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Published on 20/01/2021 10:54:15 AM | Source: Emkay Global Financial Services Ltd

Buy NTPC Ltd For Target Rs.125 - Emkay Global

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Outstanding dues recede in Dec'20; likely to improve further by Mar'21

We hosted Mr A K Gautam (Director – Finance) and Mr Aditya Dhar (Head – IR). Here are the key takeaways:

* The overdue amount declined to ~Rs160bn currently from Rs191.6bn as of Q2FY21, aided by an improvement in collection efficiency, which has increased to over 100% since Oct’20 (including recovery of arrears). The overall outstanding has also improved to Rs230bn from Rs260bn as of Q2FY21. The top 5 major debtor states/UTs for NTPC are UP, J&K, MP, Tamil Nadu and Telangana.

* On monthly billing, management highlighted that in a 45-day receivable cycle, 60-70% of the amount is being cleared within 30 days and the remaining after 30 days by all the discoms. This is in line with its historical trend.

* Receivable status should improve going ahead with the release of the second tranche of loans under the Atmanirbhar scheme.

* Capacity commissioning: The company has commissioned 1800MW of capacity till date and targets to achieve commercialization of another 3.6GW of capacity in Q4FY21. Management has retained its 5.4GW of commercialization target for FY21.

* Overall under construction projects capacity stands at 21GW (Standalone - 11GW; JV – 9.5GW), which will be commissioned over the next 3-4 years.

* Standalone company capex guidance is Rs210bn for FY21 and Rs230bn for FY22.

* Renewable bidding: Management said that the recently discovered low tariff of Rs1.99/unit in the Gujarat tender was largely due to a steep fall in module prices and interest cost. Even at the current tariffs, management said that they would achieve equity IRR of 12- 13%.

* FGD systems are under implementation at 60GW projects and are under tendering for ~4.6GW capacity. Contracts worth Rs280.6bn have been awarded till date.

 

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