NTPC Q3 net profit up 1 per cent to Rs 2,385 crore as coal supply improves

State-owned NTPC’s net profit inched up by 1% year-on-year (y-o-y) to Rs 2,385.4 crore in the three months ended December 2018 as country’s largest power generator showed signs of recovering from chronic coal supply woes plaguing the company since the beginning of 2017.

The company’s revenue increased 16% y-o-y to Rs 24,120.4 crore in the quarter as the average tariff at which NTPC sells electricity went up by more than 8% to Rs 3.47/unit. The power company generated 70 billion units of electricity in the period, 3.4% higher than the corresponding period last fiscal.

NTPC’s earnings before interest, taxes, depreciation and amortisation (Ebitda) in the quarter was Rs 6,270 crore, 20% higher than Q3FY18.

The Ebitda margin increased by 70 basis points to 25.9% as employee benefit expenses fell more than 11% to Rs 1,146 crore. Gaining from foreign exchange fluctuations, NTPC’s ‘other expenses’ also fell by nearly 17% to Rs 1,172 crore.

NTPC’s power plants received 45.4 million tonne coal in the quarter, 13.4% more than what was supplied in the preceding quarter ended September 2018.

As noted earlier by analysts at Kotak Institutional Equities, NTPC’s earnings performance over the past six quarters has been impacted by under-recovery on capacity charges due to lower plant availability.

In Q2FY19, the company’s net profit had slipped 1.1% y-o-y to Rs 2,417.6 crore on under recoveries of Rs 210 crore due to unavailability of coal.

Power plants are contractually entitled to receive fixed costs for recovering capital expenses even though when buyers do not procure electricity from the units. However, the plants need to display a minimum plant availability factor (PAF) of 83% to claim the fixed costs. The average PAF of NTPC plants in the quarter increased by 2.3 percentage points y-o-y to 85.3%.

NTPC management had said earlier that the company had subscribed to Coal India’s (CIL) offer to procure additional coal through roadways from the mines. It had also paid Rs 10,000 crore in advance to the railways to receive coal supply at un-revised rates until FY20, hedging itself against the 8.8% rise in railway freight charges.

Utilisation levels of NTPC’s coal-based power plants have also improved with plant load factor (PLF) rising by 78 basis points y-o-y in the quarter to 77.7%.

The company’s shares did not react negatively even as the performance figures were below analysts’ estimates. At the end of Wednesday, NTPC shares were trading at Rs 138.8 in the BSE, up 0.18% from a day-ago.