Motilal Oswal has maintained neutral rating on NHPC with a target of Rs 25, in its February 7, 2013 research report.
“NHPC reported PAT of INR3.1b for 3QFY13. This includes adjustment of prior period revenue, reversal of expenditure and interest income on water cess recovery. Adjusted PAT was INR2.4b, in line with our estimate. Standalone generation was 2.6BU, down 17.8% YoY due to higher base (good monsoon in the previous year). Average plant availability factor (PAF) for 9MFY13 was 89% v/s 86% in 9MFY12.”
“NHPC commissioned 275MW capacity in YTDFY13 and the management has guided addition of 545MW in 4QFY13. It targets capacity addition of 552MW in FY14 and no addition in FY15/16. Delays continue at its large projects like 2GW Subanshiri Lower (work halted since December 2011), 800MW Parbati II (contract for tunnel boring machine to be re-awarded), and 330MW Kishanganga Project (river diversification completed; dam spillway in process). NHPC's growth option beyond FY14 is limited. Outstanding debtors stood at INR20b (v/s INR26b as at end-2QFY13 and INR21b as at end-FY12). Debtors above 60 days were at INR12.6b (v/s INR12b+ in FY12). The management is taking steps to realize its dues, as also scheduling the power from defaulting states.”
“We expect NHPC to report earnings CAGR of 8% over FY13- 15, led by capacity commissioning. Possibility of RoE improvement is limited, despite assuming higher RoE for pondage based project. The stock has appreciated 26% over the last three months. We maintain Neutral, with a target price of INR25 (1x FY14E BV),” says Motilal Oswal research report.
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