NHPC Stock Tumbles Over Q1 Numbers

State-owned hydro power company NHPC reported a 14% growth in revenues to Rs 1600 crore for the first quarter of the current fiscal. The net profit was at Rs 719 crore, showing a growth of 7.5% on a year-on-year basis.

The EBITDA margins stood at 66.9% against 64.80% reported a year ago, showing an expansion of 210 basis points on a year on year basis. The improvement was mainly due to the decline in other expenses. Its employee cost, however, increased by 20% to Rs 232 crore. Depreciation also rose by 24% owing to the commissioning of new projects in the last 12 months. The company has said that all four units (33 MW each) of its Teesta low dam projects (132 MW) have become fully commercially operational.

During the quarter, generation at its Dhauliganga Power station (280 MW) came to a halt due to water entering the plant during the cloudburst in Uttarakhand. The floods damaged the generating plant, machinery and various ancillary structures. The company has said that the assets are covered under the mega insurance policy, but if the incurred loss is beyond the excess clause, the company will have to bear these damages. The same will be accounted for after a survey.

Following the result, the shares of the company fell by more than 6%. The market seems worried about the exact extent of damage of the power station. Further reports from the company on the nature of damage and the likely time required for restoration will be eagerly awaited. One can expect the impact of this on the Q2 numbers, which seems to be discounted by the market at the moment. At this time, we advise our readers to avoid the stock.