Buy NLC India Ltd for Target Rs. 320 by Elara Capital
All eyes on expansion
NLC India (NLC IN) revenue grew 14.2% YoY to INR 42bn, supported by a 34% rise in mining revenue and a 4% increase in power generation revenue while fuel cost rose 6.2% and EBITDA went up 30.1% to INR 13.9bn. PAT decreased 26.2% YoY to INR 7.2bn. In Q2, power generation grew 2.0% YoY to ~6.8BU, lignite production declined 8%, due to lower national demand, and coal production rose 19% to 3.6mn tonne. The company currently operates 6,899MW of capacity with a 2.4GW RE pipeline, and it has commissioned 150MW of the 300-MW Barsingsar solar plant, and it is close to commissioning the Ghatampur Unit-2 while the Talabira thermal units are scheduled to be commissioned during February 2030-31. Regulated equity is at INR 119.9bn and is set to increase to INR 196.7bn by FY30. We retain Buy with a TP of INR 320.
Top line up 14.2% YoY; PAT declined 26.2% YoY: Revenue rose 14.2% YoY to INR 42bn. Revenue from mining increased 34% YoY to INR 21.6bn. Revenue from power generation was up 4% YoY to INR 35.8bn. Fuel cost rose 7% YoY to INR 8.2bn. EBITDA increased 30.5% YoY to INR 13.9bn and depreciation by 32.8% YoY to INR 5.4bn. Interest cost went up 60.3% YoY to INR 2.8bn. Other income decreased 76.5% YoY to ~INR 1.7bn and PAT decreased 26.2% YoY to INR 7.2bn
Power generation rises 2% and coal production 19%: Power generation increased 2% YoY to ~6.8BU in Q2. Lignite production declined 8% YoY to 5.5mn tonne. There was a reduction in lignite production on falling national demand. Coal production rose 19% YoY to 3.6mn tonne.
Capacity expansion plans: Total installed capacity currently stands at 6,899MW. It has a total project pipeline of 2.4GW on the renewable side. It has commissioned 150MW of the 300-MW Barsinsar Solar Project. The NUPPL Ghatampur Unit-2 (660 MW) completed 72-hour full load test and is set to be commissioned shortly. The first unit of the Talabira thermal project will be commissioned in February 2030 Unit 2 will be commissioned in August 2030 and Unit 3 in February 2031. Current regulated equity stands at INR 119.9bn, which includes INR 85.9bn for thermal and INR 34bn for mines. Regulated equity is likely to reach INR 196.7bn by FY30E.
Retain Buy with a TP of INR 320: We expect a revenue CAGR of 11% and an EBITDA CAGR of 21% during FY25-28E. We reiterate Buy with a TP of INR 320. We value the regulated thermal business at 1.8x FY30E P/BV discounted to FY28E and the regulated mining business at 1.8x FY30E P/BV discounted to FY28E. We ascribe the RE business a value of 10x (from 12x) FY28E EV/EBITDA.
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SEBI Registration number is INH000000933
