M e e t s e x p e c t a t i o n s …
The company reported sales of | 1981 crore much higher than our
estimate of | 1279 crore due to inclusion of water cess of | 463 crore paid
by the company to the J&K government and other operating income of |
123 crore as interest from beneficiary states. Adjusted profit for the
company in Q2FY12 was | 729 crore vs. our estimate of | 698 crore
primarily due to higher incentives on a YoY basis. During the quarter, the
company generated 7088 MUs (up 12% QoQ, down 1% YoY). Sales
realisation per unit stood at | 2.23/kwhr (net unit sales taken at 88% of
gross generation). Valuation is at 1.1x FY13 P/BV with capacity addition of
515 MW in FY12 and 697 MW in FY13. We maintain our BUY rating with a
target price of | 28. NHPC has least fuel risk in an environment where fuel
security can materially impact earnings and valuation of power utilities.
Delay in capacity addition (as in 2000 MW Subanshri lower and 800 MW
Parbati) is the key risk for the stock.
ƒ Other key highlights for the quarter
In Q2FY12, out of operating income of | 151 crore, | 123 crore was
due to interest from beneficiary states. Other expenditure (| 325.6
crore) included expenditure of | 202 crore towards water cess with
respect to power stations situated in J&K. Total expenditure booked
by the company in this regard for H1FY12 is | 407 crore.
Depreciation declined 16.5% YoY due to a change in rate (5.2%
current vs. earlier rate of 10%).
V a l u a t i o n
At the CMP of | 25.2, the stock is trading at P/E of 12.6x and 11.5x on
FY12E and FY13E EPS, respectively. Similarly, on P/BV multiple, the stock
is trading at 1.1x and 1.1x FY12E and FY13E, respectively. We maintain
our BUY rating on the stock with a target price of | 28.
The company reported sales of | 1981 crore much higher than our
estimate of | 1279 crore due to inclusion of water cess of | 463 crore paid
by the company to the J&K government and other operating income of |
123 crore as interest from beneficiary states. Adjusted profit for the
company in Q2FY12 was | 729 crore vs. our estimate of | 698 crore
primarily due to higher incentives on a YoY basis. During the quarter, the
company generated 7088 MUs (up 12% QoQ, down 1% YoY). Sales
realisation per unit stood at | 2.23/kwhr (net unit sales taken at 88% of
gross generation). Valuation is at 1.1x FY13 P/BV with capacity addition of
515 MW in FY12 and 697 MW in FY13. We maintain our BUY rating with a
target price of | 28. NHPC has least fuel risk in an environment where fuel
security can materially impact earnings and valuation of power utilities.
Delay in capacity addition (as in 2000 MW Subanshri lower and 800 MW
Parbati) is the key risk for the stock.
ƒ Other key highlights for the quarter
In Q2FY12, out of operating income of | 151 crore, | 123 crore was
due to interest from beneficiary states. Other expenditure (| 325.6
crore) included expenditure of | 202 crore towards water cess with
respect to power stations situated in J&K. Total expenditure booked
by the company in this regard for H1FY12 is | 407 crore.
Depreciation declined 16.5% YoY due to a change in rate (5.2%
current vs. earlier rate of 10%).
V a l u a t i o n
At the CMP of | 25.2, the stock is trading at P/E of 12.6x and 11.5x on
FY12E and FY13E EPS, respectively. Similarly, on P/BV multiple, the stock
is trading at 1.1x and 1.1x FY12E and FY13E, respectively. We maintain
our BUY rating on the stock with a target price of | 28.
