NTPCNSEQ2 FY23October 29, 2022

NTPC Limited

7,446words
142turns
13analyst exchanges
1executives
Management on call
Modi. Rahul Modi
Thank you, Michelle. On behalf of ICICI Securities, I welcome you all to the Q2 FY23 Earnings
Key numbers — 40 extracted
1952 MW
s including renewables. Operational Highlights of Q2/H1 FY23 ➢ During H1 FY23, NTPC has added 1952 MW commercial capacity to its portfolio, out of which a capacity of 672 MW was added from renewable
672 MW
H1 FY23, NTPC has added 1952 MW commercial capacity to its portfolio, out of which a capacity of 672 MW was added from renewable sources. As on 30 September 2022, the commercial capacity of NTPC stands
57639 MW
added from renewable sources. As on 30 September 2022, the commercial capacity of NTPC stands at 57639 MW on standalone basis and 70254 MW for the Group. ➢ NTPC Group generated 204 Billion Units in H1
70254 MW
on 30 September 2022, the commercial capacity of NTPC stands at 57639 MW on standalone basis and 70254 MW for the Group. ➢ NTPC Group generated 204 Billion Units in H1 FY23 as compared to 177 Billion U
204 Billion
NTPC stands at 57639 MW on standalone basis and 70254 MW for the Group. ➢ NTPC Group generated 204 Billion Units in H1 FY23 as compared to 177 Billion Units in H1 FY22, an increase of ~15%. NTPC’s standal
177 Billion
and 70254 MW for the Group. ➢ NTPC Group generated 204 Billion Units in H1 FY23 as compared to 177 Billion Units in H1 FY22, an increase of ~15%. NTPC’s standalone gross generation in H1 FY23 is 176 Billi
15%
nerated 204 Billion Units in H1 FY23 as compared to 177 Billion Units in H1 FY22, an increase of ~15%. NTPC’s standalone gross generation in H1 FY23 is 176 Billion Units as compared to 151 Billion Un
176 Billion
7 Billion Units in H1 FY22, an increase of ~15%. NTPC’s standalone gross generation in H1 FY23 is 176 Billion Units as compared to 151 Billion Units in the corresponding previous period registering an incr
151 Billion
crease of ~15%. NTPC’s standalone gross generation in H1 FY23 is 176 Billion Units as compared to 151 Billion Units in the corresponding previous period registering an increase of ~16%. ➢ D
16%
as compared to 151 Billion Units in the corresponding previous period registering an increase of ~16%. ➢ During H1 FY23, PLF of coal stations of NTPC was 77.27% as against the Nationa
77.27%
stering an increase of ~16%. ➢ During H1 FY23, PLF of coal stations of NTPC was 77.27% as against the National Average of 64.46%, thereby maintaining a spread of above 12% over the Nat
64.46%
➢ During H1 FY23, PLF of coal stations of NTPC was 77.27% as against the National Average of 64.46%, thereby maintaining a spread of above 12% over the National average. For H1 FY23, 4 coal station
Guidance — 20 items
Jaikumar Srinivasan
opening
“Further Bids for 650 MW have been won which will be awarded soon.”
Jaikumar Srinivasan
opening
“The main object of the company is to develop, operate and maintain Renewable Energy Park and Project(s) in reservoirs and land owned by DVC.”
Jaikumar Srinivasan
opening
“Going forward, NTPC proposes to form a JV company between its subsidiary NTPC Green Energy Limited (NGEL) and IOCL for supply of RE-RTC power to IOCL.”
Jaikumar Srinivasan
opening
“This comes in the backdrop of NTPC announcing its Green Hydrogen initiatives and plan to build the country’s first pilot projects for synthesizing green methanol, setting up Green Hydrogen filling station, Green hydrogen blending into PNG and Green energy storage project.”
Jaikumar Srinivasan
opening
“NTPC has signed a MoU with National Sports Development Funds (NSDF) and Ministry of Youth Affairs and Sports (MYAS) for the development of archery in India with an aim to provide world class facilities with international exposure & a platform to the talented pool of Indian archers.”
