NTPC Q2 PAT seen down 13.6% at Rs 1900.8 cr: Motilal Oswal

We expect NTPC to report a PAT of INR 19 billion (down 14 percent Y-o-Y) on revenue of INR 172 billion (up 6 percent Y-o-Y). Decrease in PAT is due to low incentive income on account of PLF, generation linked disincentive etc.

We expect NTPC’s generation to be up marginally by 1.7 percent Y-o-Y to 55.5bu. Gas generation is expected to grow by 8 percent Y-o-Y to 3bu.

Pakri Barwadih mine is not cancelled, while rest of the 8 coal blocks stand cancelled. As at FY14, NTPC had made total investments of INR 21.7 billion for these coal blocks. Given the regulated structure, NTPC’s business model is insulated to such changes but it may increase its dependence on imports under new FSA.

Company has contested against the latest tariff regulation enunciated by the Central Electricity Regulatory Commission (CERC) in the Delhi High Court. Next hearing is due on October 30, 2014.

NTPC is expected to report a PAT of INR 85 billion in FY15E (down 14 percent Y-o-Y) and INR 100 billion in FY16E (up 18 percent Y-o-Y).  Stock trades at a P/E of 11.5x on FY16E basis.

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