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Friday , 2 December 2016
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NTPC Ltd – A stellar performer… powering India’s growth

  • NTPC is the largest power producer in India in terms of both installed capacity and generation, with aggregate installed capacity of 45,548 MW (including 39352 MW through directly owned units and 6,196 MW through Subsidiaries and Joint Ventures) as on September 10, 2015. In addition, the Company has a capacity of 23,004 MW which is under different phases of completion as on date.

NTPC’s capacity excluding renewable but including capacity of Subsidiary and Joint Ventures represented market share of 18.77% of India’s total installed capacity and we generated 260.58 billion units of power, representing market share of 24.95% of India’s total power generation in fiscal 2015.

  In the calendar year 2014, NTPC was ranked as the number one independent power producer (“IPP”) and energy trader in the world, on the basis of asset worth, revenues, profits and return on invested capital, according to a survey conducted by Platts.

 NTPC ranked 431st overall on the Forbes Global 2000 list of the year 2015, and 379th among companies worldwide in terms of profit and 616th among companies worldwide in terms of market value.

  • Aims to build generation capacity of 128 GW by the year 2032 with a lot more focus on renewable energy. Plans to build a portfolio of 10 GW of Solar PV capacity in next 5 years.
  • 1st Hydro project commissioned – 800 MW added at Koldam, 110 MW Solar PV capacity commissioned, 250 MW under construction, 1260 MW Solar PV capacity under tender
  • Well diversified in value chain- into trading business, coal mining, consultancy, equipment manufacturing and distribution either on its own or through joint venture companies.
  • All power plants are under Regulated return model in which Return on equity is assured on cost plus basis subject to achievement of certain operating norms. This results in consistent and strong operational cash flow unlike any other generator in India.
  • Coal plants are operating at a PLF of over 80% as against national average of 64%

Financial strength:

  • Total revenues Rs.75,362 crore and Profit After Tax of Rs.10,291 crore in FY15
  • Total Assets of over Rs. 1,97000 crore as on FY14-15 year end.
  •  Paying dividend consistently for last 22 years with dividend payout ratio of around 40-50%. NTPC is amongst top 5 dividend paying companies in India in financial year 2014-15. The Company rewarded its investor with bonus debentures @ Rs.12.50 against equity share of Face value of Rs. 10 each during 2014-15 out of its reserves.
  • Debt equity ratio of 1.05 times for the year 2014-15 and current ratio of 1.22 times
  • Compound Annual Growth of 16% in total fixed assets and capital work in progress in last 5 years.
  • Unparallel collection efficiency in the industry. Outstanding receivables of 38 days only. Collecting 100% dues from its customers consistently.
  • Bottom line has been consistently attractive- 4th  largest net profit in all  PSUs after ONGC, Coal India and SBI in FY 2014-15
  • Equity locked in Capital work in progress will be converted into operational assets in next 3-4 years which will give a big push to total profits as well as Return on Assets (RoCE) and equity (RoE).

Key Competitive Strengths

  • Leadership Position in the Indian Power Sector
  • Long-term Fuel Security –All operating stations covered by long term fuel supply agreements/ coal linkages
  • High Operational Efficiency
  • Ability to Turn Around Underperforming Power Stations – has turnaround 4 sick power plants
  • Low Cost Power Producer in India with average tariff ranging around Rs. 3.26 /kwh
  • Prudent Off-take Policy – all power stations have long term power purchase agreements with distribution companies
  • Strong Balance Sheet
  • Competent and Committed Workforce – has been adjudged as the best company to work for 2015 in the Public Sector category and also rated as the best company to work in Energy, Oil and Gas Industry, in a study carried out by Great Place to Work and Economic Times.

