NTPC Event Update OFS 060213
2
Equity | India | Electric Utility NTPC Ltd. Recomm endat i on: S UBS CRIBE February 06,2013 Institutional Research 1 Event Update Details of the Issue Price Band To be announced Issue Size Rs 120 bn * Opening Date February 7, 2013 Closing Date February 7, 2013 Issue Type Offer For Sale Face Value `10 Listed On BSE & NSE (since govt. not declared OFS price, however govt. intends to collect Rs.120 bn* amount from this issue) Objects of the Issue Disinvestment by government of India (Promoter of NTPC) Rs.120 bn* 9.5% Equity, being 783262880 shares Brokers on behalf of seller Citigroup global (I) (P) Ltd. Dautsche Equities (I) (P) Ltd. Goldman Sachs(I)(P) Ltd. Kotak Securities Ltd. Morgan Stanley (I) (P) Ltd. SBI Cap Sec. Ltd. Registrar - Shareholding Pattern Pre-Issue Shares % Promoters 6,967,361,180 84.5 Public & Others 1,278,103,220 15.5 Total 8,245,464,400 100.0 Post-Issue Shares % Promoters 6,184,098,300 75.0 Public & Others 2,061,366,100 25.0 Total 8,245,464,400 100.0 Source: Institutional Research Company Background NTPC, set up in 1975, is India’s largest power generation company with 39,674 MW installed capacity (including 4,364 MW from JV’s). The company plans to add ~14GW of capacity in the XII plan. In addition to generation, it also provides consultancy services and has a subsidiary named, NTPC Vidyut Vyapar Nigam, is engaged in power trading. Apart from this, NTPC has also entered into JVs for different businesses—with Singareni Collieries for coal mining, BHEL for equipment manufacturing, and Transformers & Electricals Kerala (TELK) for repairs and maintenance. Investment Rationale Ample of scope ahead with capacity increment With target capacity addition of around 7,700 MW in next 3 years, we expect a high growth period for NTPC in coming years as incremental power capacity to provide incremental earnings for the company. With better funds ava ilability and declining concerns on receivables and introduction of fuel and power purchase adjustment mechanism, NTPC is thus better placed than other developers - both on the operational and the financial front. Capacity to subside the fuel risk NTPC has been able to receive 100% of ACQ (Annual Contracted Quantity) of coal against LoAs despite concerns of domestic availability and Coal India’s low growth in output. With Coal India increasing its output in addition to contribution from NTPC’s captive mines starting from FY14, we believe that NTPC will be able to subside the risk of unavailability of fuel Worst over, improvement in hindsight NTPC has consistently reported PAF (Plant Availability Factor) of more than 90% against required 85%. We expect coal-based PAF to improve in FY14 and FY15 to around more than 92% from 88% in FY13 with increase in domestic coal production, contribution from captive coal mines and usage of imported coal as the inland waterways for coal transportation to Farakka and Kahalgaon stations get commissioned. Strong balance sheet NTPC’s FY12 Numbers: Net debt/equity: 0.6x Interest coverage ratio: 7.14x NTPC’s debt service coverage ratio at 3.21x Valuation & Recommendation At the CMP of `155, the stock is trading at 1.48x FY14 P/B. We believe that it is definitely the contender for higher valuation from present levels as more than 90% of its profitability is shielded due to regulated model. In addition to this there is huge confidence on NTPC’s expansion plans as compared to private sectors, which is also aided by increasing clarity about availability of fuel. We expect the stock to trade at 1.75x FY14 P/BV, which we believe is justified given its regulated return profile which provides limited downside. Recommend Subscribe to the Offer for Sale.
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Transcript of NTPC Event Update OFS 060213
7/30/2019 NTPC Event Update OFS 060213
http://slidepdf.com/reader/full/ntpc-event-update-ofs-060213 1/2
Equity | India | Electric Utility
NTPC Ltd.Recommendation: SUBSCRIBE February 06
Institutional Research
EventUpdate
Details of the Issue
Price Band To be announced
ssue Size Rs 120 bn *
Opening Date February 7, 2013
Closing Date February 7, 2013
ssue Type Offer For Sale
Face Value `10
Listed On BSE & NSE
since govt. not declared OFS price, however govt.
ntends to collect Rs.120 bn* amount from this issue)
Objects of the Issue Disinvestment by government of
ndia (Promoter of NTPC) Rs.120 bn*
9.5% Equity, being 783262880
shares
Brokers on behalf of seller
Citigroup global (I) (P) Ltd.
Dautsche Equities (I) (P) Ltd.
Goldman Sachs(I)(P) Ltd.
Kotak Securities Ltd.
Morgan Stanley (I) (P) Ltd.
SBI Cap Sec. Ltd.
Registrar
-
Shareholding Pattern
Pre-Issue
Shares %
Promoters 6,967,361,180 84.5
Public & Others 1,278,103,220 15.5
Total 8,245,464,400 100.0
Post-Issue
Shares %
Promoters 6,184,098,300 75.0
Public & Others 2,061,366,100 25.0
Total 8,245,464,400 100.0
ource: Institutional Research
Company Background
NTPC, set up in 1975, is India’s largest power generation company with 39,674 MW insta
capacity (including 4,364 MW from JV’s). The company plans to add ~14GW of capacity in the
plan. In addition to generation, it also provides consultancy services and has a subsidiary namNTPC Vidyut Vyapar Nigam, is engaged in power trading. Apart from this, NTPC has also ente
into JVs for different businesses—with Singareni Collieries for coal mining, BHEL for equipm
manufacturing, and Transformers & Electricals Kerala (TELK) for repairs and maintenance.
Investment Rationale
Ample of scope ahead with capacity increment
With target capacity addition of around 7,700 MW in next 3 years, we expect a high gro
period for NTPC in coming years as incremental power capacity to provide incremental earn
for the company. With better funds availability and declining concerns on receivables
introduction of fuel and power purchase adjustment mechanism, NTPC is thus better pla
than other developers - both on the operational and the financial front.
Capacity to subside the fuel risk
NTPC has been able to receive 100% of ACQ (Annual Contracted Quantity) of coal against L
despite concerns of domestic availability and Coal India’s low growth in output. With Coal I
increasing its output in addition to contribution from NTPC’s captive mines starting from FY
we believe that NTPC will be able to subside the risk of unavailability of fuel
Worst over, improvement in hindsight
NTPC has consistently reported PAF (Plant Availability Factor) of more than 90% against requ
85%. We expect coal-based PAF to improve in FY14 and FY15 to around more than 92% from
in FY13 with increase in domestic coal production, contribution from captive coal mines
usage of imported coal as the inland waterways for coal transportation to Farakka
Kahalgaon stations get commissioned.
Strong balance sheet
NTPC’s FY12 Numbers:
Net debt/equity: 0.6x
Interest coverage ratio: 7.14x
NTPC’s debt service coverage ratio at 3.21x
Valuation & Recommendation
At the CMP of `155, the stock is trading at 1.48x FY14 P/B. We believe that it is definitely
contender for higher valuation from present levels as more than 90% of its profitabilit
shielded due to regulated model. In addition to this there is huge confidence on NTP
expansion plans as compared to private sectors, which is also aided by increasing clarity ab
availability of fuel. We expect the stock to trade at 1.75x FY14 P/BV, which we believe
justified given its regulated return profile which provides limited downside. Recomm
Subscribe to the Offer for Sale.
7/30/2019 NTPC Event Update OFS 060213
http://slidepdf.com/reader/full/ntpc-event-update-ofs-060213 2/2
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