Buy NTPC; target of Rs 191: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal is bullish on NTPC and has recommended buy rating on the stock with a target of Rs 191 in its January 22, 2013 research report.
 
“For 3QFY13, NTPC's recurring PAT was INR24.7b, after adjusting for INR1b of reversal/write-back of variable pay (included in staff cost) and for INR0.3b prior-period sales. The PAT, however, includes the benefit on tax gross-up. We estimate adjusted PAT at INR23.1b, in line with our forecast. Staff cost was INR6.9b, down 23% QoQ and 4% YoY, even after adjusting for write-back of variable pay. The decline in staff cost is substantial, considering the utility nature of the business and fixed cost structure.”
 
“Revenue was muted (lower than our estimate) due to lower fuel cost (on higher usage of domestic coal) and lower contribution of gas projects. Realization declined from INR3.30/unit in 2QFY13 to INR2.83/ unit in 3QFY13, as fuel cost declined from INR2.03/unit to INR1.81/unit. Overall generation growth during 3QFY13 was robust at 6.6% YoY. While coal-based generation grew 9.5% YoY, gasbased generation declined 16.5% YoY. Average PLF for coal-based plants was 84.7% (v/s 83.8% in 3QFY12 and 74.8% in 2QFY13). In YTD FY13, NTPC added capacity of 2.66GW (v/s 2.82GW in FY12 and 2.5GW in FY11) and commercialized capacity of 3.82GW (v/s 1.2GW in FY12 and 1.5GW in FY11).”
 
“Superior capacity addition and generation growth is likely to drive 18% earnings CAGR over FY12-15, leading to ~250bp RoE expansion. The stock trades at 12x FY14E EPS and 1.6x FY14E BV. We reiterate our Buy recommendation,” says Motilal Oswal research report.

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