Accumulate NTPC; target of Rs 179: P Lilladher
Brokerage house Prabhudas Lilladher is bullish on NTPC and has recommended 'Accumulate' rating on the stock with a price target of Rs 179 in its research report dated July 04, 2013.
July 04, 2013 / 18:48 IST
Prabhudas Lilladher's research report on NTPC
"Between 2004-07, NTPC had been allocated six coal blocks, namely Pakri-Barwadih, Chatti-Bariatu, Kerandari, Dulanga, Talaipalliand Chatti-Bariatu (S). Production pegged from these mines was to the tune of 73m tonnes p.a (or 11000MWs) and the mining was to start in 2010. In 2012, three of the blocks, namely, Chatti Bariatu, Chatti Bariatu (S) and Kerandari were deallocated on the grounds of a substantial delay in development. Subsequently, they were reallocated to NTPC. The company is yet to start producing from these mines and the total expenditure incurred on mine development till March 2013 was to the tune of Rs12bn which is 10 percent of the total cost. NTPC, however, is expected to start production from its Pakri-Barwadih mine from FY14E. The first year production will be close to 2m tonne, which is then expected to scale up to 40m tonnes by 2017. Even if the production ramps up from Pakri-Barwadih, theKoderma-Hazaribagh-Banadag- Shivpuri-Tori railway line, which will carry the output, is getting delayed. However, once these mines get operationalised, the company will earn regulated returns on their investments too."Valuation and Recommendation: "NTPC commissioned close to 4000MWs (including JVs) in FY13 and is expected to add close to 1875MWs (including JVs) in FY14E. CCEA's acceptance of coal price mechanism will help the company to import coal to mitigate the shortfall in the Coal India supplies, if any. Though host of reasons delayed NTPC's plans to develop captive mines, allocation definitely provides fuel security for the future. NTPC offers one of the safest bet in the current scenario as it has a generation assets earning regulated returns; thus, safe guarding earnings shocks at a P/BVx of 1.2x FY15E. We maintain 'Accumulate' on the stock with a target price of Rs 179," says Prabhudas Lilladher research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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. 
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