NTPC Ltd. share price target

NTPC Ltd.'s profit fell in the quarter ended march, profit beats estimates. NTPC, the public sector power major has registered 13% growth in sales to Rs 23100.26 crore for the quarter ended March 2018. But with operating margin contract by 120 bps to 25.6%, the growth at operating profit stood restricted at 8% to Rs 5909.98 crore. Eventually on a deflated base, the PAT (after regulatory income) was up by 41% to Rs 2925.59 crore. The bottom line of...

NTPC reported mixed Q4FY18 results. Adjusted revenues at | 22500 crore were above estimates of | 21343 crore. The revenue beat was on account of better-than-expected energy sold at 64.24 billion units vs. our estimate of 63.71 billion units. The company generated 68.56 billion units (BU) in Q4FY18 vs. our estimate of 68.14 BU. Plant load factor (PLF) of coal plants was at 79% vs. 76.9% in Q3FY18. During FY18, the company commissioned capacity to the tune of 3978 MW as commercial capacity was at 44500 MW...

NTPC's Q4FY18 revenue grew by 11.8% yoy to Rs222.5bn (after adjusting for prior period sales), primarily driven by a 7.5% yoy rise in power generation to 68.6bn units (highest ever in a quarter). Revenue was marginally above our estimate of Rs216.1bn. Company recorded disincentive of Rs2.5 bn due to lower fuel availability across Mouda, Bongiagaon and Solapur units during the quarter. Accordingly, APAT was flat at Rs26.bn...

4QFY18 profit +51% QoQ as coal shortage related losses shrink NTPC's 4QFY18 adjusted net profit stood at INR 34bn (+5% YoY), a jump of 51% QoQ as losses from coal related shortage have halved to INR 2.5bn from 3Q18. As highlighted in our earlier reports, the issues related to coal shortages in newly-commissioned plants has been arrested as reflected in Mar-April'17 plant availability (PAF). We expect the coal situation to improve by 1H19 given efforts by NTPC and measures taken by Power, Coal and Railway Ministries (detailed report). The current scenario of rising power demand strengthens our long-term thesis of NTPC benefitting from capacity additions and improving PLFs. We expect...

28 May 2018 NTPCs standalone (S/A) 4QFY18 adj. PAT increased ~5% YoY to INR28b. PAT is adjusted for INR4.3b under-recovery of fixed charge (FC) and many prior-period items. Reported PAT increased 41% YoY to INR29.2b on account of a weaker base and prior-period sales, despite FC under recovery. PAT grew ~6% YoY to INR24.6b, while regulated equity grew 16% YoY (+1% QoQ) to INR509b. Commercial capacity increased by 8MW QoQ (Singrauli hydro) to 44.5GW. PAT grew 12% YoY to INR108b. Reported PAT growth was lower at just ~2% YoY to INR103b due to FC under recoveries.

EBITDA margin succumbed to pressure (down 168bps YoY) owing to higher employee cost and under recovery of fixed cost. We project revenue CAGR of 8% over FY17-20E owing to company's strong capacity addition of ~4-5 GW annually. Sustained pace of capacity commercialization going ahead will drive strong...

Despite strong generation growth of 10% YoY and 19% rise in regulated equity, NTPC's Q3 adj. PAT at Rs 23 bn (down 5% YoY) was 20% below our/street estimates. Earnings was hit by (a) under-recovery of Rs 5 bn in recently-commissioned three plants (2.1 GW) due to coal shortage

NTPC reported weak Q3FY18 results that were below our estimates. Reported revenues came in at | 20,774 crore vs. estimate of | 20,902 crore. Lower revenues were on account of lower realisations per unit (| 3.2 per unit vs. expectation of | 3.3 per unit). The company generated 63.3 billion units (BU) in Q3FY18 vs. our estimate of 63 BU. Plant load factor (PLFs) of coal plants was at 76.9% vs. 77.2% in Q3FY17. The plant availability factor (PAF) for coal based plants was at 83% while the same was at 94.5% for Q3FY18...

NTPC's standalone (S/A) 3QFY18 adj. PAT declined ~5% YoY to INR21.3b, despite ~19% YoY increase in regulated equity to INR505b. It missed our estimate due to INR5.4b under-recovery of fixed cost. Average plant availability at 83% dipped below the normative 85% due to shortage of coal at Kudgi, Solapur and Mouda. Reported PAT at INR23.6b was impacted by INR2.4b in accelerated leave encashment, offset by a gain of INR5.6b on reversal of prior-period tax. Kudgi-U2 800MW and Bongaigaon U2-250MW were commercialized in 3QFY18. 1.6GW (Kudgi-U3 800MW and Lara-U1 800MW) in S/A and Meja 660MW in JV will be commissioned in 4QFY18.

Higher plant load factor (PLF) not only drives incentive income, but also generates efficiency earnings through lower auxiliary and oil consumption, as well as a better station heat rate (SHR). We note that as PLF declines, the operating parameters deteriorate, impacting incentives and leading to under-recovery in fuel cost. Average PLF of coal-based plants declined from ~82% in FY14 to ~79% in FY17. Notably, three plants had PLF of less than 75% in FY14, which increased to five plants in FY17(Exhibit 1). This is due to a confluence of (a) increase in overcapacity in the country and (b) addition of new plants ??? Mouda and Barh -away from coalmines, with relatively uncompetitive fuel cost. The impact of lower PLF was recently quantified in case of Mouda I & II plant. It operated at PLF of ~64% from May to October 2017, which is lower than the design norms, resulting in fuel cost under-recovery of ~INR329m (annualized, it is ~1-2% of the regulated equity of the plant), in addition to the lost opportunity of earning incentives (Exhibit 2).