NTPC 2017-18 Annual Report Analysis

Fri, 21 Dec

NTPC has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

NTPC Income Statement Analysis

• Operating income during the year rose 7.4% on a year-on-year (YoY) basis.
• The company's operating profit increased by 4.3% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 25.5% in FY18 as against 26.2% in FY17.
• Depreciation charges increased by 24.1% and finance costs increased by 21.5% YoY, respectively.
• Other income grew by 61.2% YoY.
• Net profit for the year declined by 4.9% YoY.
• Net profit margins during the year declined from 12.6% in FY17 to 11.1% in FY18.

NTPC Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	820,425	880,833	7.4%
Other income	Rs m	9,668	15,583	61.2%
Total Revenues	Rs m	830,093	896,416	8.0%
Gross profit	Rs m	214,958	224,205	4.3%
Depreciation	Rs m	60,099	74,599	24.1%
Interest	Rs m	36,511	44,346	21.5%
Profit before tax	Rs m	128,016	120,842	-5.6%
Tax	Rs m	29,751	25,881	-13.0%
Profit after tax	Rs m	104,512	99,411	-4.9%
Gross profit margin	%	26.2	25.5
Effective tax rate	%	23.2	21.4
Net profit margin	%	12.6	11.1

NTPC Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 456 billion as compared to Rs 386 billion in FY17, thereby witnessing an increase of 18.4%.
• Long-term debt stood at Rs 1,168 billion as compared to Rs 1,041 billion during FY17, a growth of 12.2%.
• Current assets rose 31% and stood at Rs 392 billion, while fixed assets rose 11% and stood at Rs 2,204 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 2,744 billion as against Rs 2,485 billion during FY17, thereby witnessing a growth of 10%.

NTPC Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	978,380	1,035,635	5.9
Current Liabilities	Rs m	385,504	456,499	18.4
Long-term Debt	Rs m	1,040,713	1,167,758	12.2
Total Liabilities	Rs m	2,484,974	2,743,681	10.4
Current assets	Rs m	300,091	392,486	30.8
Fixed Assets	Rs m	1,989,278	2,204,009	10.8
Total Assets	Rs m	2,484,974	2,743,681	10.4

NTPC Cash Flow Statement Analysis

• NTPC's cash flow from operating activities (CFO) during FY18 stood at Rs 197 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -207 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs 10 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 243 million from the Rs -12 billion net cash flows seen during FY17.

NTPC Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-17	Mar-18
Cash Flow from Operating Activities	Rs m	201,666	196,627	-2.5%
Cash Flow from Investing Activities	Rs m	-244,801	-206,717	-
Cash Flow from Financing Activities	Rs m	31,380	10,333	-67.1%
Net Cash Flow	Rs m	-11,755	243	-

Current Valuations for NTPC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 12.1, an decline from the EPS of Rs 12.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 150.0, stands at 13.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.4 times, while the price to sales ratio stands at 1.6 times.
• The company's price to cash flow (P/CF) ratio stood at 7.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	99.5	106.8
TTM Earnings per share	Rs	12.7	12.1
Diluted earnings per share	Rs	12.7	12.1
Price to Cash Flow	x	7.8	7.3
TTM P/E ratio	x	13.1	13.1
Price / Book Value ratio	x	1.2	1.4
Market Cap	Rs m	1,236,819	1,236,819
Dividends per share (Unadj.)	Rs	4.4	5.1

Ratio Analysis for NTPC

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.9x during FY18, from 0.8x during FY17. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 3.7x during FY18, from 4.5x during FY17. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company declined and down at 9.6% during FY18, from 10.7% during FY18. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company declined and down at 7.7% during FY18, from 8.5% during FY17. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company declined and down at 5.2% during FY18, from 5.7% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	0.8	0.9
Debtors’ Days	Days	40	37
Interest coverage	x	4.5	3.7
Debt to equity ratio	x	1.1	1.1
Return on assets	%	5.7	5.2
Return on equity	%	10.7	9.6
Return on capital employed	%	8.5	7.7

To see how NTPC has performed over the last 5 years, please visit here.

NTPC Share Price Performance

Over the last one year, NTPC share price has moved up from Rs 180.2 to Rs 150.0, registering a loss of Rs 30.2 or around 16.7%.

Meanwhile, the S&P BSE POWER Index is trading at Rs 2,007.8 (up 0.4%). Over the last one year it has moved down from 2,346.9 to 2,007.8, a loss of 339 points (down 14.4%).

Overall, the S&P BSE SENSEX is up 7.8% over the year.

(To know more, check out historical annual results for NTPC and quarterly results for NTPC)