OFS Note | Power
Aug 29, 2017
NTPC
SUBSCRIBE
sue Open: Aug 29, 2017
Is
Issue Close: Aug 30, 2017
NTPC is India’s largest power producer with an installed capacity of 51 GW,
accounting for ~16% share in overall capacity. In addition to this the company
has ~21 GW under construction. The NTPC group contributed 24% to all India’s
Issue Details
generation during FY17. Over FY11-17 the company added nearly 16 GW of
Face Value: `10
capacity.
Present Eq. Paid up Capital: `8245cr
PLF to remain steady, while lower coal cost will reduce cost: NTPC’s coal station
Offer for Sale: **41.23cr Shares
achieved Plant Load Factor of 78.6% against 59.9% at all India level. Compared
to FY16 the coal based station’s PLF has remained flat and we expect the same to
remain steady going ahead. The PLF for Gas based plants marginally declined in
FY17 to 24.4% vs 25.1%, which too is expected to bounce back. Further the
Post Eq. Paid up Capital: `8245cr
company expects coal cost to come down due to rationalistion of coal linkages,
Issue size (amount): **`7000 cr
re-grading of coal mines and implementation of GST. The above all factors
should be margin accretive for the company.
Price Band: `168
Next phase of growth likely on the back of new project commercialization: During
5% Discount for Retail
FY17 NTPC added 4,430 MW against 2,255 MW in FY16. During July 2017
NTPC commercialised 800 MW of capacity indicating it is on set for its next phase
of high capacity addition. In FY18 the company targets to add another 4,543 MW
and commercialise 3.6 GW of capacity.
Promoters holding Pre-Issue: 70%
We expect earnings growth to be healthy backed by aggressive capacity addition
Promoters holding Post-Issue: 65%
as well as commercialisation: NTPC had ~ `87,000 cr worth of CWIP on book
and conversion of the same into gross block and resultant revenue growth should
** if 5% OFS offered
lead to healthy ~15% earrings CAGR over FY17-19. The rate of capitalisation of
capacity is likely to be higher than the capex over the next two years and this is
Book Building
likely to be RoE accretive.
MF/Insurance
25% of issue
Valuations & View: The floor price of the issue has been fixed at `168/ share and
Non-Retail
55% of issue
retail investors are entitled for 5% discount on the floor price, which works out to `
Retail
20% of issue
159.6. At the offer price the stock is valued at 1.2x its FY19 BV, which looks
attractive and hence we recommend investors to SUBSCRIBE to the issue.
Post Issue Shareholding Pattern
Key Financials (Consolidated)
Promoters
65%
Y/E March (` cr)
FY14
FY15
FY16
FY17
Revenue
78,951
80,612
73,426
82,081
Others
35%
% chg
10
2
-9
12
Adj. net profit
11,438
9,856
10,900
10,757
% chg
-0
-14
11
-1
Adj. EPS (`)
14
12
13
13
OPM (%)
25
21
25
27
P/E (x)
12
14
13
13
P/BV (x)
1.6
1.7
1.5
1.4
RoE (%)
13
12
12
11
RoCE (%)
9
6
7
7
Jaikishan J Parmar
EV/Sales (x)
2.5
2.8
3.1
2.9
+022 39357600, Extn: 6810
EV/EBIDTA
10.2
13.0
12.3
10.8
Source: Company, Angel Research, Valuation ratios based on floor price.
Please refer to important disclosures at the end of this report
1
NTPC | OFS Note
Issue Details
The government is offering up to 5% in NTPC, the country's largest power
producer, through an offer for sale (OFS) on Tuesday and Wednesday. The offer,
at the minimum base price of Rs 168 per share, could bring in around `7,000cr
into the exchequer. The government will sell a little over 41.22cr shares, consisting
of 5% of the company, at a base price of `168 per share. If there is demand for
additional shares during the OFS, the government could divest up to 5% more of
the company.
The retail investors would get the discount of 5% on floor price. As a result, retail
investor would get shares at `159.6 per share.
Exhibit 1: Pre and Post-OFS shareholding pattern (shares in cr)
No of shares (Pre-issue)
% No of shares (Post-issue)
%
Promoter (GOI)
575
70
534
65
Institution/Public
249
30
291
35
825
100
825
100
Considered 5% OFS offered
Objects of the offer
The stake sale in NTPC is part of the government's comprehensive divestment
plan to raise up to `72,500cr announced In the Budget. For fund its
infrastructure and welfare projects.
Aug 29, 2017
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NTPC | OFS Note
Exhibit 2: Profit & Loss Statement (Consolidated)
Y/E March (` cr)
FY14
FY15
FY16
FY17
Net Sales
78,951
80,612
73,426
82,081
% chg
10
2
-9
12
Total Expenditure
59,310
63,283
55,003
59,613
Fuel cost
50,772
54,268
47,727
1,675
Employee Costs
5,037
4,882
4,694
5,676
Other Expenses
3,501
4,133
2,581
52,262
EBITDA
19,641
17,329
18,424
22,468
% chg
9
-12
6
22
(% of Net Sales)
25
21
25
27
Depreciation& Amortisation
4,770
5,565
5,771
6,693
EBIT
14,871
11,764
12,652
15,775
% chg
4
-21
8
25
(% of Net Sales)
19
15
17
19
Interest & other Charges
3,263
3,669
3,366
3,753
Other Income
2,879
2,365
1,332
1,738
Profit before tax
14,487
10,461
10,618
13,761
% chg
-13
-28
2
30
Tax Expense
3,082
464
-163
3,047
(% of PBT)
21
4
-2
22
Recurring PAT
11,405
9,997
10,781
10,714
Minority Interest
-0
6
-20
-6
Share of associates
-32
135
-99
-37
Reported PAT
11,438
9,856
10,900
10,757
Adjusted PAT
11,438
9,856
10,900
10,757
% chg
-0
-14
11
-1
(% of Net Sales)
14
12
15
13
Aug 29, 2017
3
NTPC | OFS Note
Exhibit 3: Balance Sheet (Consolidated)
Y/E March (` cr)
FY14
FY15
FY16
FY17
SOURCES OF FUNDS
Equity Share Capital
8,245
8,245
8,245
8,245
Reserves & Surplus
79,084
73,849
83,330
89,593
Shareholder Funds
87,330
82,094
91,576
97,838
Minority Interest
680
888
793
803
Total Loans
81,455
1,02,252
99,424
1,13,769
Deferred Tax Liability
6,913
8,098
8,153
10,066
Other Long term liabilities
5,588
6,068
6,302
5,746
Total Liabilities
1,81,966
1,99,400
2,06,248
2,28,222
APPLICATION OF FUNDS
Gross Block
1,31,394
1,44,361
98,844
1,17,088
Less: Acc. Depreciation
47,186
52,508
5,915
12,556
Net Block
84,208
91,853
92,929
1,04,532
Capital Work-in-Progress
53,825
67,555
75,046
86,896
Goodwill
Investments
3,300
1,902
6,473
7,802
Current Assets
42,822
39,991
30,599
30,113
Cash
17,051
14,252
4,938
3,301
Inventories
6,062
8,060
7,145
6,690
Debtor
6,726
9,250
8,289
8,964
Other
12,984
8,430
10,228
11,158
Current liabilities
23,826
27,144
25,417
28,960
Net Current Assets
18,996
12,847
5,182
1,154
Other Assets
21,637
25,243
26,618
27,839
Total Assets
1,81,966
1,99,400
2,06,248
2,28,222
Aug 29, 2017
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NTPC | OFS Note
Research Team Tel: 022 - 39357800
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