Buy NTPC: Motilal Oswal

Motilal Oswal is bullish on NTPC and has recommended buy rating on the stock in its August 1, 2012 reports.

“NTPC's adjusted PAT for 1QFY13 was INR24b, higher than our estimate of INR22b. Earnings growth during the quarter is led by improving core earnings, as NTPC gained on commercialization of 1.2GW capacity in FY12 and partially due to commercialization of additional 1.6GW in 1QFY13. Stable PLF for coal plant at 86.3% (v/s 86.8% in 1QFY12).”

“NTPC commissioned 2.2GW capacity in 1QFY13 v/s 2.8GW in FY12. Over FY13-15, it is likely to add 11.7GW capacity and given that the 11th Plan capacity addition is delayed, we expect 12th Plan capacity addition to be front-ended. Improvement in domestic availability of coal, higher growth in power demand (FY12: 8.7%; FY11: 3.8%) led by improving cash flow position of DISCOMs (financial restructuring + tariff hike) would mean higher generation growth/dispatches for thermal power projects. We expect NTPC's earnings to grow at CAGR of 17% over FY12-14. We estimate FY13/FY14 net profit at INR96b (up 15%) and INR115b (up 20%). The stock trades at 11.3x FY14E EPS and at 1.5x FY14E BV,” says Motilal Oswal research report.  

Non-Institutions holding more than 90% in Indian cos

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