Buy NTPC-Coal-fired PLF at 79%, PAF at 89% for FY15 :: Nomura research

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
Coal-fired PLF at 80.4% in Mar-2015 (-490bps m-m, -870bps y-y)  As per the latest available data from the Central Electricity Authority (CEA), the tentative monthly generation report for March 2015 – utilisation level (PLF) of NTPC’s overall wholly-owned capacity (gas + coal) stood at 74.4% (down 460bp m-m and 840bp y-y).  For March 2015, NTPC’s wholly-owned coal-fired PLF stood at 80.4% (vs. 85.3% in Feb-2015 and 89.1% in Mar-2014). Dadri (1820MW), Rihand (3000MW), Sipat (2980MW), Singrauli (2000MW), Tanda (440MW), Unchahar (1050MW) and Vindhyachal (4260MW) projects saw a sequential decline in PLF.  Barh-II (660MW, which began commercial operations in Nov, 2014), posted a PLF of 70% (vs. 67% in Feb-2015) whereas Mauda-I (1000MW) saw a marginal pick-up in PLF to 28% (vs. 4% in Feb-2015).  6/16 coal-fired projects aggregating 12.7GW capacity operated at a PLF of >85% in March (vs. 10/16 plants aggregating 23.3GW capacity reporting >85% PLF in February).  Downtrend in PLF of gas-fired capacity continued – PLF stood at 25% vs. 26% in Feb-2015 and 36% in Mar-2014. Coal-fired PAF at 94% in Mar-2015 (down 600bps m-m and y-y) As per data available for 28.9GW of NTPC’s wholly owned coal-fired commercial capacity (87% of total) and its entire gas-fired capacity:  Weighted average PAF for coal-fired capacity stood at 94% in March (vs. 100% in Feb-2015 and Mar-2014). The PAF of gas-fired capacity was 91% (vs. 95% in Feb-2015 and 100% in Mar-2014). For FY15, PAF for NTPC’s coal-fired/gas-fired capacity stood at 89%/92% respectively.  Notably, based on the data and our brief interaction with the management, we understand that Barh-II (660MW) and Mauda-I (1000MW), wherein PAF was <80 101="" 103="" 200bp="" 4qfy15="" 96="" 9mfy15="" a="" all="" and="" appears="" available="" averaged="" barh-ii="" be="" been="" by="" data="" for="" fy15="" has="" historically="" implication:="" in="" made="" march="" mauda-i.="" monitored="" ntpc="" of="" our="" paf="" plants="" posted="" provider="" quarterly="" reflected="" reported="" respectively="" service="" the="" to="" us="" within="">83% (threshold as per regulatory norms for recovery of fixed costs)  Coal-fired PLF for FY15 was 79.2% (down 240bps y-y) – the dip is largely attributed to outages / reserve shutdowns at Badarpur, Singrauli, Tanda and Vindhyachal, and Mauda-I and Barh-II operating at ~25%/~70% PLF vs. potential steady state of 80-85% PLF.  For FY15, 5/16 coal-fired projects aggregating 10.7GW capacity operated at a PLF of >85%; electricity generation in excess of 85% PLF was 3627MUs (vs. 2541MUs up to Feb 2015), implying incentive-linked income at INR1814mn (NTPC’s incentives pegged at INR0.5/kWh for electricity generation >85% PLF as per the FY15-19 tariff regulations).  For FY15, PAF for all projects appears to be >83% (i.e. above Central Electricity Regulator’s threshold for recovery of fixed costs), implying none of its projects should see under-recovery of normative fixed costs for the full year – this is in line with management’s guidance in its 3QFY15 earnings call (as of 9MFY15, PAF for Mauda-I/Barh-II was <80 1.4x="" 14.2x="" 17="" 82-83="" a="" able="" achieve="" and="" at="" be="" buy="" cmp="" current="" equity="" for="" four="" fy16f="" inr11.0="" inr112.1="" maintain="" market="" new="" ntpc="" of="" on="" operating="" ore="" other="" p="" price="" regulated="" regulations.="" return="" should="" stations="" stock="" tariff="" that="" the="" to="" trades="" under="" was="" we="">