Motilal Oswal: NHPC Q1 Review - Impact Of Rebate Flowing Through
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Motilal Oswal Report
NHPC Ltd.’s Q1 FY21 results highlight the impact of Rs 1.85 billion rebate to distribution companies.
Accordingly, reported standalone profit after tax dropped 18% YoY to Rs 7.2 billion (in-line).
Capex run-rate should increase on account of investment in new projects.
However, their commissioning remains four to five years away, which implies a drag in free cash flow/return on equities in the near-term.
Management commentary highlights –
NHPC expects to incur capex of Rs 53 billion in FY21. Further, it expects capex in FY22/FY23 to rise to Rs 76 billion/Rs 81 billion at the group level.
It has maintained its commissioning timelines for Subansiri and expects it to be completed by FY24.
NHPC is also planning to complete the linkage of nala work by October 2020, thereby increasing discharge of water for Parbati-II.
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