Mohit Kumar
qa
“Are you on course to meet the guidance that will do the monetization by FY23?”
Mohit Kumar
qa
“Secondly, on this sir, what is the status of renewables monetization are you on course to meet the guidance that will do the monetization by FY23?”
Management
qa
“But we expect that by the close of Q3 or in any case, before the end of the financial year, we'll be able to conclude this transaction.”
Management
qa
“We will be able to recover substantial amount of this from the remaining days.”
Anuj Upadhyay
qa
“And sir, secondly, can you just mention about the capacity which we plan to add for FY23, 24 and if possible, 25 as well?”
Risks & concerns — 4 flagged
The decline is broadly from two subsidiaries (JVs), Meja Urja and Hindustan Urvarak.
— Management
And why is this so, sir, I mean, the reason for the decline?
— Anuj Upadhyay
Now sir, I wanted to understand the impact of this for future quarters.
— Apoorva Bahadur
So, we are a bit cautious, but we are steadily moving.
— Management
Q&A — 13 exchanges
Q
Yes. My first question is on the interest cost and late payment surcharge. I think you accounted roughly INR 3.9 billion in the interest cost related to the electricity late payment surcharge rules. Can you please explain how much is the amount which is being availed in this scheme? And how we have done the accounting? And is it onetime charge? And also, the finance cost has been restated for last financial year and last quarter?
Management
Late payment surcharge, we have booked around INR 392 crore. This you're mentioning or you're talking about the discount? Yes, it's a onetime charge? And why it has been done? No, there are two different things. One is the surcharge, which we are levying periodically. The other thing is we have booked a finance charge as a onetime. Which one are your referring to? Sir, looking to the onetime charge which you have booked. Can you please explain it? One time charge, there is a scheme for restructuring the loans (receivables), outstanding loans (receivables). Installment has been given to many of
Q
Sir, in the opening remarks, you mentioned that the profit from your JV has declined to somewhere around INR 120-odd crore compared to INR 526 crore on a year-on-year basis. Any reason for this non-performance, sir?
Management
The decline is broadly from two subsidiaries (JVs), Meja Urja and Hindustan Urvarak. And why is this so, sir, I mean, the reason for the decline? See, for the Meja plant, we had an issue with the boiler. So, we had to shut down for around five months and repair it. So now the boiler is back in service. We will be able to recover substantial amount of this from the remaining days. And sir, secondly, can you just mention about the capacity which we plan to add for FY23, 24 and if possible, 25 as well? And the bifurcation among the project side would be very helpful. The capacity addition plan th
Q
Sir, a couple of questions that I had. Now the regulated equity has gone up quite substantially due to the merger of Nabinagar and Kanti in the standalone books. So can you help us with reconciling the profit numbers as obviously, the growth seems to be a bit muted, partly that can be understood due to the reduction in the other income, I believe in the late payment surcharge. Sir, what are the other aspects which probably we need to look at to reconcile, because the growth in the regulated equity has been quite significant. So. is there any adjustments which is happening?
Management
There are one or two reasons. If you want to see the peculiar aspects during the quarter is, one is, as I mentioned, that this is a financial charge which we had for the discounting of receivables. That is one aspect and there will be some tax aspect of merger close to around INR 190 crore. This would be the peculiar item. Of course, the other income is gradually on the lower side because of better payment trends from the DISCOMs.
Q
Sir, a few questions actually on the solar front. Sir, if I remember correctly, for execution of the solar projects, we were talking earlier that we would procure the modules ourselves and then do the balance of system works with the other players. So, I just wanted to understand on that front, what are we currently doing in terms of executing this? Are we looking to procure the models ourselves and heading in that direction?
