NTPC Ltd. share price target

NTPC's standalone 4QFY16 (NTPCsa) adj. PAT declined 6.3% YoY to INR25.6b primarily due to lower other income. Core (generation) adj. PAT was up 1.4% YoY to INR21.4b driven by growth in regulated equity by 12% on capitalization of...

concerns about (1) delay in capacity addition, (2) risk to fuel security 50% of capacity expectedtobecommissionedinthenextfiveyearsreliesoncaptivecoalmines,whichare delayed,and(3)riskofunderrecoveriesbasedonCERCorderoncalculationoffuelcost.In...

Ujwal DISCOM Assurance Yojana (UDAY) aims at permanent resolution of DISCOM issues. The scheme focuses on increasing DISCOM efficiency as against increasing tariff to cover their...

GoI to sell 5% (~41,22,73,220 equity shares) stake in NTPC through OFS. On February 23, 2016 (for non-Retail Investors) and February 24, 2016 (for Retails Investors and for nonretails Investors), of face value of `10 each, representing 5% of the total paid up equity share capital of the Company (the "Offer Shares"), through a separate, designated window of the BSE Limited (the "BSE") and the National Stock Exchange of India Limited (the "NSE and together with BSE, the "Stock Exchanges"). As per the BSE notice the offer price for the offer shall be `122/share. Consequently, Govt will raise `5000 crore from OFS. ~5 percent additional discount would be offered to retail...

Incorporated in 1975, NTPC is India's largest power company with total installed capacity of 45,548MW (including JVs) with 18 coal based and 7 gas based stations and accounts for ~26% of the total power generation in the country. Capacity additions to drive regulated equity: NTPC is a long term growth play on the power sector with its strong capacity addition plans. The company's current consolidated capacity stands at 45,048MW and is expected to add ~23,500MW (~7,500MW by FY2017, ~8,050MW in FY2018 and ~8,200MW in FY2019) by FY2019. The company has earmarked a consolidated capex of ~Rs31,500cr this fiscal. With the strong capex plan, Management expects a 45% jump in regulated equity by FY2018 and a 75% increase by FY2019. Well placed to benefit from demand recovery: Power sector woes have mostly been related to fuel supply issues and debt issues of State Electricity Boards (SEB). We believe the government is proactively taking steps to resolve both these issues. With increasing production at Coal India, coal availability issues have already been sorted to a large extent. The UDAY scheme can help the SEBs restructure their debt and provide long term solutions for the SEBs via tariff hikes and improvements in operating...

Although the tripartite agreements with state discoms as part of the onetime settlement scheme of 2002 are likely to expire in October 2016, NTPC is optimistic aboutrenewingthesetosecurepayment....

NTPC reported 186bps higher operating margins to 26.6% yoy on lower operating expenses. NTPC posted Rs24.9bn net profit, down 18.9% yoy above our expectation of 29.1%. PAT was lower due to weak demand, lower PLF and reduced other income. Taxation was lower since quarter included income tax refund related to previous years (Rs4,144mn). After adjustment of one-off items, PAT came to Rs20.6bn in 3QFY16...

For 2QFY2016, NTPCs net sales increased by 6.9% yoy to Rs17,723cr (2.4% below our estimate; and as against Rs16,582cr in the corresponding quarter of last year) led by a 6% yoy increase in coal PLF. Coal PLF improved 407bp to 77.3% as against 73.2% last year. Gas PLF however continued to fall, coming in at 25.7% as against 33.4% last year. PAF remained stable at 88.1%/97.6% for coal and gas respectively. Higher than expected operating expenses resulted in the EBITDA coming in 5.5% below our estimate, at Rs4,031cr. The EBITDA however increased 24% yoy resulting in a 315bp improvement in margin. While depreciation and interest expenses were in line with expectations, higher tax refunds boosted net profit, which came in 9.6% ahead of our expectation at Rs2,898cr. Strong capacity addition to drive regulated equity: NTPCs current capacity stands at 45,048MW and the company plans to add ~23,500MW by FY2019. The company will commission 7,500MW by FY2017, ~8,050MW in FY2018 and ~8,200MW in FY2019. Led by the strong capex, the Management expects to see a 45% jump in regulated equity by FY2018 and a 75% increase by FY2019. Outlook and valuation: We like NTPC for the growth offered by its regulated...

9 NTPC's recurring PAT of Rs 22.16bn (+24% yoy) beat our estimate of Rs 21.1bn and consensusofRs20.2bnduetohigherincentiveearningsandlowerunderrecovery. 9 PLFbased incentives were at Rs 890mn (+123% yoy) aided by 8.5% growth in...

NTPC reported revenues which were in line with our estimate at Rs179bn, up 6.9% yoy on the back of improved electricity generation (up 8.5% yoy). Net profit at Rs28.9bn, was up 39.9% yoy largely on account of income tax refund. The company's stock has underperformed the Nifty over the past 12-18 months on account of negative impact of new CERC regulations which is affecting core RoE. Operating parameters of NTPC's power plants are under pressure with PLF dropping by 600-800bps due to lower system demand and fuel issues. However, in our view, both these have already been factored in the current valuation of 1.1x...