Quarterly Result Update

NTPC Limited
Surprised the street supported by exceptional items gain
Outlook
Despite having flat electricity generation growth in Q4FY13, we believe the company is well placed in terms of fuel security as compared to peers supported by the preference coal supplies from Coal India and ability to pass through hike in fuel costs. Further, with the recent re-allocation of the 3 coal blocks (Chatti-Bariatu, Kerandari and Chatti-Bariatu (South)) we believe the NTPC's upcoming generation capacity will have secured coal supplies. At the CMP of Rs 154, NTPC trades at EV/EBITDA of 8.4x and 7.4x FY14E & FY15E consensus earnings estimates. We recommend a BUY on the stock amidst alleviating concerns on coal supplies leading to lower PAF. If company can get higher fuel supplies from Coal India and imported coal, PAF and PLFs can improve further leading to higher generation. Higher than expected capacity addition coupled with high PAF and PLF can result in re-rating of the stock. Recommendation (Rs) CMP Rating Index Details Sensex Nifty Industry Scrip Details Mkt Cap (Rs cr) Eq Shares O/s (Cr) Avg Vol (Lakhs) 52 Week H/L Dividend Yield (%) Face Value (Rs) 154 BUY

19,692 5,980 Power

Key Takeaways
NTPCs revenue increased by 1.2% YoY (improved by 4.4% Q-o-Q) to Rs. 16,461.8 crore. The company has total installed capacity of 41,184MW after having declared a capacity addition of 4170 MW and an addition of 4830 MW in its commercial capacity in FY12-13. EBITDA margins improved by 190 bps YoY to 27.6% primarily due to lower fuel and staff cost. NTPCs reported PAT grew by 68.9% YoY to Rs 4,381 crore in Q4FY13. Other income increased by 29.8% YoY and 12% QoQ to Rs 720 crore. The depreciation was higher by 38.7% YoY (23.2% QoQ) to Rs 1,021.3 crore led by new capacity addition. In Q4FY13, PAF for Coal and Gas TPS stood at 92.7% and 95.9%, a YoY decline of 216bps and 275bps respectively. However, coal based PAF has increased 463bps on QoQ basis due to 9.5% QoQ growth in domestic coal supplies at 41.9mmt. PLF for coal based plants declined 463bps YoY while for gas based plants it declined 3640bps YoY. NTPC Electricity generation unit for the quarter stood at 60.3 bn units, which is flat compared to same quarter previous year primarily led by the non-availability of imported coals.

126,898 825 2.9 175/136 2.6 10.0

Latest shareholding pattern (%) Promoters 75.0 Indian Institutions 10.5 FIIs 9.4 Public 5.2 Total 100 Stock performance (%) 1m 3m NTPC 9.3 3.8 Nifty 8.2 0.8 BSE Power 5.7 -5.0

6m -7.8 5.5 -11.0

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Quarterly Result Update

The company has received 9.1mmt of imported coal in FY13 vs 12mmt in FY12, (-24% YoY). This was due to delay in awarding tender for 7mmt on pricing issues. This has however been awarded in March'13 and coal is expected in 1QFY14. NTPC expects to import 25mmt of coal in FY14. PAF at Farakka/Kahalgaon/Simhadri has been at 73%/ 79%/76% respectively due to lower coal imports. However, progress in the inland transportation of coal to Farakka has been on fast track; trans-shipper has been procured by operator, 19 barges have been procured and jetty and conveyor system is underway and is expected to get commissioned by 1QFY14. Total expenditure in Q4FY13 was at Rs. 12,555.2 crore as against Rs. 12,162.1 crore in Q4FY12. Other Expenditure was at Rs. 11,574 crore and Depreciation & Amortization expenses were Rs 1021.3 crore primarily attributable to growth of expenditure.