Management
Yes Aniket, we are doing that only. So, we have broken up the project into packages. One package is the balance of system, and we've already awarded that for a project. Modules we'll be preparing separately. Fair. And so, in this balance of systems that you're providing, are these fixed-price contracts? Yes, it's fixed price. And in some of the earlier packages that you would have awarded to the EPC contract, given the increase in module prices, as it's happened, are there any renegotiations that have happened? No, they cannot happen because in all these projects, the tariffs which we have bid
Q
Sir, a couple of questions. Firstly, if you could share the fixed cost under recovery, late payment surcharge and the PLF incentive numbers for the quarter, that'd be very helpful.
Management
See, the fixed costs under recovery for the half year is INR 718 crore. However, I may just add that this is a transient figure because ultimately, the evaluation is on an annual basis, that is declared capacity on an annualized basis. So, it doesn't follow an even trend depending on the operational level of Q2. We stand here, but as we go ahead, this will be further mitigated. Sir, what would be our expectation by year-end to what level should we hit? Around INR 250 crore. Sir, I assume the late payment surcharge will be very low this quarter, less than INR 100 crores? For the quarter, it was
Q
Just to add to the previous question. Sir, you have just mentioned that we have Lara 1,600 MW and around 3.2 GW 3 other projects. So, can you just give us a time line of the ordering for these projects year-wise? Say, FY23, we have already done one. So, will we have anything else and FY24, FY25 and so on?
Management
See, Lara, our target is to award by March 2023. And then our Sipat will be within Q2 of the next financial year, that is FY24. And then Singrauli and Sipat, both will come in the FY25. Sir, Darlipalli will come when? Darlipalli, there are some forest land issues, which we're settling. And once we settle, we may bring it to FY24 itself if we can get the forest clearances. Otherwise, it will go to FY25. So currently, coal capacity addition plan that we have in the pipeline is 4.8 GW. Am I right? That is already decided by us. Okay. And is there any chance that more such projects will be added?
Q
Yes. Sir, my question is on the average realizations, which have been disclosed. So there has been a very sharp increase over the past six, seven months in the average realization. So, is it all driven by imported coal? Or is there any other reason to it? And what is the proportion of imported coal that is being used?
Management
There is no linkage between realization and imported coal. Due to imported coal, sales have increased definitely. But as far as realization is concerned, we have realized 100%. Average tariff, as disclosed in the key metrics that you disclosed for the first half is INR 4.77. And last year, it was INR 3.86. So, there is a jump of about INR 0.91 paise. Understood. It is all because of this imported coal. And what proportion of the coal use is imported coal in this period? We are blending around 7.9%. Okay. And that is likely to continue for some time or that is coming off with the improvement in
Q
Sir, with regard to this joint venture, last year, we made a profit of INR 1,000 crore. When things normalize with this Meja stabilizing in and this fertilizer units at HURL getting normalized, what is the likely profit we can see a contribution from this joint venture, sir?
Management
See if you look at the contribution from profits of the subsidiaries, it was INR 867 crore from subsidiaries and INR 120 crore from joint ventures, around INR 980 crore. If things stabilizes, we expect that the losses which we are seeing here to the order of around INR 300 crore that will come down and probably they'll start making some profit. So, you can expect profits to go up by around INR 400 crore to INR 450 crore. So, from this INR 980 crore level, we can go to INR 1,500 crore run rate, sir? Half yearly basis, so you can double it up for a year. Sure, my second question is with regard t
Q
What is the portfolio size in terms of gigawatt that would be monetized by December that you mentioned.
Management
No, we are diluting the equity. Entire RE assets will be with the NTPC Green Energy Limited. And even NTPC RE, NREL also will be under this company, and we are diluting the stake of NGEL to the extent of maximum 20%. Sure. So then given -- there would be inclusion of hydrogen, the storage projects etc.? Management: All green portfolio will be under this. So instead of monetization of specific assets, it is a stake sale in the green energy company. Correct. So, the question is what is the size of portfolio considered when valuing for the stake sale? NTPC plans to add 60 GW by 2032. Currently wh
Q
Of course.
