NTPC - Regaining Lost Ground Gradually; Result Update Q3FY15 ::Edelweiss

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NTPC’s Q3FY15 adjusted PAT of ~INR23bn was higher than our INR21bn estimate. Strong operational performance backed by improved coal supplies aided higher fixed cost recovery (only two of its plants are currently facing under-recovery) in turn boosting profits. Management is confident of further enhancing the current ~19% operational RoE through efficiency gains and capital spares in Q4FY15, and targets to complete some acquisitions by end FY15. These, along with the bonus debentures are expected to improve cash utilisation and return ratios.

Strong operational performance

PAT of INR23bn (adjusted for tax write back and prior period sales) was much higher than our INR21bn estimate. Operationally it was a healthy quarter with coal plants clocking PAF^@ of 91% (76.8% in Q2FY15) and PLF^$ of 80.8% (up 760bps QoQ). The 9mFY15 core earnings imply ~19% RoE on average regulated equity (currently at INR366bn). While YTD coal PAF at 85.7% (83% in H1FY15) helped in recovering capacity charges, there is scope for further efficiency gains with 2 plants (Mauda and Barh) operating at less than 83% and 4 stations at 82-83%. Coal materialisation from domestic linkages improved to 93.2% and with imports till date at 11.4MT (versus 8.5MT in 9mFY14) resulted in higher PAF.

Acquisitions to be sealed by FY15 end; declares interim dividend

Amongst the various projects being shortlisted, NTPC is evaluating two state government projects - 770MW at Patratu, Jharkand and 1,330MW at Sarani, Madhya Pradesh. Management indicated they plan to announce some of these by FY15 end.

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https://www.edelweiss.in/research/NTPC--Regaining-Lost-Ground-Gradually;-Result-Update-Q3FY15/28185.html