NTPC (Q4 FY12)

India Infoline News Service | Mumbai |

Effective tax rate at 29% during the quarter; Adjusted for tax reversal of Rs3.1bn, tax rate is at 37%

  • In line with our expectation, NTPC reported revenues of Rs163bn registering 5% yoy and 6% qoq growth
  • Generation unit increased by 3.7% yoy while net sales grew by 4.8% on account of higher realisations
  • Net income registered de-growth of 7% yoy to Rs26bn
  • Effective tax rate at 29% during the quarter; Adjusted for tax reversal of Rs3.1bn, tax rate is at 37%
  • The PLF increased to 91% in Q4 FY12 compared to 84% in Q3 FY12 and declined by 2% yoy
  • The PAF stood at as high as 94.7% against 85.2%  in Q3FY12

Result table

(Rs mn)
Q4FY12
Q4FY11
% yoy
Q3FY12
% qoq
Generation (BU)
59.9
57.9
3.6
56.4
6.3
Sales (BU)
58.0
54.3
6.8
52.9
9.6
Realisation (Rs/unit)
2.8
2.9
(1.9)
2.9
(3.3)
Net sales
162,636
155,189
4.8
153,323
6.1
Material cost
(104,430)
(97,256)
7.4
(107,933)
(3.2)
Personnel cost
(8,963)
(7,082)
26.6
(7,188)
24.7
Other overheads
(7,953)
(12,665)
(37.2)
(9,162)
(13.2)
Operating profit
41,290
38,187
8.1
29,040
42.2
OPM (%)
25.4
24.6
78 bps
18.9
645 bps
Depreciation
(7,363)
(6,981)
5.5
(7,560)
(2.6)
Interest
(4,870)
(5,300)
(8.1)
(4,496)
8.3
Other income
7,683
6,661
15.3
9,131
(15.9)
PBT
36,740
32,568
12.8
26,114
40.7
Tax
(10,640)
(4,750)
124.0
(4,324)
146.0
Effective tax rate (%)
29.0
14.6
1438 bps
16.6
1240 bps
Reported PAT
26,100
27,818
(6.2)
21,790
19.8
PAT margin (%)
16.0
17.9
(188) bps
14.2
184 bps
EPS (Rs)
12.7
13.5
(6.2)
10.6
19.8

 

In line with our expectation NTPC reported revenues of Rs163bn registering 5% yoy and 6% qoq growth

PLF for NTPC coal station during the Q4 FY12 stood at 91% as against 84% in Q3 FY12, higher by ~6%. We believe higher PLF allowed company to register healthy incentive and aided in reporting revenue at the current level. Though the revenues are in line with estimates, the result would have been better primarily on account of higher fuel cost. But, NTPC continued to make payments on pre-revised rates of CIL (UHV rates), factoring the increased coal price as a contingent liability which ultimately led to lower realisations. We expected higher fuel cost realization (The fuel cost increased to 64.2% as a percentage of sales from 62.7% in last year) will lead to higher reported net sales.

 

The PLF increased to 91% in Q4 FY12 compared to 84% in Q3 FY12 and declined by 2% yoy

NTPC reported better PLF and PAF compared to Q3FY12. The company losses due to lower fuel availability decline in Q4 FY12 with higher PAF of 94.7% as against PAF of 85.2% in Q3 FY12. But, the losses are still quite significant at 7bn units in yearly basis. But, lost out on account of SEBs backing down and lowers realization which ultimately resulted in lower income.


Net income registered de-growth of 7% yoy to Rs26bn

NTPCs reported PAT was impacted significantly by higher tax rate of 27.5% as against 14.6% in Q4FY11. Higher taxes were led by the deferred tax assets of Rs1.4bn. The company also lost out on account of SEBs backing down and lowers realization which ultimately resulted in lower income.

 

As a % of net sales
Q4FY12
Q4FY11
bps yoy
Q3FY12
bps qoq
Material cost
64.2
62.7
154
70.4
(619)
Personnel cost
5.5
4.6
95
4.7
82
Other overheads
4.9
8.2
(327)
6.0
(109)
Total costs
74.6
75.4
(78)
81.1
(645)

 

Outlook & Valuation

With assured return model and increasing capacities, NTPC’s earnings visibility remains high. We expect 2400MW capacity addition in next two years. We keep our ROE assumption at 15.5% and we expect lower incentive income for the company accordance with a change in CERC regulation. Currently, the concerns over domestic fuel availability and deteriorating health of SEBs make the utilities space risky. But, since the stock has corrected by more than 15% in last month and it’s being a good defensive play which leades to favourable risk reward, we rate NTPC BUY with a 9-month price target of Rs171/share.


Key take-away from the conference call

  • Debtor days improved to 35 days for FY12 as compared to 68 days in H1FY12.
  • NTPC added 7,888MW, just 36% of its original target of 22GW in the XIth five year plan.
  • NTPC commissioned 2,820MW of capacity in FY12 as against the guidance of 4,320MW while only 1,160MW of capacity was declared commercial. Slippages primarily consisted of Mouda Unit I (500MW), Jhajjar Unit 3 (500MW) and Vallur UII (500MW).
  • NTPC is expected to consume 164MT of coal in FY13, which is 15.5% more than FY12. Of this, the company is planning to import 16MT of coal.
  • Pakri Barwadih in Jharkhand is expected to come on stream only in the FY14.
  • For FY13 NTPC is aiming to commission 4,160MW. Overall, it plans to add 14,000 MW in the next five years.
  • Materialisation for last 45 days from Coal India is at more than 100%.
  • BTG award for 6860MW of contract has been placed.

 

Financial summary

Y/e 31 Mar (Rs m)
FY11
FY12E
FY13E
FY14E
Revenues
574,910
620,536
666,259
742,735
yoy growth (%)
19.0
7.9
7.4
11.5
Operating profit
134,414
130,729
140,281
159,955
OPM (%)
23.4
23.0
21.1
21.5
Pre-exceptional PAT
93,640
92,237
BSE 175.80 [2.45] ([1.37]%)
NSE 175.90 [2.45] ([1.37]%)

***Note: This is a NSE Chart

 

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