power generator ntpc delivered a strong performance in Q3FY23 with standalone /consolidated reported PAT at Rs 44.8 bn/ Rs 48.5 bn and adj. PAT at Rs 44.2 bn/ Rs 48 bn, respectively. Main factors impacting the performance were: strong core operational performance and addition of 3GW capacity over the past 12 months, reduction in fixed cost under recovery to `5.5 bn by 9MFY23-end, higher PLF-based incentives and reduction in other income and profits from subsidiaries/JVs mainly due to lower LPS. Core earnings were robust backed by capacity addition and strong coal PLFs. 18GW capacity is under construction; commissioning over the next two years is expected to take the group regulated equity to Rs 1.2trn. Monetisation of RE platform is expected to conclude in FY23. Interim dividend of Rs 4.25/sh has been announced. Maintain Buy.
Profits stable: In Q3FY23, consolidated revenue was Rs 446 bn, while Ebitda was up 31.5% y-o-y at `145 bn. Reported consolidated PAT was Rs 48.5 bn, while adj. PAT was up 16.6% y-o-y at Rs 48 bn, despite a decline in other income by 21.1% y-o-y to Rs 3.9 bn, mainly due to lower surcharge income. On a standalone basis, revenue was Rs 414 bn, Ebitda was up 36.2% y-o-y at Rs 132.4 bn, reported PAT at Rs 44.8 bn was up 5.4% y-o-y, and adj. PAT was up 17.7% y-o-y at `44.2 bn, despite 17.6% y-o-y decline other income at Rs 7.4 bn. Coal PLF in Q3FY23 was 68.9%, up 121bps y-o-y, while PAF was 92.7%, up 717bps. Standalone gross generation increased 8.3% y-o-y to 78.6BU and average tariff in 9MFY23 was `4.96/unit. Gas PLF was 281bps lower y-o-y at 3.4%, while PAF was 98.5%. Standalone regulated equity stood at Rs 754.5bn at 9MFY23-end. Under recovery was Rs 5.5 bn for 9MFY23 vs Rs 6.9 bn for 9MFY22. Target is to reduce under recovery to Rs 2.5bn by FY23-end. However, incentives in Q3FY23 were Rs 1.25bn and for 9MFY23 the were Rs 4.24bn. In 9MFY23, profit from subsidiaries declined to `12.9bn and NTPC’s share in JV profits also declined to Rs 4.8bn in 9MFY23, mainly due to LPS reduction, debtor discounting and adjustments in accounting for future receivables. Dividend income from subsidiaries and JVs in 9MFY23 was Rs10.46bn vs Rs 11.42bn in 9MFY22.
Coal availability is sufficient: Coal supply in 9MFY23 was 166mnte, of which 11.6mnte was imported. NTPC’s coal plants currently have 15 days of coal stock. With improved supplies from Coal India, higher imported coal procurement and blending, as well as substantial increase in captive coal production, which was up 51% y-o-y during 9MFY23 at 14.55mnte, we do not expect a repeat of coal shortage-related issues in the months ahead, despite rise in peak all India demand, which is estimated to cross 230GW in CY23.