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NTPC has withheld payment of Rs25.3 billion on account of the impasse on the quality of coal received (as admitted by NTPC) versus coal supplied (as billed by Coal India), points out Nomura Equity Research in its Quick Note
State-owned power utility major NTPC has proposed a final dividend of Rs2 per share (total FY13 dividend is at Rs5.75 per share), implying a 43.8% payout (including dividend tax). Regulated equity for operational projects stood at Rs326 billion as of FY13. Receivables remain in check; excluding unbilled revenues, debtor days stood at 30 days. FY13 consolidated net profit stood at Rs125.9 billion.
According to Nomura Equity Research analysts in its Quick Note on NTPC, the long-term investment thesis remains intact—defensive earnings growth outlook with relatively high earnings visibility, lowest funding risk among peers and relatively adequate fuel security. The stock trades at 1.4x P/B and 11.5x P/E based on its FY15F earnings forecast. Nomura reiterates its ‘Buy’ rating on the NTPC share.
On a note of concern, Nomura Equity Research points out that NTPC has withheld payment of Rs25.3 billion on account of the impasse on the quality of coal received (as admitted by NTPC) versus coal supplied (as billed by Coal India - CIL). The amount is disclosed as a contingent liability (if materialized, the amount is likely to be recoverable from beneficiaries). NTPC did not elaborate on the manner in which this dispute with CIL would be settled, but stated that joint sampling of coal has commenced both at the mine-end and plant-end on a pilot basis for coal supply from Eastern Coalfields (100% CIL’s subsidiary).
Nomura analysts have summarised the fourth quarter performance of NTPC in the following table:
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