Accumulate NTPC; tgt of Rs 182: PINC Research

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Accumulate NTPC; tgt of Rs 182: PINC Research

PINC Research is bullish on NTPC and has recommended accumulate rating on the stock with a target of Rs 182 in its January 30, 2012 research report.

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PINC Research is bullish on NTPC and has recommended accumulate rating on the stock with a target of Rs 182 in its January 30, 2012 research report.

"NTPC's Q3 FY12 performance was impacted by continued backing down by SEBs and poor fuel supply. Coal and gas station PAF contracted by 835 and 110bps to 85.3% and 94.5% respectively - thus impacting its incentive income. This coupled with preponed maintenance shutdown at a few stations and under-recoveries due to lower than normative PAF for some stations, translated into lower than expected adjusted PAT of Rs21.7bn - lower 7.7% yoy."

"During Q3FY12 NTPC generated at sold 56.4BU and 52.6BU respectively. It lost 6.48BU due to grid restrictions (2.7BU) and low fuel supply (3.8BU), higher by 8.3% yoy. Due to this, NTPC's coal PLF declined to 83.6% from 87.2% in the corresponding period last year. The management indicated that debtor days during 9M FY12 worsened to 77 days against 53 days in FY11. The management highlighted that none of the states had defaulted in their payments except for one week extension (beyond 60 day payment window) given to BSES-Rajdhani and BSES-Yamuna."

"NTPC maintains its commissioning target of 4,980MW during FY12. In 9M FY12, it commercialised 1.6GW. Despite this, the management remains confident of meeting its target. NTPC plans to declare Farakka, Sipat and Jhajjar as commercialised during Q4 FY12. As Coal India implements the new pricing mechanism, NTPC's cost of generation and hence tariff is expected to increase. As a result, we believe it runs the risk of increased backing down by beneficiary states. We continue to build in capacity addition of 2.8GW and 4.2GW during FY12 and FY13 respectively. Although we maintain ACCUMULATE rating on the stock, we believe NTPC's earnings quality is likely to deteriorate due to concerns on fuel supply and hence low availability," says PINC Research report.     

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To read the full report click on the attachment