Karvy Stck Broking has recommended an outperformer rating on NTPC, with 12-month price target of Rs 245, in its report dated November 3, 2009. The stock closed at Rs 210.30 on November 4, 2009.

"We have valued NTPC on BV and capacity (MW), than earnings as profitability is regulated in this industry. Currently NTPC is trading at 3x FY09 BV and 2.7x FY10 BV. Going by the historical P/BV (forward) band, we arrive at a target price of Rs 246/share, based on 3x FY11BV. Also, the scrip is available at EV/MW multiple of 65x FY10 capacity and if the same is carried forward to FY11, we arrive at target price of Rs 244/share, (65x FY11MW). Moreover, we believe replacement cost should be around Rs 50-55mn per MW in FY11, giving a support for the stock. Therefore taking average, we arrive at a 12 month price target of Rs 245/share for NTPC and initiate our coverage with Outperformer rating," says Karvy Stock Broking report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment.........