Management
Q
My first question is on the monetization. So right now, we have about 2.8 gigawatts and it includes the potential work that is going on in the storage and on the battery level. Is it very prudent to dilute about 20% right now rather than having a little significant portion of the work done and then going for it? Because the valuation can vary accordingly. So, what is the thought process behind this? Why was the monetization needed so early?
Management
Well, we have a mandate from Government of India to go for monetization. So, we are going for monetization. But as far as the quantum of monetization is concerned, we plan to go up to 20%. So, it may be less but there is maximum ceiling of 20%. It will all depend on what is the valuation we are getting from the prospective investor. Based on that we will try to see what the interest is. The quantum what we'll offer has also got to do with -- I mean how much is the interest that the prospective investor relevance, isn't it? So, we'll take a call on that as we go ahead. Let me chip in. You have
Q
See the increase because some of the units that we have taken for overhauling due to the increased work the overhaul duration has increased. So going forward, by the end of the year, most of this will be recovered. The projected under-recovery by the end of the year is only INR 250 crore, that too mainly in only four stations where we had major equipment issues. The remaining under- recovery will be recovered. Koundinya Nimmagadda: So, in that case, there is no fuel cost under recovery, if I'm understanding this correctly?
Management
There is no fuel cost under-recovery. Koundinya Nimmagadda: Sir, secondly, even if I add back this under-recovery number and look at the implied ROE, that looks quite lot around 13.5%, 14%. So how should we read that? I did not follow. If you're adding this under-recovery to the PAT, you are getting a return of 14% on equity. This is what you are saying? Koundinya Nimmagadda: Core ROE, yes, the core ROE number. So just trying to understand if I'm missing something out here. Cannot add to the PAT. Of course, see, broadly your approach is correct. But then there is an element of discounting, whi
Q
Yes. So, on behalf of the management, I thank all the participants for attending this conference call. I would also like to thank Rahul Modi from ICICI Securities for organizing this. Thanks a lot.
Management
Speaking time
Management
65
Moderator
15
Anuj Upadhyay
10
Apoorva Bahadur
10
Mohit Kumar
8
Aniket Mittal
8
Nikhil Abhyankar
6
Atul Tiwari
6
B Vijay Kumar
5
Kirti Jain
4
Opening remarks
Rahul Modi
Thank you, Michelle. On behalf of ICICI Securities, I welcome you all to the Q2 FY23 Earnings Conference Call of NTPC. We have with us the senior management of NTPC, represented by Mr. Jaikumar Srinivasan, Director (Finance), Mr. Dillip Kumar Patel, Director (Human Resources), Mr. Ramesh Babu V., Director (Operations), Mr. Chandan Kumar Mondol, Director (Commercial) and Mr. Ujjwal Kanti Bhattacharya, Director (Projects). With this, I would like to hand over the call to Mr. Srinivasan for his opening remarks, and then we can have a Q&A session. Thank you for your time, sir. Over to you.
Jaikumar Srinivasan
Thank you. A very good evening to all the participants. I, Jaikumar Srinivasan, Director (Finance), welcome all of you to the Q2 FY23 Conference Call of NTPC Ltd. I have with me Shri Dillip Kumar Patel, Director (Human Resources), Shri Ramesh Babu V., Director (Operations), Shri Chandan Kumar Mondol, Director (Commercial) and Shri Ujjwal Kanti Bhattacharya, Director (Projects). I also have with me other key members of NTPC team. Today, the Company has announced the unaudited financial results for Q2 FY23 along with half- year results of FY23. The Key Performance Highlights for the quarter and half-year ended 30 September 2022 have already been disclosed on both the stock exchanges. NTPC has completed yet another remarkable quarter with a very strong operational and financial performance. We have made significant progress on various strategic initiatives including renewables. Operational Highlights of Q2/H1 FY23 ➢ During H1 FY23, NTPC has added 1952 MW commercial capacity to its portfol
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