Stock in Action-NTPC & Cera Sanitaryware ltd. 01 March 2023

Stock in Action-NTPC

NTPC reported strong growth in core business during 3QFY23. It has reported a strong 34% YoY growth in revenues. This was led by higher capacity, increase in capacity utilisations (PLF) and realisations. During the quarter, the company’s overall coal-based plant’s PLF stood at 68.9%, as against 67.6%, in the corresponding quarter last year. In Q3FY23, the company added close to 630 MW capacity and the regulated equity grew by 7% on a YoY basis to Rs 75,450 crore. With higher scale and incentives (linked with PLF) as well as recovery of fixed charges, the company maintained good profitability. Improvement in operating efficiencies and lower cost mean higher profitability and better margins in the coming months. Further, higher contribution from JVs and subsidiaries would aid profitability. In the core business, the company has added close to 3,900 MW capacity in the last nine months and it has a portfolio of close to 18,263 MW capacity under construction. It plans to add 5,000 MW capacity by the end of fiscal 2023. Similarly, in fiscal 2024, it intends to install another 6,810 MW capacity. Overall, the pipeline of scale and capacity provides very good visibility in terms of revenue and earnings. Positive on NTPC given the overall asset monetization, earnings visibility, and strong pipeline of projects, along with gains in the operating efficiencies.

Cera Sanitaryware ltd.: The demand trends for Cera Sanitaryware’s core products including faucetware and sanitaryware remain healthy in Q4FY23-TD. Demand continues to be driven by traction in the residential housing and home improvement markets. Also, recent new product launches in faucetware and sanitaryware, along with increased A&P activity by hiring celebrities, have enabled the company to get higher consumer mindshare, especially in tier-2 and tier-3 markets. Company’s operating margins are expected to remain stable at ~16-16.5% going ahead as raw material price pressures have abated. Also, despite higher spend on Advertisement & promotion and increased competition from new entrants, it is believed that the margins will likely remain unaffected as the company will have the cushion of operating leverage and a better product mix. Cera has a strong net cash balance sheet with healthy growth prospects led by an uptick in the housing and home improvement markets. Positive on Cera Sanitaryware given its comprehensive product portfolio, wide distribution reach and strong brand presence.