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P e r f o r m a n c e i n l i n e …
Revenues grossed up at normal tax rate (instead of MAT), decline in gas
based generation despite higher PAF (back down by SEBs), higher fuel
cost (on per unit basis), higher other income and lower interest costs
were key highlights of NTPC’s Q1FY12 results. Adjusted PAT post
adjustment is | 2228 crore. Average realisation/unit for the quarter stood
at |2.77/kwhr (auxiliary consumption: 6.4%). While we like the regulated
nature of its business, capacity addition backed by fuel security (to
maintain 80%+ PLFs for coal based power plants); capacity slippages
and back down by SEBs are key risks for NTPC. We maintain BUY rating
on the stock on the back of relative defensiveness and reasonable
valuations.
ƒ Planned shutdown, back down by SEBs impact PLF in Q1FY12
In Q1FY12, coal-based power plants operated at 86.85% (89.51% in
Q1FY11). Planned shutdown of coal fired plants (impact of 100 bps
on PLF) and back down by SEBs (100 bps on PLF) were key reasons
for lower PLFs. On the gas-based power plants, the impact of
backing down on PLFs was 2100 bps.
ƒ Capacity addition of 3320 MW in FY12
As per CEA data, we expect a capacity addition of 3320 MW though
the management is confident of achieving 4320 MW. While the
company has commissioned 660 MW in Sipat, the other units that
would be commissioned in FY12 are Sipat Unit 2 (660 MW), Vallur
Phase 1 and 2 (1000 MW), Simhadri unit 4 (500 MW) and Jhajjar
Phase 1 (500 MW).
V a l u a t i o n
At the CMP of | 177, the stock is trading at a P/E of 15.6x and 13.9x on
FY12E and FY13E EPS, respectively. Similarly, on P/B multiples, the stock
is trading at 2.0x and 1.8x FY13E, respectively. Superior execution (in
terms of commercialisation of power capacities) could re-rate the stock.
We maintain our target price of | 202. Slippage in capacity ramp up in
FY12 and back down by SEBs are key risks to our call.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P e r f o r m a n c e i n l i n e …
Revenues grossed up at normal tax rate (instead of MAT), decline in gas
based generation despite higher PAF (back down by SEBs), higher fuel
cost (on per unit basis), higher other income and lower interest costs
were key highlights of NTPC’s Q1FY12 results. Adjusted PAT post
adjustment is | 2228 crore. Average realisation/unit for the quarter stood
at |2.77/kwhr (auxiliary consumption: 6.4%). While we like the regulated
nature of its business, capacity addition backed by fuel security (to
maintain 80%+ PLFs for coal based power plants); capacity slippages
and back down by SEBs are key risks for NTPC. We maintain BUY rating
on the stock on the back of relative defensiveness and reasonable
valuations.
ƒ Planned shutdown, back down by SEBs impact PLF in Q1FY12
In Q1FY12, coal-based power plants operated at 86.85% (89.51% in
Q1FY11). Planned shutdown of coal fired plants (impact of 100 bps
on PLF) and back down by SEBs (100 bps on PLF) were key reasons
for lower PLFs. On the gas-based power plants, the impact of
backing down on PLFs was 2100 bps.
ƒ Capacity addition of 3320 MW in FY12
As per CEA data, we expect a capacity addition of 3320 MW though
the management is confident of achieving 4320 MW. While the
company has commissioned 660 MW in Sipat, the other units that
would be commissioned in FY12 are Sipat Unit 2 (660 MW), Vallur
Phase 1 and 2 (1000 MW), Simhadri unit 4 (500 MW) and Jhajjar
Phase 1 (500 MW).
V a l u a t i o n
At the CMP of | 177, the stock is trading at a P/E of 15.6x and 13.9x on
FY12E and FY13E EPS, respectively. Similarly, on P/B multiples, the stock
is trading at 2.0x and 1.8x FY13E, respectively. Superior execution (in
terms of commercialisation of power capacities) could re-rate the stock.
We maintain our target price of | 202. Slippage in capacity ramp up in
FY12 and back down by SEBs are key risks to our call.
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