In long run only fundamentals play. Not speculative buying and selling. NTPC is certainly stock to hold in the long run. As far as inflation is concerned, it is not going to be affected by it as its fuel cost is a pass through item in the current tariff regim of CERC. What ever it spends on fuel will be reimbursed separately in the form of tariff as tariff is cost plus. Rather it will gain to some extent with higher working capital margins allowable in Tariff regulations of 2004-09.
The only thing to watch will be the new CERC norms which are in the process of forumulation. The new norms will be effective from 01.04.09. Seeing the present power scenario in India, one can hope that the government (CERC) will do well by being liberal to power generators so that it remains attractive to expand.
The other point to see is Tariff based bidding. So far NTPC has been awarded projects through PPA (Power Purchase Agreement) route. But as one can see competition is getting tougher. Private sector players with little experience are quoting aggressive rates and bagging power projects. Sasan, Mundra and Krishnapattam UMPPs are case in pointer.
This has another dimenesion also. NTPC has already tied up its hand in sufficient large capacity addition programme in 11th and 12th year plan. It has targetted a capacity addition of another 50000MW upto 2017. Quite big, isnt it!! So, it is going to invest in less risky projects as compared to risky UMPPs like Krishnapattam which reliance has bagged and which is based on imported coal. It indeed requires guts of reliance to quote a tariff at present with coal which has to be imported at unknown price for next 25 years.
So dear, hold your nerves, NTPC is least risky and more rewarding play in power generation sector.
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