NTPC appears to be on a strong footing compared to its peers

MUMBAI: The capacity addition by NTPCBSE -1.19 % this financial year has made it stand out among major power generating companies, which are presently finding it difficult to add capacity due to land-acquisitions and fuel supply issues. In FY13, NTPC added 4170 MW of power generating capacity, which is the highest by the company in any given year. With this, the company has met 30% of the target set for the twelfth five-year plan. 

NTPC's March quarter results were rather disappointing as the company was not able to fully benefit from low international coal prices. Owing to technical issues, the company has been unable to import the required quantity of coal. As a result, its plant load factor or PLF for coal-based plants decreased 390 basis points to 87.2% in the March 2013 quarter. In addition to this, lower gas availability in the country led to low PLF in its gas based plants. Its PLF at gas-based plant dropped to 42.9% from 67% in the same period a year ago. Hence, excluding an exceptional gain of Rs xx crore, its profits in this quarter marginally grew by 4% to Rs 2,697 crore. 

Despite disappointing result, NTPC still seem to be an attractive bet considering that the company has minimal operational risk. At present, many private power companies are in poor financial health owing to fuel supply issues, outstanding dues from State electricity boards and overleveraged balance sheet. NTPC has average receivables of 36 days, which is the best in the industry. In other words, the company receives payment at an average of 36 days after recognising revenues. Also, the company has nearly 20,000 MW in various stages of construction. With this, NTPC seem to be on track of achieving its twelfth five-year plan target of 14 GW of capacity addition. 

Another positive aspect for the investors is the dividend payout. The company recommended a final dividend of Rs 2 per share, which is in addition to the interim dividend of Rs. 3.75 per share paid in March 2013. This leads to a dividend yield of over 3% for the investors.