5 February 2021
3QFY21 Results Update | Sector: Utilities
NTPC
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
NTPC IN
9,895
980.1 / 13.2
119 / 74
-5/-19/-36
2611
In-line numbers, partly aided by higher other income
CMP: INR99
TP: INR139 (+40%)
Buy
Financials & Valuations (INR b)
Y/E MARCH
2020 2021E
Sales
1,143 1,116
EBITDA
364.1 371.3
Adj. PAT
136.6 149.0
EBITDA Margin (%)
31.8 33.3
Cons. Adj. EPS (INR)
13.8 15.1
EPS Gr. (%)
19.2
9.1
BV/Sh. (INR)
120.1 126.9
Ratios
Net D:E
1.7
1.6
RoE (%)
11.9 12.2
RoCE (%)
6.5
7.3
Payout (%)
22.8 39.8
Valuations
P/E (x)
7.2
6.6
P/BV (x)
0.8
0.8
EV/EBITDA(x)
8.1
8.0
Div. Yield (%)
3.2
6.1
FCF Yield (%)
6.7 13.2
Shareholding pattern (%)
As On
Dec-20 Sep-20
Promoter
51.1
51.0
DII
33.6
35.0
FII
12.3
11.4
Others
3.0
2.6
FII Includes depository receipts
2022E
1,275
415.8
164.4
32.6
16.6
10.3
135.4
1.5
12.7
7.5
42.1
6.0
0.7
7.2
7.1
16.8
Steady growth led by capacity additions; valuations attractive
NTPC’s 3QFY21 results highlight steady growth in its regulated business,
partly aided by other income. S/A adj. PAT (excl. FC u/r) was up 16% YoY to
INR33.7b.
The co. has undertaken steps on the renewable front, with ~2GW of
renewable capacities expected to be commissioned in FY22. It has recently
been the lowest bidder in 1.4GW of renewable projects as well. With the
THDC and NEEPCO additions and a pickup in capitalization, we expect a 9%
earnings CAGR over FY20–23E. Maintain
Buy,
with TP of INR139 (DCF-
based).
Other income aids profitability
Adj. for one-offs, NTPC's S/A PAT (excl. FC u/r) was up 16% YoY to INR33.7b
(in-line), partly aided by higher-than-expected other income. Other income
rose 44% YoY to INR7.6b on the back of higher late-payment surcharge
(LPS) income.
LPS income stood at INR5.7b (v/s INR4.6b in the previous year) given the
increased profile of DISCOM overdues. However, the co. noted it has
lowered the LPS rate to 12% pa (v/s 18% pa earlier) for dues settled under
the
Atmanirbhar
scheme.
Profit from JVs was higher at INR2b, v/s INR0.8b in the previous year, led by
better availability at Meja.
PLF at coal-based plants was higher YoY at 64.3%. PLF incentives were also
higher YoY at INR760m (v/s INR90m).
Plant availability factors at coal-based plants rose YoY to 89.1% (v/s 88.3%
in the previous year) given better coal availability. Fixed Cost under-
recoveries (FC u/r) came in at ~INR700m (v/s recoveries of ~INR700m in the
previous year), led by under-recoveries at Kahalgaon.
The company commercialized 865MW in 3Q, led by the commercialization
of Lara (800MW).
NTPC has also approved an interim dividend of INR3/share.
Management commentary – overdues decline
Overdues decreased to INR167b in Dec and have declined further to
INR157b in Jan (v/s INR192b at the end of 2Q). The co. expects another
INR80b to flow in from tranche 2 of the Atmanirbhar scheme.
The FY21 commercialization target is set at 5.1GW, with a further 6GW in
FY22. The FY22 target includes the commissioning of 1.8GW of solar.
The co expects the issue at Kahalgaon to be resolved by end-March. It
expects overall FC u/r to come in at INR3.5–4b at the end of FY21. The co. is
also in touch with CERC to recover the INR0.8b impact due to high/low
demand season regulations.
Dec-19
54.1
30.6
12.8
2.5
;
13 February 2020
1
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Aniket Mittal – Research Analyst
(Aniket.Mittal@MotilalOswal.com)