NHPC: Strong operating performance; Cut estimates on delay at Parbati-II; Maintain Buy
(NHPC IN, Mkt Cap USD4.7b, CMP INR30, TP INR37, 24% Upside, Buy)
NHPC’s 3QFY18 underlying PAT grew 40% YoY to INR2.7b (ahead of our estimate of INR2b), led by higher incentive income, lower other expenses, and saving in interest cost. Underlying PAT is adjusted for (a) dividend income of INR2.4b from NHDC and (b) late payment surcharge of INR2.3b (gross tax).
- Generation was up 1% YoY to 3.4BU. PAF increased ~270bp YoY to 76.8%.
- Incentive income increased 59% YoY to INR1.1b.
- Interest cost saving of INR1.1b was achieved on repayment and refinancing of debt. Refinancing will generate annualized saving of INR340m, of which INR170m will be retained by NHPC.
Kishanganga on track, Parbati-II delayed; cut estimates on delay; Maintain Buy