Hold NTPC; target Rs 182: PINC Research

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Hold NTPC; target Rs 182: PINC Research

PINC Research has maintained hold rating on NTPC with a target price of Rs 182 in its October 28, 2011 research report.

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PINC Research has maintained hold rating on NTPC with a target price of Rs 182 in its October 28, 2011 research report.

"NTPC's coal station availability declined to 83.4% - lower than normative PAF of 85% - due to muted coal supplies during the quarter. Overall generation remained weak owing to 1) seasonality, 2) grid restrictions and 3) SEB backing down. Avg. realisation improved to Rs3.28/unit - higher by 8.3% YoY due to higher fuel cost and grossing up RoE at corporate tax rate."

"Adjusting for multiple items, NTPC's adjusted PAT grew by 20% YoY to Rs16bn. Capacity addition continued to remain muted during the quarter with only 500MW being commercialised at Simhadri. H1 FY12 balance sheet indicates longer debtor days of 69 days against 53 days in FY11. The management indicated that fewer states have been opting for early payments (on the first day). This coupled with few states delaying payments beyond the 60 day window has resulted into longer debtor days. NTPC plans to add 4,320MW during FY12, of which it commercialised 1.2GW during H1. Despite this slow ramp up in capacity, the management remains confident of meeting its target. NTPC indicated that it plans to declare Farakka as commercialised over the next couple of weeks. We build in an addition of 2,820MW during the year."

"We cut our target price to Rs182/share on account of deteriorating earnings quality, declining PAF and 3% cut in FY13E earnings. Although we build in 92% PAF for FY12 we remain uncertain on the company's ability to achieve it. We also reduce our FY13 PAF estimate to 88%. Other risks to earnings growth for NTPC are 1) continued backing down by SEBs and 2) slow capacity addition. Maintain Hold for a target price of Rs 182," says PINC Research report.

Public holding more than 90% in Indian cos

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