Buy NTPC; target of Rs 125: Emkay Global Financial

Emkay Global Financial's report on NTPC

The board has approved the proposal to buy back up to 197.9mn equity shares at a price of Rs115 per share for an aggregate sum not exceeding Rs22.76bn (2% of total paid-up equity) through a tender offer. The offer represents a 30.6% premium on the CMP. In Q2FY21, availability (PAF) improved by 775bps yoy across coal-based plants to 91.8%, while load factor (PLF) remained flat at 64.3%. H1Y21 under-recovery stood at Rs5bn vs. Rs4.5bn yoy and management expects it to decline to Rs2.5bn by FY21 end. Revenue/EBITDA increased 8.5%/13.9% yoy, led by a 9.8% yoy rise in generation from improved demand. APAT rose 23.3% yoy to Rs39.4bn, above Street estimates. YTDFY21, NTPC has added 984MW capacity and targets to add ~5GW each in FY21/22.

Outlook

We revise earnings to factor in a change in project mix as per commissioning targets. We maintain Buy on NTPC with a revised TP of Rs125 (Rs122 earlier), backed by its riskaverse regulatory business model and historic low valuations of 0.7x FY22E P/BV.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More