NTPCs withstands demand slowdown better but pressure points remain

Mumbai: After successive quarters of earnings misses, NTPC Ltd impressed the Street with strong profit for the September quarter. The stock gained 2% in Monday morning trade. Net earnings jumped 34.5% as the company benefited from levies on payment delays from customers — power distribution companies. Adjusted for the surge in other income, standalone net profit grew 6.9% which is decent considering the constrained revenue growth.

Revenues grew a mere 2.3%, weighed down by 7% fall in generation. In this backdrop, the performance looks decent. “Adjusted for ~ ₹900 crore of treasury income we estimate core project level profit of ~ ₹2,600 crore. This profit on a regulated equity base of ₹53,200 crore translates into core project return on equity of ~20%,” analysts at SBICAP Securities Ltd said in a note.