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NTPC profit flat at Rs 2,603 crore in Q1

FE Bureau
NTPC, NTPC profit, NTPC Q1 profit, NTPC net profit, plant load factor, industry news

State-owned NTPC's net profit inched up by 0.6% year-on-year (y-o-y) to Rs 2,602.8 crore in the three months ended June 30 on a standalone basis as the country's largest power generator produced lesser electricity and imported more coal than the corresponding period last year. Utilisation levels of NTPC's coal-based power plants have decreased with plant load factor (PLF) falling by 400 basis points y-o-y in the quarter to 73.9%. It generated 68.2 billion units of electricity on a commercial basis in the period, 1.3% lower than Q1FY19.

Lower PLFs can potentially hurt efficiency parameters like station heat rate and auxiliary energy consumption, which play a role in determining the level of returns for the regulated entity.

The company's revenue increased 7% y-o-y to Rs 24,518.8 crore in the quarter as the average tariff at which NTPC sells electricity went up nearly 5% to Rs 3.63/unit. NTPC's earnings before interest, taxes, depreciation and amortisation (Ebitda) in the quarter was Rs 6,452.4 crore, an annual rise of 8.4%. The Ebitda margin increased by 50 basis points to 26.7% as employee benefit expenses fell nearly 4% to Rs 1,195.8 crore.

The profit would have been much lower if NTPC coal stations' average plant availability factor (PAF) had not improved 520 basis points y-o-y to 91.1% on higher coal receipt, which lowered its fixed cost under recoveries. Fixed cost represents pre-determined expenditure components, including debt service obligation and risk-free returns. Power plants are contractually entitled to receive fixed costs even when buyers do not procure electricity from the units. However, the plants need to display a minimum PAF of 85% to claim the fixed costs.

NTPC's power plants received 43.2 million tonne coal in the quarter, 1% more than what was supplied in the Q1FY19. While its own newly commissioned captive mines produced 2.1 MT of the fuel in the quarter, it imported 0.9 MT of coal in the period, about nine times higher than the corresponding quarter last year. NTPC plans to import 11.9 MT in FY20, more than twice the 5 MT target set for FY19.

Analysts have attributed the fall in NTPC's utilisation levels to renewable/hydro plants and cheap spot power displacing high-cost NTPC stations. Discoms seemingly chose to cater to the higher power demand from the recently auctioned renewable energy units where tariffs range between Rs 2.43-3.00/unit, lower than the fuel charge of many NTPC stations. Furthermore, with improved coal supply situation, spot prices in the day-ahead market have remained attractive at below Rs 4/unit.