NTPC Ltd - ZENMoney

Company Profile: NTPC, India's largest power producer and a Maharatna PSU was set up in 1975. NTPC is emerging as an 'Integrated Power Major', with a significant presence in the entire value chain of power generation business. The company is engaged in the business of generation and sale of bulk power. The company has a total installed power generation capacity of 41,184 MW (including 5,364 MW through JV and subsidiaries). The company presently has (including JV and subsidiaries) 19 coal based power generation plants, 8 gas based power plants and 4 hydel power plants (under constt.). The company has also set up a JV with BHEL and Bharat Forge for electric equipment manufacturing. NTPC's subsidiaries include NTPC Electric Supply Company Ltd, NTPC Hydro Ltd, NTPC Vidyut Vyapar Nigam Ltd, Kanti Bijlee Utpadan Nigam Ltd and Bhartiya Rail Bijlee Company Ltd. In all NTPC has 5 subsidiary companies and 21 Joint Venture companies.

Strengths:

- NTPC caters to more than 1/4th (27%) of the country's power demand and has the best Plant Load Factor (PLF) & Plant Availability Factor (PAF) in the country. NTPC's cost of operation on a per unit basis is the lowest in the industry (around Rs. 1.8/unit).

- The company gets more than 90% of its total coal requirements from domestic coal linkages. Company has fuel supply agreements in place for 20 years for 23,895 MW units commissioned till 31.03.2009. Has signed in-principle FSAs for 14,010 MW and detailed FSAs are being signed for 4,760 MW NTPC Stations and 2,250 MW JV stations.

- The six coal Mines allocated to NTPC (and in principle approval for another 4 coal blocks from Ministry of Coal) hold reserves of more than 5 billion tonnes.

Concerns:

- Company is facing delays in the development of 4 mines allocated to it in Jharkhand.

- Company has a total debt of Rs. 70418.49 crores (as of 31st March, 2013).

- Company's PLF has been falling for the last four years (from 91% in 2009-10 to 83% in 2012-13).

Outlook: Ongoing capacity addition by the company is expected to drive its top-line higher, while the relatively better PLF and PAF maintained by the company are expected to support its profit margins. The decision of the government to re-allocate the de-allocated coal mines will strengthen the company further- though it is facing delays in execution, as and when these mines come-on stream there will be an improvement in companies operating margins by a significant percentage. What sets apart this thermal power giant from the rest of the pack is its relatively low receivable days and ensured margins on power sold to the utilities because of strong domestic fuel linkages, which saves them from currency and regulatory uncertainties. Overall, NTPC's targeted capacity expansion to 52,000 - 60,000 MW by 2017 along with the above stated positives bodes well for this company.

Source : Equity Bulls

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