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Quarterly Result Update

Description Net Sales Other operational Income Total Oper. Income(TOI) Raw Materials Cons.% to TOI Stock adj. (-)Inc / (+)Dec% to TOI Net Raw Mat adj. for stock % to TOI Other expenses % to TOI Contribution Net_Sales Personnel % to TOI Total expenditure Operating Profit % to TOI Non-Operating Income Interest Exceptional Items Gross Profit Depreciation PBT before Extra-ord % to TOI Extraordinary Items PBT Tax Rate Prov. for Tax % to TOI Profit after Tax % to TOI Face Value Equity Share capital EPS (Rs.) CEPS (Rs.) Q4FY13 16461.8 887.3 17349.1 11574.0 66.7 5775.1 981.4 5.7 12555.4 4793.7 27.6 884.1 591.2 1684.1 3402.5 1021.3 5749.5 33.1 0.0 5749.5 23.8 1367.9 7.9 4381.6 25.3 10.0 8245.5 5.3 6.6 Q4FY12 16263.6 98.0 16361.5 11254.5 68.8 5107.0 907.6 5.5 12162.1 4199.5 25.7 681.2 487.0 0.0 4393.7 736.3 3657.4 22.4 0.0 3657.4 29.1 1064.0 6.5 2593.4 15.9 10.0 8245.5 3.1 4.0 % Chg. 1.2 805.8 6.0 2.8 13.1 8.1 3.2 14.2 29.8 21.4 0.0 -22.6 38.7 57.2 0.0 57.2 -18.2 28.6 68.9 68.9 62.3 Q4FY13 16461.8 887.3 17349.1 11574.0 66.7 5775.1 981.4 5.7 12555.4 4793.7 27.6 884.1 591.2 1684.1 3402.5 1021.3 5749.5 33.1 0.0 5749.5 23.8 1367.9 7.9 4381.6 25.3 10.0 8245.5 5.3 6.6 Q3FY13 15774.9 32.7 15807.6 11088.1 70.1 4719.5 691.6 4.4 11779.7 4027.9 25.5 722.0 530.4 0.0 4219.5 828.8 3390.7 21.4 3390.7 23.4 794.0 5.0 2596.8 16.4 10.0 8245.5 3.1 4.2 % Chg. 4.4 2613.5 9.8 4.4 22.4 41.9 6.6 19.0 22.5 11.5 -19.4 23.2 69.6 69.6 1.7 72.3 68.7 71.0 57.1 FY201303 64316.4 1357.6 65673.9 45199.8 68.8 20474.2 3360.1 5.1 48559.9 17114.1 26.1 3101.6 1924.4 1684.1 16607.2 3396.8 16578.6 25.2 0.0 16578.6 23.9 3959.2 6.0 12619.4 19.2 10.0 8245.5 15.3 19.4 FY201203 61144.9 907.3 62052.2 44910.7 72.4 17141.6 3101.7 5.0 48012.4 14039.9 22.6 2789.7 1711.6 0.0 15117.9 2791.7 12326.2 19.9 0.0 12326.2 25.2 3102.4 5.0 9223.7 14.9 10.0 8245.5 11.2 14.6 % Chg. 5.2 49.6 5.8 0.6 19.4 8.3 1.1 21.9 11.2 12.4 0.0 9.9 21.7 34.5 0.0 34.5 -5.1 27.6 36.8 36.8 33.3

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Quarterly Result Update

P/E Bands
350 300 250 200 150 100 50 Mar-05 CMP 9X 350 300 250 200 150 100 50 Mar-05 CMP

P/B Bands
300050 250050 200050 150050 100050 50050 50 Mar-05 EV

EV/EBITDA Bands

Mar-07 11.6X

Mar-09 14.18X

Mar-11 16.78X

Mar-13 19.38X

Mar-07 1.2X

Mar-09 1.6X

Mar-11 2X 2.4X

Mar-13 2.8X

Mar-07 6.3X

Mar-09 7.55X 8.8X

Mar-11 10.05X

Mar-13 11.3X

NIFTY Comparison
130.0 120.0 110.0 100.0 90.0 80.0 70.0 60.0 50.0 40.0 May-12

BSE- Power Comparison

130.0 120.0 110.0 100.0 90.0 80.0 70.0 60.0 50.0 40.0 May-12
30
EXPECTED 2YR EPS CAGR%

Rating Chart
Tata Power

25 20 15 10 5 0 -5 0 -10 -15 1 2

Power Grid NTPC

3 4 5 6

Jul-12

Sep-12 Nov-12 NTPC

Jan-13

Mar-13

Jul-12

Sep-12 Nov-12 Jan-13 Mar-13 NTPC BSE POWER

NIFTY

RATING SCORE

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Quarterly Result Update

Segment Wise-Revenue

Segment revenue (Rs.Cr) Generation Others Total Segment results Generation Others Total

Q4 FY13 19135.3 40.4 19175.7 5809.8 12.1 5821.9

Q4 FY12 16395.8 32.1 16427.9 3797.1 -11.7 3785.4

Y-o-Y 16.7 26.0 16.7 53.0 53.8

Q3 FY13 15839.0 24.9 15863.9 3403.4 -2.1 3401.2

Q-o-Q 20.8 62.6 20.9 70.7 71.2

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Quarterly Result Update

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