Nomura’s first cut calculations suggest that CERC’s final tariff regulations entail a potential 11%-13% dent to its earnings forecast for NTPC post FY14
For NTPC, the Central Electricity Regulatory Commission (CERC) issued the final tariff regulations for the period FY15-19 – these regulations form the basis of NTPC’s earnings (regulated returns) from its core business over the next five years. CERC had issued the FY15-19 draft tariff regulations in December 2013; subsequently, representations from various stakeholders were invited and a public hearing on the draft norms was held in January 2014.
Contrary to expectations, relative to CERC’s draft tariff regulations for FY15-19, the final tariff regulations overall offer meagre relief to NTPC’s earnings outlook, points out Nomura in a research note.
According to Nomura, “Purely on benchmark operating norms, our first cut calculations suggest that CERC’s final tariff regulations entail a potential 11%-13% dent to our earnings forecast for NTPC post FY14.” Nomura’s calculations assume zero utilisation-linked incentive for NTPC’s projects post FY14.
The research note makes it clear that relative to the tariff norms proposed in the draft regulations, the absence of material relief in CERC’s final tariff regulations for NTPC’s post-FY14 effective RoE (return on equity) prospects is a significant negative surprise. In this context, Nomura expects near-term stock price performance to be weak. Nomura however, maintains its ‘Buy’ rating on the Nomura share in the stock market.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
Fiercely independent and pro-consumer information on personal finance.
1-year online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
30-day online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
Complete access to Moneylife archives since inception ( till the date of your subscription )
