Buy NTPC: Target Of Rs 123: Sharekhan
Sharekhan is bullish on NTPC recommended buy rating on the stock with a target price of Rs 123 in its research report dated November 02, 2020.
Nov 5, 2020 / 05:07 PM IST
Sharekhan's research repor on NTPC
Management has guided for strong commercialisation of 5,566MW for FY2021, 7,336MW for FY2022, and 5,016 for FY2023 and expects fixed cost under-recoveries to reduce to Rs. 200 crore-220 crore by March 2021. NTPC board has approved buyback of equity shares not exceeding 19.8 crore shares (2% of the total paid up equity share capital) at a price of Rs. 115/share (29% premium to last closing price) for an aggregate amount not exceeding Rs. 2,276 crore. We recommend Buy on NTPC with a PT of Rs. 123, given earnings visibility (expect 19% PAT CAGR over FY21E-FY23E), RoE of 13%, attractive valuation of 0.6x its FY23E P/BV (54% discount historical valuations), and healthy dividend yield of 7-8%.
NTPC’s Q2FY2021 PAT at Rs. 3,505 crore (up 7.4% y-o-y) was in-line with our estimate of Rs. 3,502 crore as higher-than-expected higher surcharge income at Rs. 657 (up 20% q-o-q) and increased regulated equity (up 19.3% y-o-y) was offset by FC under-recoveries of Rs. 271 crore.
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