NTPC Q3 Results Preview: Revenue expected to increase 10-15%, PAT likely to grow 22-25%

State owned utilities company NTPC Ltd (National Thermal Power Corporation Limited) will declare its third quarter results during the day today.

Experts expect the country’s largest power producer to report ~5-12 percent year on year increase in its consolidated net profit at Rs 3,400 – 3,700 crore for the quarter driven by benefits from higher availability and generation due to higher demand and incremental earnings from new capacity additions.

The leader in thermal power generation is expected to report ~10-11 percent on year increase in its consolidated revenues to Rs 26,500 – 27,000 crore for the quarter.

It may be noted that the company had reported a net profit of Rs 3,315 crore in the same period last year and its consolidated revenues were Rs 24,509 crore.

During the previous quarter, the net profit was recorded at Rs 3,212 crore and the consolidated revenues stood at Rs 28,329 crore.

Brokerage Expectations

Elara Capital

According to the report from Elara Capital, in FY21, NTPC added new capacity to the tune of 4,160 Mega Watt (MW), which included 904 MW toward renewable and hydro power. In the 9 months of current financial year the company has added 1,075 MW to its capacity to take the group’s cumulative capacity to 66,800 MW.

The brokerage expects the revenues to be higher by 8.0 percent YoY to Rs 26,400 crore due to higher generation as a result of new capacities getting commissioned. Compared to previous quarter, revenues may decline by ~7 percent.

EBITDA (earnings before interest, tax, depreciation and amortization) for the quarter is expected to increase both on yearly and quarterly basis, growing by ~6 percent on year and ~8 percent quarter on quarter to Rs 7,830 crore. EBITDA during the same period a year ago was Rs 7,367 crore and in the previous quarter, the company had recorded an EBITDA of Rs 7,224 crore.

PAT (profit after tax) is likely to be up 13.9 percent YoY and 17.5 percent QoQ at Rs 3,770 crore. The outstanding dues are seen improving further during this quarter from Rs 8,000 crore as on September 2021. The outstanding dues stood at Rs 19,100 crore as on December 2020.

ICICI Securities

The brokerage says, “NTPC’s standalone generation increased 10% YoY to 71.7 Billion Units (BUs) during the quarter, aided by gross commercialization of 3.1GW (Giga Watt) capacity in trailing twelve months (TTM)”.

As per the report from the brokerage, during the quarter NTPC and its subsidiaries commercialized 1.2GW of capacity: 1) 17.5MW of 100MW Ramagundam floating solar PV (photo voltaic) project; 2) Unit-2 (250MW) of Barauni Thermal Power Station (TPS) stage II; 3) 80MW of 160MW Jetsar solar PV project, Rajasthan; 4) Unit-4 (250MW) of Nabinagar TPS of BRBCL; 5) Unit-1 (660MW) of Barh Super TPS; 6) 49.92MW out of 296MW Fatehgarh solar PV project.

It pegs the “revenues to increase by 10 percent YoY as it will benefit from higher availability and generation (up 10 percent YoY) due to higher demand and incremental earnings from new capacity commissioned in TTM”. Revenues are expected at Rs 26,960 crore for the quarter, a sequential decline of ~5 percent.

EBITDA for the quarter may increase 18 percent on year and 20 percent on quarter to Rs 8,690 crore basis which the EBITDA margins will increase to 32.2 percent from 30.1 percent last year and 25.5 percent in the previous quarter.

ICICI Securities expect PAT to increase by 8.5 percent YoY and 12 percent on quarter to Rs 3,600 crore due to higher EBITDA, higher other income, and lower interest expense.

 Kotak Institutional Equities Research

Kotak expects an on-year growth of 11.3 percent in the consolidated revenues for the quarter. It forecasts Rs 27,288 crore in revenues with a sequential decline of ~3.7 percent.

The growth is driven by, “healthy growth in generation at 71 BU (+8.5 percent YoY) owing to higher utilization for domestic coal plants at the start of the quarter and commercialization of 2.9 GW over the trailing 12 months and an incremental 660 MW commercialized during the quarter”, Kotak said in its report.

EBITDA at Rs 7,350 crore is likely to be flat on year and marginally higher by 2 percent compared to previous quarter.

The brokerage expects EBITDA margins to decline 314 bps on year to 26.9 percent and improve by 142 bps QoQ.

It expects a “modest PAT growth of 3% YoY on account of lowered surcharge income in comparison to Rs 570 crore of surcharge income in the same period last year”. PAT is likely at Rs 3,400 crore.

The brokerages suggest that it would be important to watch out for update on renewable; progress of under-construction projects and commissioning schedule; guidance for FY22, if any.

The stock of NTPC Ltd closed at Rs 140.1, up Rs 5.2 (+3.8 percent) from its previous close on the National Stock Exchange on January 28. During the past one year, the stock has generated returns of 53 percent while during the past one month, it has gained 13 percent.