NTPC Q3 Net Up 22%
DSIJ Intelligence / 22 Jan 2013
NTPC's Q3 earnings improved, thanks to the new pricing norms which have reduced its fuel costs. The company during the quarter has commissioned Unit I (500MW) of its Rihand project. Despite an improved performance, the stock declined on declaration of results. Better to avoid this counter until the government comes up with its pricing of the OFS.
India's largest power utility, NTPC has reported a healthy net profit of Rs 2596 crore beating market expectations. It was expected to report a profit of around Rs 2476 crore for the quarter. Net sales came in at Rs 15332 crore, up 2.9% on a YoY basis.
The power major has reported a 31.38% growth in its EBITDA which stood at Rs 4028 crore and its EBITDA margin increased by a whopping 553 basis points to 25.53% during the quarter. Its fuel cost declined by 6.44%. during the December quarter. The company has started making coal payments on a Gross Calorific Value (GCV) basis. Earlier the UHV method of coal pricing had only seven coal grades but the new system has created as many as 17 coal grades which have seen prices of some coal categories decline. This has helped the company in bringing down its fuel bill during the quarter.
Its employee cost has also come down on a YoY basis as well as on a sequential quarter basis. The total employee cost for the December quarter of 2012 stood at Rs 691 crore as compared to Rs 718 crore during the same period last year. For the September quarter of 2012 its employee cost stood at Rs 896 crore.
For the nine months ended 31st December 2012, it has reported a 6.6% growth in sales to Rs 47854 crore. EBITDA margins have improved by 845 basis points to 30.68% and the net profit has surged by 24.24% to Rs 8237 crore.
The market did not cheer its earnings report despite its improved financial performance. The stock declined by 1.46% to Rs 161.75 by close on the BSE. The Government holds a 84.5% stake in the company and the upcoming OFS in the first half of the February is currently weighing heavily on the stock. The government is expected to divest a 9.5% stake in the company through the OFS route to raise about Rs 13000 crore which will be the largest OFS so far.
One should avoid the counter until the floor price for the OFS is declared by the government. Since power sector companies are looking stressed in terms of valuations one could expect the government to offer a good discount at the time of the OFS.
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