NTPC’s 1QFY17 recurring PAT at Rs 24.0bn (6%YoY growth) was 8% ahead of our estimates due to (1) Higher incentive income (Rs 1.5bn in 1QFY17 as against Rs 0.8bn for 1QFY16), and (2) Impact of change in accounting standard to Ind AS. Gross generation at 64.6bn units grew by 10%YoY. Coalbased PLF stood at 81.4% for 1QFY17 (vs. 77.6% for 1QFY16). Average tariff realization was Rs 3.11/kwh for 1QFY17 as against Rs 3.25/kwh for 1QFY16 due to lower coal imports as well as rationalization of coal linkages.

Valuation: We increase our TP to Rs 191 to factor in (1) Roll forward of target P/B to Jun-18E from Mar-18E, and (2) An increase in target P/B at 1.5x (from 1.4x earlier).Maintain BUY.