NTPC –Robust  Financials

NTPC enjoys robust financials and the strength of our balance sheet can be judged from the following:

  1. Very low gearing ratio of Debt : Equity – 1.05:1  as on 31.03.2015
  2. Debt Service Coverage Ratio : 2.44 times for FY15 end
  3. Interest Service Coverage Ratio : 6.72 times for FY15 end
  4. Current ratio of 1.22 times for FY15 end
  5. Total Assets of around Rs. 1,97,000 crore (standalone) and the group assets are above Rs 219000 crore as on FY14-15 year end.
  6. Total revenues Rs.75,362 crore and Profit After Tax of Rs.10,291 crore in FY15
  7. Total revenues for Q1 15-16 is Rs.17,233 crore and Profit After Tax  is Rs. 2135 crore

  •  Paying dividend consistently for last 22 years with dividend payout ratio of around 40-50%. NTPC is amongst top 5 dividend paying companies in India in financial year 2014-15.

  • The Company rewarded its investor with bonus debentures @ Rs.12.50 against equity share of Face value of Rs. 10 each during 2014-15 out of its reserves.

  • Average dividend for last 3 years is around Rs 9 per equity share including bonus debentures.

  • Unparallel collection efficiency in the industry. Outstanding receivables of 38 days only. Collecting 100% dues from its customers consistently.

  • As against CAPEX Rs. 22,400 crore for 2014-15, incurred an expenditure of Rs. 23,239 crore. Target for FY15-16 Rs. 23000 crore. However, the same may increase depending on our requirement in solar projects. So far in the current year we have spent around Rs. 9500 crore till date

  • We enjoy high credit rating not only from domestic rating agencies but also international rating agencies.

  • NTPC has been able to raise debt of Rs. 13,000 crore from international and domestic markets at very competitive rates. Further, NTPC has upsized its MTN program from USD 2 billion to USD 4 billion.

  • Due to strong investor’s confidence, even in the bull-run at equity market, NTPC’s debt instruments have received overwhelming response from investors.

  • The shareholders have also approved our borrowing programme for Rs 5000 crore through NCDs in domestic market to be raised in the next 1 year.

  • The shareholders have also approved payment of dividend of Rs. 1.75 per share in AGM held on 18th September 2015

Issue Highlights

 

  • Regarding tax free bonds, NTPC has a history of creating records. Our earlier issue in December 2013 was oversubscribed by 3.67 times and we had to pre-close the issue

  •  As against allocation of Rs.1000 crore of tax free bonds as talked about our CMD, we have already issued Rs 300 crore on private placement basis to institutional investors which received an overwhelming response and the issue was oversubscribed by 7.25 times

  • The balance amount of Rs 700 crore is being raised through public issue. 40% i.e. Rs 280 crore is reserved for allocation to retail category.

  • The issue is managed by 4 reputed Lead Managers – AK Capital, Edelweiss Financial, Axis Capital, SBI Capital and the consortium members – AK Stockmart, Edelweiss Securities, SBICAP Securities.

  • The legal advisor to the issue is a leading legal firm – AZB & Partners

  • After the detailed due diligence by Legal Advisor and Lead Managers the prospectus has been filed with Registrar of Companies on 17th September 2015.

  • There are three tenures 10, 15 and 20 years.

  • The investors are classified under two categories retail and non-retail. The non retail category consists of QIBs, Corporates and HNIs.

  • The coupons are payable annually :

  10 yr 15 yr 20 yr
Retail 7.36% 7.53% 7.62%
Non-Retail 7.11% 7.28% 7.37%

For a person in 30% tax bracket the effective pre tax yield is 10.88% approx in 20 year option. The coupons are far attractive than the returns from FD return which hover in the range of 7.5% to 8.75% p.a. for various maturities.

  • Interest on application money will be paid at the respective coupon rates, however interest on refund will be at 5%.

  • The issue opening date is 23rd September 2015, Wednesday.

  • Allotment will be made on first come first serve basis, and all applicants on the day the issue gets oversubscribed will get pro-rata allotment.

  • Allotment will be made in Demat only, hence everybody should have active demat accounts.

  • The bond issue enjoys the highest credit rating of AAA by 3 rating agencies CRISIL, ICRA & CARE. The Bonds with such ratings are considered to have highest degree of safety regarding timely servicing of financial obligations and carry lowest credit risk.

  • The bonds will be secured and listed on NSE /BSE, hence can be sold freely on stock exchange.

  • There is no lock in period.

  • The proceeds of the issue will be utilized for a green purpose – towards capex in our (4×250 MW) Anantpur Solar Power Project and other renewable energy projects.

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