NHPC - 2QFY13 Results Update - Motilal Oswal

2QFY13 adjusted PAT muted: NHPC posted adjusted PAT of INR7b for 2QFY13, down 4% YoY. PAT was muted, as incentive income (INR1.6b v/s INR1.9b in 2QFY12) and other income (INR2.4b v/s INR3b in 2QFY12) were lower. Standalone, NHPC generated 7.6BU during the quarter, up 10% YoY. Generation growth was primarily led by the commissioning of Chamera-III. On a like-to-like (LTL) basis, generation growth was 1% YoY.

Analyst meet takeaways: 1) Outstanding debtors stood at INR26b as at September 2012 v/s INR21b as at March 2012. Debtors outstanding for over 60 days were lower at INR8b v/s INR12b, 2) Capacity addition target lowered to 822MW (1,212MW earlier) for FY13 and to 1,706MW (4,506MW earlier) under the 12th Plan, 3) For the 12th Plan period, NHPC has targeted capex of INR290b, but expects a downward revision due to delays at Subanshiri Lower (20,000MW) and Parbati St III (800MW), 4) NHPC plans to gross up its PBT by MAT in 3QFY13 and will review its policy in 4QFY13 based on actual capacity addition.

Capacity addition target lowered by 1/3rd for FY13 and by 2/3rd for 12th Plan period: NHPC has lowered its commissioning targets for FY13 and 12th Plan period. We had already factored in delays in the FY13 capacity addition. We expect NHPC to commission 440MW (company guidance of 822MW) in FY13 and 666MW in FY14 (guidance of 554MW; our estimate is higher, as FY13 slippages taken in FY14).

Valuation and view: We expect NHPC to report PAT of INR22.4b in FY13 (down 3%) and INR22.3b in FY14 (up 4%). The stock trades at 11x FY14E EPS and 0.9x FY14E BV. We reiterate Neutral, despite the stock trading at 1x FY14E BV, given the subdued RoE of 7-8% (a large part of net worth deployed in cash/CWIP) and delayed capacity addition.

Source : Equity Bulls

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