A 30 per cent jump in NTPC's net profit at Rs 3,142 crore for the quarter ended September has failed to cheer the market. However, this doesn't come as a surprise, as experts say continued constraints on the imported coal front, which pulled down the availability factor for plants, emerged as a major drag on returns.
Since NTPC announced its results on October 26, the company stock has declined 2.2 per cent to Rs 165.2 on the BSE.
While the state-owned power generator has added 2,100 Mw of fresh capacity between April and September, its generation loss rose to 5,000 million units, against 1,900 million units in the corresponding period last year. The loss resulted from a drop of about 60 per cent in imported coal for plants. This, in turn, reduced the plant availability factor (PAF) from 83.4 per cent to 80.1 per cent year-on-year.
"We expect fuel supply issues to keep return on equity under pressure, given the dip in operational parameters," Edelweiss Securities said in its latest report on NTPC's performance. The Mumbai-based brokerage, however, added as 2,160-Mw capacity was already commissioned, the company could meet its guidance of 4,200-Mw capacity addition this financial year.
Despite coal availability under the fuel supply agreement route at 104 per cent of the annual contracted quantity, some recently-commissioned plants operated at low plant load factors, owing to low supply of imported coal, which fell to 1.5 mt for NTPC plants in the quarter ended September, compared with 3.9 mt in the year-ago period.
The coal crunch was despite NTPC awarding contracts for 9.2 mt of its 16-mt coal import target for this financial year. "While the contracts for 9.2 mt have been awarded, there have been some issues with actual imports this year. But the situation is going to improve soon. A tender has been floated for another seven mt of imports," a senior NTPC executive told Business Standard.
The company attributes the low PAF of plants to adverse weather conditions. "Owing to low ambient temperature, which leads to planned outages, PAF always remains low in the first two quarters of any financial year. The availability factor in the last two quarters of 2011-12 was as high as 94.7 per cent. Overall, we are confident of meeting our PAF target of 98 per cent for this financial year," the executive added.
After adjusting for prior items and interest claims, including interest on income tax refund and interest from customers, growth in the company's net profit drops to 10 per cent.
Adjusted profit after tax rose from Rs 1,853 crore to Rs 2,046 crore annually.
Lower coal availability reduced fuel costs seven per cent to Rs 9,932 crore during the quarter. Total income of the company rose to Rs 17,167 crore, against Rs 16,386 crore in the second quarter of 2011-12, a rise of 4.7 per cent.