Motilal Oswal
NTPC (Buy)
Target: ₹145
CMP: ₹117.95
NTPC’s Q4FY21 results highlight a steady performance given the regulated business and aided by other income. S/A adj. PAT (excl. FC u/r) was up 17 per cent y-o-y to ₹3,860 crore. FY21 reported consolidated PAT stands higher at ₹14,600 crore. Adjusted for one-offs, PAT would be higher by 11 per cent y-o-y at ₹15,200 crore.
Other income at S/A stood at ₹1,670 crore and was boosted by strong late payment surcharge (LPS) income of ₹620 crore (v/s our est: ₹450 crore) and ₹700 crore in dividends from subs and JVs. Adjusted for the dividends from subs and JVs, PAT nos. would be approximately ₹3,200 crore.
NTPC has ramped up its longer term RE capacity target to 60 GW by 2032 (earlier: 32 GW). While this may seem ambitious (implying 5–5.5GW pa of RE additions over the next 11 years), the firm has taken steps to improve its renewables footprint. Nearly 3 GW of renewable capacities are under construction and expected to be commissioned over the next two years.
Even as the company gradually scales up on its renewables journey, we expect continued capitalisation for its thermal projects to drive 12 per cent growth in regulated equity over FY21–23. NTPC has also approved a final dividend of ₹3.15/share, taking the total FY21 dividend to ₹6.15/share. We maintain ‘Buy’, with a DCF-based target price of ₹145