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Not without Subansiri. The continued stalemate over the Subansiri project prevents us from taking a constructive stance on NHPC that will likely continue to bear the brunt of high interest and administrative cost for the 2,000 MW stranded under-construction capacity. Earnings during the quarter were impacted by lower generation due to forced shutdown of Uri II since end-November. Maintain REDUCE rating and TP of `22.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Lower-than-estimated generation leads to miss in revenues NHPC reported net sales of `11.6 bn (4% yoy, -44% qoq), operating profit of `5.6 bn (-10% yoy, -56% qoq) and net income of `1.6 bn (-37% yoy, -76% qoq) against our estimates of `12.5 bn, `6.8 bn and `2 bn respectively. Earnings are not comparable on a sequential basis owing to the seasonal nature of the business. Lower-than-estimated generation at 3.1 BU against our estimate of 3.3 BU led to the miss in earnings partially made good by reversal of provisions of `300 mn reflected in higher other income. Reported profits of `1.8 bn include adjustment of tax for earlier years of `152 mn. Subansiri—still no resolution, although hope remains Subansiri (2,000 MW) has so far incurred a capex of `70 bn as project execution remains suspended since December 2011. While renewed efforts have been made by the government, we would hold our optimism till such time that project execution commences at the site. The management has highlighted that the commissioning of the project would take four years from the time of commencement at an estimated project cost of `130 bn. The company incurs a recurring expenditure of `500 mn every month due to stoppage of work at Subansiri. NHPC has accounted for `1.4 bn of incremental cost during the quarter attributable to stoppage of work at Subansiri. We note that work at Teesta Low Dam IV has resumed since November 2014 after NHPC extended financial assistance to the contractor, HCC Constructions, who had suspended work since March 2013. Maintain REDUCE rating with revised target price of `22 We retain our REDUCE rating on NHPC with a target price of `22 noting relatively expensive valuation of 0.7X FY2016E net worth and 10X FY2016E EPS—lofty for RoE of 7% and absence of meaningful earning growth. We also highlight that continued commissioning delays could keep sentiment and stock performance muted in the near term, especially with commissioning of large power plants stalled. We have marginally revised our earning estimates for FY2015/16E by +1.8/-5.6% reflecting the performance of the quarter.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily06022015mh.pdf
Not without Subansiri. The continued stalemate over the Subansiri project prevents us from taking a constructive stance on NHPC that will likely continue to bear the brunt of high interest and administrative cost for the 2,000 MW stranded under-construction capacity. Earnings during the quarter were impacted by lower generation due to forced shutdown of Uri II since end-November. Maintain REDUCE rating and TP of `22.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Lower-than-estimated generation leads to miss in revenues NHPC reported net sales of `11.6 bn (4% yoy, -44% qoq), operating profit of `5.6 bn (-10% yoy, -56% qoq) and net income of `1.6 bn (-37% yoy, -76% qoq) against our estimates of `12.5 bn, `6.8 bn and `2 bn respectively. Earnings are not comparable on a sequential basis owing to the seasonal nature of the business. Lower-than-estimated generation at 3.1 BU against our estimate of 3.3 BU led to the miss in earnings partially made good by reversal of provisions of `300 mn reflected in higher other income. Reported profits of `1.8 bn include adjustment of tax for earlier years of `152 mn. Subansiri—still no resolution, although hope remains Subansiri (2,000 MW) has so far incurred a capex of `70 bn as project execution remains suspended since December 2011. While renewed efforts have been made by the government, we would hold our optimism till such time that project execution commences at the site. The management has highlighted that the commissioning of the project would take four years from the time of commencement at an estimated project cost of `130 bn. The company incurs a recurring expenditure of `500 mn every month due to stoppage of work at Subansiri. NHPC has accounted for `1.4 bn of incremental cost during the quarter attributable to stoppage of work at Subansiri. We note that work at Teesta Low Dam IV has resumed since November 2014 after NHPC extended financial assistance to the contractor, HCC Constructions, who had suspended work since March 2013. Maintain REDUCE rating with revised target price of `22 We retain our REDUCE rating on NHPC with a target price of `22 noting relatively expensive valuation of 0.7X FY2016E net worth and 10X FY2016E EPS—lofty for RoE of 7% and absence of meaningful earning growth. We also highlight that continued commissioning delays could keep sentiment and stock performance muted in the near term, especially with commissioning of large power plants stalled. We have marginally revised our earning estimates for FY2015/16E by +1.8/-5.6% reflecting the performance of the quarter.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily06022015mh.pdf
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