Subscribe to NTPC FPO: SKP Securities

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Subscribe to NTPC FPO: SKP Securities

SKP Securities has come out with a research report on NTPC's follow-on public offering (FPO). The research firm has recommended subscribing to this issue.

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SKP Securities has come out with a research report on NTPC 's follow-on public offering (FPO). The research firm has recommended subscribing to this issue.

The FPO of India's largest power generation company NTPC opened for subscription. The floor price for the FPO of 412,273,220 equity shares of Rs 10 each is at Rs 201/share and the issue will close on February 5, 2010. The issue has been subscribed 0.79 times so far, as per data available on the NSE website.

SKP Securities report on NTPC FPO -

NTPC, promoted by the President of India, is the largest power generating company in India with an installed capacity of approximately 18.6% of India's total installed capacity. In Fiscal 2009 they contributed 28.6% of India's total installed capacity and were the top Independent Power Producer (IPP) in Asia & ranked 2nd in the world on the basis of assetworth, revenues, profits and return on invested capital. As of September 2009 their total installed power generation capacity was 30644 MW. They have stated a goal of 75000 MW by Fiscal 2017.

The demand for power is rising and is slated to grow in the coming years @ 12-14%. NTPC has a good financial track record, with consistent growth in capacity additions, sales and profit. They have supply agreements with PSUs for long term supply of raw materials, also looking at backward integration through coal mining. They are also diversifying into consulting business, nuclear power, renewable energy and hydro-electric power, insulating from dependence on any specific segment. The issue price of Rs 201 implies a P/E of 20.1X on FY09 EPS of Rs 10 (on post issue equity), which we believe is fair given the stable nature of business and consistent long term growth, we recommend to subscribe to the issue.

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To read the full report click on the attachment