While the state-run NTPC Ltd seeks a stay on the revised tariff structure as it sees a possible impact on its earnings, the company's market capitalisation has already caved in by Rs 30,054 crore since the Central Energy Regulatory Commission (CERC) issued the draft regulations on December 10, 2013. NTPC shares shed 23.59% since then, while the company's market-cap as on Monday stood at Rs 96,471 crore.
CERC announced the final set of regulations on February 24. According to analysts, the new norms are expected to shave off 11-13% off NTPC's earnings. “The final tariff regulations overall offer meagre relief to NTPC’s earnings outlook, in our view. Purely on benchmark operating norms, our first cut calculations suggest that CERC’s final tariff regulations entail a potential 11-13% dent to our earnings forecast for NTPC post FY14,” Nomura said in a recent report.
As per the new norms, incentives will now be pegged to the plant load factor (PLF) rather than the plant availability factor (PAF) though the incentive itself is an attractive flat 50 paise/kWh. Currently, gencos earn incentives merely if their PAF exceeds 85% and the new structure will hurt the public sector power producer.
Apart from this, NTPC is also likely to get hit owing to changes in taxation norms. “The grossing up of the tax on the actual paid versus the applicable tax rate to hit NTPC,” Bank of America Merrill Lynch wrote in a report.