NTPC 2017-18 Annual Report Analysis

Sat, 31 Mar

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 7.0% on a year-on-year (YoY) basis.
• The company's operating profit increased by 5.0% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 25.9% in FY18 as against 26.4% in FY17.
• Depreciation charges increased by 24.1% and finance costs increased by 18.5% YoY, respectively.
• Other income grew by 246.8% YoY.
• Net profit for the year declined by 0.3% YoY.
• Net profit margins during the year declined from 12.5% in FY17 to 11.7% in FY18.

NTPC Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	806,433	863,203	7.0%
Other income	Rs m	15,130	52,465	246.8%
Total Revenues	Rs m	821,563	915,668	11.5%
Gross profit	Rs m	213,140	223,694	5.0%
Depreciation	Rs m	60,099	74,599	24.1%
Interest	Rs m	37,528	44,466	18.5%
Profit before tax	Rs m	130,643	157,094	20.2%
Tax	Rs m	29,751	56,529	90.0%
Profit after tax	Rs m	100,892	100,565	-0.3%
Gross profit margin	%	26.4	25.9
Effective tax rate	%	22.8	36.0
Net profit margin	%	12.5	11.7

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NTPC Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 480 billion as compared to Rs 441 billion in FY17, thereby witnessing an increase of 8.8%.
• 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 45% and stood at Rs 480 billion, while fixed assets rose 9% and stood at Rs 2,413 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 2,906 billion as against Rs 2,558 billion during FY17, thereby witnessing a growth of 14%.

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	440,838	479,815	8.8
Long-term Debt	Rs m	1,040,751	1,167,758	12.2
Total Liabilities	Rs m	2,557,680	2,905,946	13.6
Current assets	Rs m	331,691	480,091	44.7
Fixed Assets	Rs m	2,214,194	2,413,261	9.0
Total Assets	Rs m	2,557,680	2,905,946	13.6

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 193 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	196,696	-2.5%
Cash Flow from Investing Activities	Rs m	-244,801	-206,781	-
Cash Flow from Financing Activities	Rs m	31,380	10,278	-67.2%
Net Cash Flow	Rs m	-11,756	193	-

Current Valuations for NTPC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 12.2, an decline from the EPS of Rs 12.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 169.7, stands at 16.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.6 times, while the price to sales ratio stands at 1.6 times.
• The company's price to cash flow (P/CF) ratio stood at 8.0 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	97.8	104.7
TTM Earnings per share	Rs	12.2	12.2
Diluted earnings per share	Rs	10.4	10.4
Price to Cash Flow	x	10.0	8.0
TTM P/E ratio	x	16.4	16.6
Price / Book Value ratio	x	1.2	1.4
Market Cap	Rs m	1,216,618	1,407,089
Dividends per share (Unadj.)	Rs	4.8	5.1

Ratio Analysis for NTPC

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.0x 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 improved and stood at 4.5x 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 9.7% during FY18, from 10.3% 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 improved and stood at 9.1% during FY18, from 8.3% 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 5.0% during FY18, from 5.4% 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	1.0
Debtors’ Days	Days	4	4
Interest coverage	x	4.5	4.5
Debt to equity ratio	x	1.1	1.1
Return on assets	%	5.4	5.0
Return on equity	%	10.3	9.7
Return on capital employed	%	8.3	9.1

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 166.0 to Rs 169.7, registering a gain of Rs 3.8 or around 2.3%.

Meanwhile, the S&P BSE POWER Index is trading at Rs 2,125.8 (down 1.1%). Over the last one year it has moved down from 2,274.4 to 2,125.8, a loss of 149 points (down 6.5%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

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

Read: Latest Annual Report Analysis of NTPC