Hold NTPC; target of Rs 216: PINC Research

http://www.moneycontrol.com/news_html_files/news_attachment/2011/NTPC_PINC_070411.pdfPublished on Fri, Apr 08, 2011 at 10:13   |  Updated at Fri, Apr 08, 2011 at 11:20   |  Source : Moneycontrol.com

PINC Research has recommended hold rating on NTPC with a target of Rs 216, in its April 7, 2011 research report.

“NTPC grossed up its RoE by corporate tax rate against MAT during 9M FY11, thus translating into 18% and 16% improvement in average realisation for Q4FY11 and FY11 to Rs 2.50/unit and Rs 2.44/unit respectively. This aided 17% and 24% YoY growth in Q4FY11 revenues and PAT to Rs 145 billion and Rs 25 billion respectively. Although NTPC’s PLF contracted to 88.3% during FY11 from 90.9% in the corresponding period last year, its PAF improved marginally to 91.6% from 91.4% last year.”

“During FY11 NTPC commissioned 2,490MW against its revised target of 3,150MW – in line with CEA’s estimate. During Q4FY11 the company commercialised 500MW each at Jhajjar and Korba, commissioned 500MW each at Farakka and Simhadri and synchronized 660MW at Sipat. With the commissioning of these projects, NTPC’s installed capacity increased to 34.2GW. NTPC plans to add 4,320MW during FY12. Contrary to NTPC’s target addition of 4,320MW during FY12, CEA’s latest document suggests NTPC shall be able to add only 3,000MW. NTPC plans to commission 1,320MW at Sipat, 1,000MW each at Jhajjar and Vallur and 500MW each at Simhadri and Mouda during the year. As of now we factor in an addition of 4,320MW, in line with the company’s target. NTPC currently has 14.7GW under construction which is expected to commission during the XIIth Plan.”

“With NTPC missing its capacity addition target yet again in FY11, we remain skeptical on its capacity addition plan for FY12. However, we continue to build in its targeted addition for the year and will review it when the audited results will be declared in May. Despite this, we believe it offers better safety and steady returns vis-à-vis its private IPPs like JSW Energy. NTPC has tied up 100GW under long term PPAs thus providing steady returns. At the current price, NTPC trades at 2.2x FY12E book. We value the stock at 2.1x FY13E book to arrive at our target price of Rs 216, maintain HOLD,” says PINC Research report.

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