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NTPC - Operationally strong, higher dividend; RE target doubled - ICICI Securities

Posted On: 2021-06-21 16:24:54 (Time Zone: UTC)


NTPC reports strong operational numbers in Q4FY21 on the back of power demand recovery. While reported standalone (SA)/consolidated (cons.) PAT was Rs44.8bn / Rs46.5bn, up 258%/205% YoY, adjusted PAT was Rs38.3bn/Rs40bn, up 31%/25.2% YoY, respectively. Strong core earnings backed by 7.3%/8.4% YoY increase in SA/cons. regulated equity to Rs663bn/Rs840bn helped increase FY21 EPS by 19.2%/12.7% to Rs14.7/Rs15.9. NTPC has doubled its RE capacity addition target by CY32 to 60GW and is on the right path with 1.5GW solar capacity won in the recent bids and participation in 5GW of upcoming bids. It will add >13GW RE capacity in FY22-24. Receivables declined by Rs29bn QoQ to Rs128bn (lower than FY20-end level of Rs142bn). NTPC's final dividend of Rs3.15/sh takes total FY21 payout to Rs6.15/share (higher than policy and in addition to 2% share buyback). Maintain BUY.

- Operational profitability remains high: In Q4FY21, cons. adj. PAT was Rs40bn (up 25.2% YoY), while reported PAT was Rs46.5bn (up 205% YoY) and revenue was Rs301bn (down 0.3% YoY). Standalone adjusted PAT was Rs38.3bn (up 31% YoY) while reported PAT was Rs44.8bn (up 258% YoY). Revenue was Rs265.7bn (down 2.5% YoY). Other income was up 62% YoY due to higher LPS and dividend income. Standalone / group gross generation in Q4FY21 was 77.6BU/91.7BU, up 13.7%/20.6% YoY. Coal PLF was up 760bps at 77.1%. Average tariff was slightly lower at Rs3.87/unit as PLF picked up. Total commercial/installed capacity of NTPC group was 64.5GW/65.8GW while for standalone it was 51.7GW/52.8GW. Installation targets: FY22 - 5GW thermal and 1.1GW RE; FY23 - 4.9GW thermal and 5GW RE. FY22 capex target is Rs237bn.

- RE capacity target doubled to 60GW: NTPC has doubled its RE targets to 60GW by CY32 from 30GW earlier. It is targeting to commission over 13GW RE capacity by FY24 to reach 15GW. Current operational RE capacity is 1.35GW while 2.9GW is under implementation and 3.3GW is under various stages of tendering. NTPC will participate in 5GW of upcoming auctions and also the CPSU scheme. Year-wise cumulative RE capacity addition targets: FY22 - 3GW, FY23 - 8GW, FY24 -15GW. It will participate in the upcoming 5GW IREDA CPSU scheme. It has also signed MoUs with five states for setting up 17GW at UMREPPs [Gujarat (4.75GW) and Maharashtra (2.64GW) already signed].

- Capacities added help increase regulated equity and EPS: NTPC's adjusted EPS for standalone/consolidated entity in FY21 was up 19.2%/12.7% at Rs14.7/Rs15.9 aided by strong core earnings due to 7.3%/8.4% increase in standalone/cons. regulated equity YoY to Rs663bn/Rs840bn, and streamlining of acquisitions. A robust commissioning pipeline, supported by green initiatives will strengthen core earnings further. Under recovery increased to Rs6bn vs Rs2.5bn at FY20-end due to initial stability issues at the newly-commissioned units of Darlipali and Lara and ash dyke breach at Kahalgaon. As all issues are now resolved, we expect substantial improvement on this front.

- Receivables decline substantially: Receivables declined to Rs128bn and overdue to Rs65bn vs FY20-end figures of Rs142bn and Rs96bn, helped by PFC/REC scheme.

- Maintain BUY with an unchanged target price of Rs165/share. It is currently trading at FY23E standalone P/BV of 0.8x (P/E of 6x) and FY23E consolidated P/E of 5.3x.

Shares of NTPC LTD. was last trading in BSE at Rs.117.95 as compared to the previous close of Rs. 113.55. The total number of shares traded during the day was 2295379 in over 15381 trades.

The stock hit an intraday high of Rs. 118.35 and intraday low of 113. The net turnover during the day was Rs. 267222862.


Source: Equity Bulls

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