Moody's: NTPC's FY2016 results are in line with expectations

Moody's Investors Service says that NTPC's (Baa3 positive) results for fiscal year ending March 2016 (FY16) are within Moody's expectations. Accordingly, the company's Baa3 issuer rating and positive outlook are unaffected by the results.

For the fiscal year ending March 2016 (FY2016), NTPC reported an EBITDA of Rs 203 billion, which represents a slight 4% year on year increase.

"NTPC's FY2016 results are in line with our expectations, given they are underpinned by its relatively predictable cash flows from its regulated power business", says Abhishek Tyagi, a Moody's Vice President and Senior Analyst.

In FY2016, NTPC generated and sold 242 billion and 225 billion units of electricity respectively, and achieved a plant load factor (PLF) of 78.6% for its coal based power projects for the year. This percentage represents a slight drop as compared to FY15. The key reason for this trend in electricity generation despite 2.25GW addition in installed capacity in FY2016 was the lower off-take of electricity from state owned distribution companies.

The fuel cost for NTPC in FY2016 declined by 10% year on year due to lower coal imports and reduction in domestic gas costs. The average tariff for FY2016 was Rs3.18 per unit which was down 2.5% year on year.

NTPC's reported borrowings increased by INR97 billion to INR 1,120 billion as compared to March 2015 as company continues to invest in its ongoing expansion projects.

Based on NTPC's FY2016 results, its credit metrics remain within the tolerance limits for its Baa3 ratings. For example, FFO interest coverage is around 2.6x compared to the tolerance range of 2.5-3.0x and FFO/Debt as at 31 March 2016 is approximately 10% which is within the tolerance range of 5%-13%.

Over the next 12-18 months, Moody's expects NTPC's financial position to remain within rating expectation.

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