New Research Reports

Parabolic growth trajectory while significantly de-risked

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NHPC's results highlight the benefit of cost approval for its TLDP-IV project, resulting in the doubling of profits on a YoY basis. Adjusted for one-offs, S/A PAT declined 9% YoY to INR3.7b on lower generation. The capex run-rate is expected to increase on account of investments in new projects. However, their commissioning remains 45 years away ...

Capex run-rate is expected to increase on account of investment in new projects. However, their commissioning remains 4-5 years away, implying FCF/RoEs dragging in the near term. Maintain Neutral with TP of INR23. Profits in line as lower other income offsets modest generation growth NHPC's S/A PAT declined 3% YoY to INR13.0b (v/s est. INR13.3b) on account of lower other income. Other income was down 15% YoY to INR4.3b. Generation was up 4% YoY to 9.4BU in 2QFY21 based on data available at...

INR6.8b) due to Generation declined 5% YoY to 8.1BU in 1QFY21 due to the shutdown of 2 Chamera units and lower water availability. NHPC is also planning to complete the linkage of work by Oct20, thereby increasing discharge of water for Parbati-II. NHPC expects to receive INR18b from the PFC-REC scheme on completion of certain formalities for J&K.; Capex run-rate, on the other hand, is expected to increase as the company is investing/exploring new projects, which is expected to reduce FCF and drag RoEs in the near term. Generation declined 5% YoY to 8.1BU in 1QFY21 due to shutdown of two Chamera units and lower water availability. Moreover, commissioning for the project is still some time away (FY24 Capex run-rate, on the other hand, is expected to increase as the company is investing/exploring new projects, which is expected to reduce FCF and drag RoEs in the near term.

NHPCs results highlight the benefit of higher generation and the low base of the previous year. Capex run-rate is expected to increase on account of investment in new projects. However, their commissioning remains 4-5 years away, implying NHPCs standalone PAT more than doubled YoY to INR4.0b (from INR1.8b in 3QFY19; in line with our estimate of INR4.0b) off a low base. The previous year included the impact of regularization of pay scales (INR1.9b). noted while Dibang is still in the initial stages, capex would be required for providing access to the site such NHPC highlighted the current quarter also included provisioning of INR0.6b for PRP given incremental profits. Capex run-rate, on the other hand, is expected to increase as the company is investing /exploring new projects which will reduce FCF and drag RoE over the near term. Capex guidance for NHPC noted the current quarter was impacted by INR0.6b on account of.

INR12.4b) on the back of resumed income recognition for its Subansiri project (since 1QFY20). Construction on NHPCs Lower Subansiri (2,000MW) project has restarted from Oct19. NHPC expects the project to be completed by 2QFY24. Company expects the project to be commissioned in FY22 (unchanged). Capex run- rate, on the other hand, is expected to increase as the company is investing/ exploring new projects. in prior quarter numbers Management has noted that work on Subansiri project has resumed and the project is expected to be completed by 2QFY24. The tender for Power house is yet to be awarded and company is in the process The project requires a tunnel of 31km, of this, 2.5km is yet to be completed and NHPC expects the project to be commissioned in FY22. Company expects the project to be completed in 5 years time.

The NGT has given a favorable order for the Lower Subansiri (2,000MW) project clearing the last legal hurdle for re-starting the project. According to the management, local people have been supportive of the various CSR initiatives undertaken by the company over the years. It expects to restart fullscale construction after the monsoon season. With clarity on the project, it has resumed capitalizing expenses (stopped w.e.f. 2QFY19) on the project....

Earnings growth muted, capex run-rate increasing; Maintain Neutral Standalone (S/A) adj. PAT of INR36m in 4QFY19 was below our estimate of INR1.6b due to higher-than-expected operating cost. This also implies a sharp fall from INR1.9b in 4QFY18, particularly because the company no longer capitalizes expenses (as part of regulatory deferral account) for the Lower Subhansiri power...

21 November 2018 NHPCs many recently commissioned projects are still not contributing to PAT. Kishanganga 330MW is breaking even at PAT, pending final approval of tariff order. Parbati-3 has been commercialized, and 2 units of 200MW of Prabati-2 have been commissioned but full revenue recognition will be post completion NHPCs standalone (S/A) PAT increased 20% YoY to INR12.2b in 2QFY19, led by generation growth of 11% (aided by commercialization of the 50MW solar unit in Mar18), the resumption of TLDP-3&4 and the absence of revenue reversal for Parbati-3, partly offset by lower other income and regulatory revenue. NHPC has stopped recognizing regulatory revenue against the Lower Subhanshari project, which has been stalled since Dec11. This will drag PBT by INR1.1b every quarter until the project is restarted. Renewable energy projects have contributed PBT of INR217m in 1HFY19. We lower FY19/20E PAT by 7/12% to ~INR23.4b/27.4b, primary due to the loss of regulatory revenue from the Lower Subhanshari project. We expect under-recoveries to reduce in FY20 on approval of pending final tariff for five projects and pass-through of wage hike in new regulation 2019-24.