O n e o f f s d r i v e h i g h e r p r o f i t s …
Revenues grossed up at normal tax rate, decline in availability of coal for
thermal power stations, one off sales of ~| 760 crores, higher fuel cost
(increase of 30 bps on YoY basis), higher other income, increase in
debtors days and lower interest costs were the key highlights of Q2FY12
results of NTPC. Adjusted PAT post adjustments is | 1664 crore (lower
than our estimates of | 1810 crore and street estimates of | 2000 crore).
Average realisation per unit for the quarter stood at |2.92/kwhr (Aux
consumption of 7.5%). While we like the regulated nature of its business,
capacity addition backed by fuel security (to maintain 80%+ PLFs for coal
based power plants), lower PAF due to muted coal production (resulting
in under recovery of fixed charges), capacity slippages and back down by
SEBs are the key risks for the company. We downgrade the stock from
Buy to Hold mainly on account of possible under recoveries due to lower
PAF (for thermal power stations).
ƒ Planned outages impacted PAF of thermal stations in Q2 FY12
In Q2 FY12, PAF of coal based power plants was 83.4 % (decline of
300 bps YoY) on account of planned shutdown of coal fired plants.
The company lost ~5.4 billion units (10.6% of generation) due to
backing down by SEBs.
ƒ Capacity addition of 4320 MW in FY12
The company remains confident of adding 4320 MW in FY12 (on a
consolidated basis). As per CEA data, we expect a capacity addition
of 3320 MW. Till date, the company has added 1160 MW (660 MW in
Sipat and 500MW in Jhajjar) and commercialised 1160 MW (500
MW in Simhadri and 660 MW in Sipat) .
V a l u a t i o n
At the CMP of | 174, the stock is trading at P/E of 15.1x FY12E & 14.3x
FY13E EPS, respectively. Similarly, on P/B multiple the stock is trading at
1.9x FY12E & 1.7x FY13E, respectively. Superior execution (in terms of
commercialisation of power capacities), higher PAF could re rate the
stock. We downgrade the stock from Buy to Hold. Slippage in capacity
ramp up in FY12 and back down by SEBs is the key risk to our call.
Key highlights of conference call
• PLF for H1FY12 for coal based power stations stood at 82.73%
(v/s 86.13% in H1 FY11) while PLF for Gas based power for H1
FY12 was 61.7% (v/s 74.21% in H1 FY11).
• ACQ (Actual contract quantity) received from coal India was
91.17% in H1FY12 v/s 94.46 %( H1 FY11).
• The company imported coal to the tune of 7.23 mn tonnes in H1
FY12 v/s 6.2 mn tonnes in H1 FY11.
• Units lost due to unavailability of fuel was at 1.944 billion units
• In Q2FY12, the company received 29.54 mn tonnes (v/s~31 mn
tonne in Q1FY11). This included imported coal of 3.87 mn tonnes.
• Receivable days for the company were at 69 days (H1 FY12) v/s
33 days (H1 FY11). The company maintains 100% recovery, till
date no SEB have defaulted.
• Average cost of debt of 7.06% in H1 FY12 v/s 6.42% in H1 FY11
• Weighted average cost of coal is | 2651/tonne in Q2FY12 v/s |
2100/ tonne in Q2FY11.
Revenues grossed up at normal tax rate, decline in availability of coal for
thermal power stations, one off sales of ~| 760 crores, higher fuel cost
(increase of 30 bps on YoY basis), higher other income, increase in
debtors days and lower interest costs were the key highlights of Q2FY12
results of NTPC. Adjusted PAT post adjustments is | 1664 crore (lower
than our estimates of | 1810 crore and street estimates of | 2000 crore).
Average realisation per unit for the quarter stood at |2.92/kwhr (Aux
consumption of 7.5%). While we like the regulated nature of its business,
capacity addition backed by fuel security (to maintain 80%+ PLFs for coal
based power plants), lower PAF due to muted coal production (resulting
in under recovery of fixed charges), capacity slippages and back down by
SEBs are the key risks for the company. We downgrade the stock from
Buy to Hold mainly on account of possible under recoveries due to lower
PAF (for thermal power stations).
ƒ Planned outages impacted PAF of thermal stations in Q2 FY12
In Q2 FY12, PAF of coal based power plants was 83.4 % (decline of
300 bps YoY) on account of planned shutdown of coal fired plants.
The company lost ~5.4 billion units (10.6% of generation) due to
backing down by SEBs.
ƒ Capacity addition of 4320 MW in FY12
The company remains confident of adding 4320 MW in FY12 (on a
consolidated basis). As per CEA data, we expect a capacity addition
of 3320 MW. Till date, the company has added 1160 MW (660 MW in
Sipat and 500MW in Jhajjar) and commercialised 1160 MW (500
MW in Simhadri and 660 MW in Sipat) .
V a l u a t i o n
At the CMP of | 174, the stock is trading at P/E of 15.1x FY12E & 14.3x
FY13E EPS, respectively. Similarly, on P/B multiple the stock is trading at
1.9x FY12E & 1.7x FY13E, respectively. Superior execution (in terms of
commercialisation of power capacities), higher PAF could re rate the
stock. We downgrade the stock from Buy to Hold. Slippage in capacity
ramp up in FY12 and back down by SEBs is the key risk to our call.
Key highlights of conference call
• PLF for H1FY12 for coal based power stations stood at 82.73%
(v/s 86.13% in H1 FY11) while PLF for Gas based power for H1
FY12 was 61.7% (v/s 74.21% in H1 FY11).
• ACQ (Actual contract quantity) received from coal India was
91.17% in H1FY12 v/s 94.46 %( H1 FY11).
• The company imported coal to the tune of 7.23 mn tonnes in H1
FY12 v/s 6.2 mn tonnes in H1 FY11.
• Units lost due to unavailability of fuel was at 1.944 billion units
• In Q2FY12, the company received 29.54 mn tonnes (v/s~31 mn
tonne in Q1FY11). This included imported coal of 3.87 mn tonnes.
• Receivable days for the company were at 69 days (H1 FY12) v/s
33 days (H1 FY11). The company maintains 100% recovery, till
date no SEB have defaulted.
• Average cost of debt of 7.06% in H1 FY12 v/s 6.42% in H1 FY11
• Weighted average cost of coal is | 2651/tonne in Q2FY12 v/s |
2100/ tonne in Q2FY11.
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