NLC India Company Analysis

 

Industry Profile : Power is one critical component for development of economy. Lack of availability of power is not sustainable for growth and development. India is one of the country having diverse source of natural resource like Water, Coal, Lignite, Natural Gas, Oil, Nuclear power, wind which also help development of power sector. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required. India ranks third among 40 countries in EY’s Renewable Energy Country Attractiveness Index, on back of strong focus by the government on promoting renewable energy and implementation of projects in a time bound manner and moved up 73 spots to rank 26th in the World Bank’s list of electricity accessibility in 2017.

Power sector in India is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing at both the market and supply sides (fuel, logistics, finances, and manpower).

Total installed capacity of power stations in India stood at 330,260.53 Megawatt (MW) as on May, 2017. The Ministry of Power has set a target of 1,229.4 billion units (BU) of electricity to be generated in the financial year 2017-18, which is 50 BU’s higher than the target for 2016-17. The annual growth rate in renewable energy generation has been estimated to be 27 per cent and 18 per cent for conventional energy.

The Government has added 10.2 Giga Watts (GW) of conventional energy generation capacity and 12.5 GW of renewable energy capacity in Financial Year 2017. Under the 12th Five Year Plan, the Government has added 93.5 GW of power generation capacity, thereby surpassing its target of 88.5 GW during the period.

Company profile  :  NLC India, formerly Neyveli Lignite Corporation, is Navratna, Government of India owned company operating in mining of lignite and Electricity generation through lignite based thermal power plants. The company holding four lignite mines out of which three are in Neyveli Tamil Nadu and one lignite mine at Barsingsar in the State of Rajasthan with a total capacity of over 30.60 metric tons per annum (MTPA). The company is operating over four Thermal Power Stations at Neyveli, Tamil Nadu and one Thermal Power Station at Barsingsar, Rajasthan, with a total installed capacity of over 3,240 megawatts (MW). The company, through its subsidiary NLC Tamil nadu Power Limited, has also recently commissioned a 1000 MW coal based power plant (comprising 2 Units of 500 MW capacity each), 10 MW solar plant and 30 MW wind power plant thus bringing the total installed capacity of the company to 4280 MW.

Shareholding Pattern  :  Central Govt is holding 89.32%. Except state govt hardly any investor is holding large stake. state govt hold 3.91%, Mutual funds hold 0.1% Banks and financial Institutions hold 3.71% and nearly 1% hold by Insurance companies. Remaining is held by public.

Financials and Ratio : 

 2010 - 112011 - 122012 - 132013 - 142014 - 152015 - 162016 - 17
Revenue4,867.645,615.216,173.026,991.996,796.977,194.209,347.25
Net Profit1,298.531,411.331,459.751,501.881,579.681,204.152,368.81
NPM26.67%25.13%23.64%21.48%23.32%15.21%25.34%
EPS7.748.418.708.959.427.1814.14
Book Value66.6171.7677.2082.8788.6492.2079.80
Dividend per Share2.302.802.802.802.8037.34
Dividend Payout29.7133.2832.1831.2729.7341.7957.59
ROE11.62 11.7211.2710.8010.627.7819.41
ROCE8.468.678.508.328.275.7012.20
ROA7.077.417.487.347.395.088.61
Asset Turnover23.4225.5628.6429.1828.4928.1731.52

Future Prospectus : Thermal Power plants are one big contributors in India. Even though the clean energy is coming fast, development of Solar and Water dams are time consuming. Cost of Coal and so does the lignite is increasing. It is expected that govt will increase the price of Electricity. Even in that case the company is well placed to run the business. Many countries are talking about Electric Vehicles and for that we need Better Electric supply. In that way, NLC India is one Better opportunity.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter