating
results were 4% below estimates due to higher fuel costs. Wtdaverage
coal cost stood at Rs2,651/t for 2Q12 vs. Rs2,100/t for
2Q11.
● Management indicated that 2Q12 reported profitability could have
been higher by Rs1.05 bn but for lower generation due to (1) grid
restrictions, (2) backing down by beneficiaries resulting in lower
hydro and nuclear generation and (3) lower coal availability.
● Sundry debtors rose to 69 days in 2Q12 (39 days in 2Q11) with
35% of SEBs now paying on first day of billing (to avail 2% timely
payment discount) compared with 65% of SEBs earlier, which is a
concern. However, there have been no defaults by SEBs so far.
● NTPC is confident of reallocation of its de-allocated captive coal
blocks and continues to invest in the same (Rs5.7 bn spent till
Sep-11). It has also received in-principle approval for allotment of
five additional captive coal blocks for its Unchahar (0.5GW), Kudgi
91.6GW), Barethi (3.96GW) and Gajmara (1.6GW) projects.
Generation impacted due to grid restrictions, SEB’s
backing down and lower coal availability
Management indicated that profitability for 2Q12 could have been
higher by Rs1.05 bn but for lower generation (down 4% YoY) due to
(1) grid restrictions, (2) backing down by beneficiaries resulting in
lower hydro and nuclear generation and (3) lower coal availability.
Lower coal supplies impacted generation by 1.94 bn kWh in 2Q12
(3.8% of gross generation), which management expects to make up
for in 2H12.
Domestic coal receipts decline 11% YoY; FSAs signed for
Ramagundam, Farakka and Kahalgaon projects
Coal receipts from Coal India declined 11% YoY in 2Q12 due to
excessive rains and Telangana agitation. NTPC received 91.2% of
annual contracted quantity (ACQ) in 2Q12 vs. 94.5% in 2Q11, down
3.3 p.p. As a result, share of imported coal increased from 9.1% in
2Q11 to 13.1% in 2Q12. NTPC has now signed FSAs with Coal India
for Ramagundam (2.6GW), Farakka (1.6GW) and Kahalgaon (2.3GW)
projects for total 16 mmtpa. Out of this, FSA for Ramagundam has
been signed with coal supply commitment at 90% of ACQ since the
project was commissioned before Mar-09. For the other two projects,
NTPC continues to petition with CERC for relaxation of PAF norms.
NTPC has maintained guidance of adding 4.32GW capacity in FY12,
and is also confident of achieving 92% overall PAF for coal-based
plants in FY12. We update our model for FY11 annual report, factor in
lower coal availability (which impacts PAF and hence incentives) and
consequently our earnings estimates for FY12/13 decline by 3%/2%,
respectively. Our target price reduces to Rs181, maintain NEUTRAL
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● Post adjustments for one-off items, NTPC’s 2Q12 recurring PAT
stood at Rs16.1 bn, which was up 21% YoY but was 11% below
our estimates. Despite 9% higher-than-expected sales, operating
results were 4% below estimates due to higher fuel costs. Wtdaverage
coal cost stood at Rs2,651/t for 2Q12 vs. Rs2,100/t for
2Q11.
● Management indicated that 2Q12 reported profitability could have
been higher by Rs1.05 bn but for lower generation due to (1) grid
restrictions, (2) backing down by beneficiaries resulting in lower
hydro and nuclear generation and (3) lower coal availability.
● Sundry debtors rose to 69 days in 2Q12 (39 days in 2Q11) with
35% of SEBs now paying on first day of billing (to avail 2% timely
payment discount) compared with 65% of SEBs earlier, which is a
concern. However, there have been no defaults by SEBs so far.
● NTPC is confident of reallocation of its de-allocated captive coal
blocks and continues to invest in the same (Rs5.7 bn spent till
Sep-11). It has also received in-principle approval for allotment of
five additional captive coal blocks for its Unchahar (0.5GW), Kudgi
91.6GW), Barethi (3.96GW) and Gajmara (1.6GW) projects.
Generation impacted due to grid restrictions, SEB’s
backing down and lower coal availability
Management indicated that profitability for 2Q12 could have been
higher by Rs1.05 bn but for lower generation (down 4% YoY) due to
(1) grid restrictions, (2) backing down by beneficiaries resulting in
lower hydro and nuclear generation and (3) lower coal availability.
Lower coal supplies impacted generation by 1.94 bn kWh in 2Q12
(3.8% of gross generation), which management expects to make up
for in 2H12.
Domestic coal receipts decline 11% YoY; FSAs signed for
Ramagundam, Farakka and Kahalgaon projects
Coal receipts from Coal India declined 11% YoY in 2Q12 due to
excessive rains and Telangana agitation. NTPC received 91.2% of
annual contracted quantity (ACQ) in 2Q12 vs. 94.5% in 2Q11, down
3.3 p.p. As a result, share of imported coal increased from 9.1% in
2Q11 to 13.1% in 2Q12. NTPC has now signed FSAs with Coal India
for Ramagundam (2.6GW), Farakka (1.6GW) and Kahalgaon (2.3GW)
projects for total 16 mmtpa. Out of this, FSA for Ramagundam has
been signed with coal supply commitment at 90% of ACQ since the
project was commissioned before Mar-09. For the other two projects,
NTPC continues to petition with CERC for relaxation of PAF norms.
NTPC has maintained guidance of adding 4.32GW capacity in FY12,
and is also confident of achieving 92% overall PAF for coal-based
plants in FY12. We update our model for FY11 annual report, factor in
lower coal availability (which impacts PAF and hence incentives) and
consequently our earnings estimates for FY12/13 decline by 3%/2%,
respectively. Our target price reduces to Rs181, maintain NEUTRAL
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