NTPC (Q3 FY12)

CMP Rs172

• Revenue registered 14% yoy growth to Rs153.3bn lower by 5% to our estimate. Generation rose 3% yoy, while revenues increased 14% yoy driven better realizations (Rs2.9 per unit up by 11% yoy)
• EBITDA is 8% below our estimation to Rs29bn; registered decline of 19% yoy. Higher fuel cost along with under recoveries of water charges and higher repair & maintenance cost contributed to depressed margin
• The twin issue of poor coal supply by Coal India and deteriorating health of State Electricity Board have impacted the profit after tax of the company. PLF for NTPC coal station during the Q3 FY12 stood at 83.6% as against 87.2%; lower by 4.6%. For gas it is 70.5% as against 66.3% registering a gain of 4.2%. Plant availability factor for coal station for the quarter ended to December 2011 has been 85.3% as against 93.6% in last quarter. Availability for the gas station has been at 94.5% for the quarter as against 95.6%.
• The blending ratio for the quarter stood at 7.3% v/s 5.9% in Q3 FY11. Total coal consumption during the quarter was 35.9MT and the company received 9.8MT of imported coal. Higher imported coal increased the overall operating cost.
• Reported PAT down 8% yoy and 10% qoq, Adjusted PAT down by 8% yoy. Other operating income grew by 22% yoy to Rs9bn (down by 9% qoq); a cushion to falling net margins on the back of higher operating expenses.
• Update on capacity addition and commercialisation: The company has commissioned Unit‐II of 660MW in Sipat in Q3FY12, which is yet to be commercialized. 1660 MW of capacity added YTD which is just 34% of yearly target of 4900MW. NTPC expects to add ~4000MW of capacity in FY13.
• We prefer regulated model in utilities in the wake of uncertainty about fuel linkages; Fixed ROE and fuel price pass through makes NTPC one of our best bet in utilities. However for NTPC, capacity addition and commercialisation remains the key for future growth.