1QFY13 Results : NHPC performance above estimate :: Motilal Oswal

1QFY13 Results : NHPC performance above estimate
Incentive and other income boosted PAT
 1QFY13 Result better than expected: NHPC adjusted PAT for 1QFY13 stood at
INR6.5b v/s our estimate of INR5.7b. Higher PAT is led by 1) Higher incentive income
where-in UI income stood at INR440 (v/s INR330 m YoY) and PAF stood at INR630m
boosted by higher PAF at 94% v/s 90% YoY, 2) Higher Other Income at INR2.4b (v/s
our est of INR2.2b) and 3) Lower taxes at 21% v/s our est. of 25%, owing to tax
adjustment related to earlier years.
 Operational performance impacted: During 1QFY13, the generation for NHPC
(Standalone) stood at 6.1BUs, down 2% YoY. Out of its 12 power plant , NHPC
reported generation growth from only 3 plants. Average PLFs for the plants stood
at 74.5% v/s 76.2% YoY. Lower generation at its plants is led by lack of snow fed
water and delayed monsoon. During the quarter NHPC commissioned U-I of
Chamera, while it commissioned U-II and III during 1st week of July.
 Projects facing delays: NHPC has targeted to commission 1.2GW (Including 520MW
Parbatti-III) in FY13 and YTDFY13 it has commissioned 231MW Chamera.
Management highlighted Chutak and Nimo Bazgo ready for commissioning but
need to demonstrate full load, which is partly impacted due to transmission line
delays. We understand local agitation has impacted commissioning of Uri -II while
Kishanganga project is caught in controversy between India and Pakistan.
 Valuations and view: We marginally upgrade our earnings for FY13/14 by 5%/2%
respectively to factor in 1) Higher incentive income, 2) Higher other income during
the quarter. We expect to NHPC to report PAT of INR22.1b in FY13 (v/s INR21.1b
earlier) and INR24.7b in FY14 (v/s INR24.3b earlier). Re-iterate Neutral, despite 1x
P/BV valuations given Subdued RoE of 7-8% (a large part of net worth deployed in
cash/CWIP) and delayed capacity addition.

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