NTPC, SAIL shares hit 52-week low

NTPC was down 1% at Rs 147, falling 8% thus far in November, while SAIL trading 1.5% lower at Rs 61.35, extending its Tuesday's 3% decline on the BSE.

Shares of two public sector companies NTPC and Steel Authority of India (SAIL) have hit their respective 52-week lows on the BSE on Wednesday.

NTPC was down 1% at Rs 147, falling 8% thus far in November, after India's largest electricity generator, reported a marginal decline in its September quarter (Q2FY19) net profit at Rs 24.26 billion. It had posted a net profit of Rs 24.39 billion in the year-ago quarter. Turnover rose 12.65% to Rs 225 billion on the back of a rise in electricity generation, while total expenses rose 17.5% to Rs 199 billion during the quarter.

The performance was impacted by a shortage of domestic coal resulting in fixed charge under-recoveries and an increase in working capital driving higher interest cost.

The brokerage firm Motilal Oswal Securities expects NTPC’s core performance to improve sharply in FY19 as fixed charge under-recoveries reduce. However, the reported performance will be muted due to a stronger base of FY18. NTPC has a healthy pipeline of projects. It expects around 16% CAGR (FY18-21) in NTPC’s regulated equity.

SAIL was trading 1.5% lower at Rs 61.35, extending its 3% decline on Tuesday on the BSE. Since November 2, the stock of steel company underperformed the market by falling 12%, after reported lower than expected net profit in Q2FY19. In comparison, the S&P BSE Sensex was up 0.31% during the period.

The company reported a net profit of Rs 5.54 billion for Q2FY19, against analysts’ estimates of Rs 8.29 billion. It posted a loss of Rs 5.39 billion last year. Operational revenue grew 23% at Rs 167 billion from Rs 136 billion in the corresponding quarter of the previous year.

“SAIL reported Q2FY19 EBITDA of Rs 23.7 billion, lower than our estimates of Rs 25.5 billion, driven by lower sales volume. Volume was impacted due to unplanned shut down of blast furnace at Bhilai and IISCO steel plants. The company has downward revised its volume guidance for FY19 from 16.6 million tons earlier to 15.5 currently,” JM Financial Institutional Securities said in result update.

“We believe that value ascribed to CWIP should be in tandem with the operational performance delivered by the current capacities. In the meantime, owing to its structural weakness, the company continues to lose domestic market share, while also realizing lesser for its products. Despite better raw material integration than some of its private peers, SAIL continues to deliver significantly lower EBITDA/ton,” the brokerage firm said re-iterate SELL with a fair value of Rs 62/share.