NTPC has target of Rs 170: IIFL

NTPC has target of Rs 170, says Harshavardhan Dole, Analyst, IIFL.

Dole told CNBC-TV18, “In NTPC I am pretty sure that the full issue will go through. In the long run if someone buys the stock between Rs 145 and Rs 148 you are actually well poised to get about 12-15 percent compounded return over a period of next three-four years and that too at a risk, which is far lower than essentially what the private sector Independent Power Plants (IPPs), offer at the moment.”
He further added, “Our target price is Rs 170 and we have a positive bias on this stock. The hypothesis is very much simple that worst for NTPC is behind us. The key issues such as pick up in capacity addition and fuel shortages those are behind us.”
“Yesterday we saw that pooling of coal price has been cleared. So hopefully going forward they should be able to sign the FSAs with Coal India and that should ensure that the plants are available at a benchmark availability of more than 85 percent, which should allow them to earn their benchmark 15.5 percent ROE.”
“We all know that NTPC has been one of the most efficient power generators in India, so pickup in capacity addition and assurance of coal supply will ensure that their earnings will compound at least at 10 percent over the next two-three years. So our target price of Rs 170 is based on 2015 price to book value at 1.5 times.”