NHPC’s results helped by prior period revenues

Hydro-power company NHPC’s revenues rose by 40% to Rs 1,431 crore during the June quarter (Q1), but this growth was chiefly due to prior-period revenues. Finalisation of tariff for earlier years led to Rs 275 crore being added to revenues in this quarter. Excluding that, growth would have been a more sedate 13.7%.

During the June quarter, the company had generated 6,284 million units of power, 10.5% higher than the power generated in the year ago period. The company has 12 power stations in operation at the end of the quarter.

Other operating income rose by 3.5 times during the quarter, and along with the addition of prior year income, resulted in total income rising by 47.6%. A key item under this head is revenues from consultancy and advisory services provided by NHPC.

Expenditure rose by a sharp 57% during the quarter, chiefly due to a sharp jump in employee costs and a tripling of other expenditure.

While employee costs may have risen due to hiring and wage hike implementation, other expenditure has gone up chiefly because of a Rs 202 crore provision made for water cess imposed by the J&K government. The company has challenged this levy and has also simultaneously applied to the electricity regulator to pass this on to customers, in case the levy gets confirmed.

Other income rose by 35%, mainly due to inclusion of profit of about Rs 69 crore on transfer of a project.

The company’s profit before tax has risen by about 45%, but if one were to adjust the June quarter’s figure for the prior period income, then the growth would fall down to just 4%. This assumes that the expenses incurred for earning this income would have been incurred in the prior periods itself, therefore adding all of it to profits. But this may not be a recurring event, and it hence makes sense to look at the adjusted profits.

The company’s stock price was up by 4.5% to Rs 25.4 at the time of posting. The sharp rise in its reported net profit appears to have enthused investors.

Download the financial results table from the BSE here.

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