Accumulate NTPC; target of Rs 175: Prabhudas Lilladher

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Accumulate NTPC; target of Rs 175: Prabhudas Lilladher

Prabhudas Lilladher is bullish on NTPC has recommended accumulate rating on the stock with a target price of Rs 175 in its January 30, 2012 research report.

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Prabhudas Lilladher is bullish on NTPC has recommended accumulate rating on the stock with a target price of Rs 175, in its January 30, 2012 research report.

"Lower coal supplies continued to haunt NTPC in Q3FY12. Earnings suffered on account of lower generation, PAF (leading to lower incentives) and higher O&M costs to the extent of Rs1.5bn. Revenue for Q3FY12 increased by 14% YoY, which was mainly on account of higher coal costs. ESO stood at 52.6bn units, which was higher by 2.6% YoY, as the PLF was lower by 4.1% YoY to 83.6%. Adjusting to other items, adjusted PAT (as indicated by mgmt) stands at Rs21.7bn (reported PAT Rs21.3bn) for Q3FY12, registering a decline of 8% YoY."

"In Q3FY12, NTPC's PAF stood at 85.3%, declining by 8.9% YoY; however, improved by 2.7% QoQ. For gas, PAF stood at 94.47%, down by 2% YoY. The coal imports in Q3FY12 stood at 2.6mt, up by 26.9% YoY. For 9MFY12, it stood at 9.9mt, up by 20.2% YoY. The average receivable days for the company have increased to 71 days. NTPC plans to add close to 4980MWs in FY12E (only 1660MWs commissioned up till now) and achieve COD for 1000MWs. Overall the company has close to 13GWs under construction. In 9MFY12, NTPC has done a capex of Rs90bn and is planning to spend Rs70bn in Q4FY12E. As regards the new GCV based coal pricing, the company is still waiting for the final decision from Coal India and MoP."

"Capacity addition is becoming a tall task for NTPC, going ahead in FY12E. We expect only 500MWs (Farakka) to achieve COD in FY12E and the balance 1160MWs would slip to FY13E. The stock is trading at a P/BV of 1.8x FY13E and 1.6x FY14E. On account of looming fuel crisis and dissuading situation of SEBs, the risk-reward ratio has turned unfavourable towards NTPC and the power sector in general. However, as the stock offers a defensive play within the sector, we maintain 'Accumulate' on the stock," says Prabhudas Lilladher research report.

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