Buy NTPC; target of Rs 147: Dolat Capital

Dolat Capital's research report on NTPC

NTPC Q1 sales was lower by 3% YoY at Rs235bn while EBITDA came in at and APAT was Rs24bn. It has provided for a rebate of only Rs8bn instead of the entire Rs14bn in Q1 due to some states not revoking post foreclosure clause. NTPC had no under recoveries of fixed charges in Q1FY21. NTPC commercialized 660MW at Khargone in Q1. It plans to achieve 5.5GW of capacity addition in FY21. Its capex target remains at Rs210bn in FY21. Its CWIP is expected to fall as more assets are capitalized and it is targeting a 15% CAGR in regulated equity in next three years.

Outlook

We maintain estimates in FY21. Stock is trading at an attractive P/BV of 0.7x FY22E. We maintain a Buy rating with a TP of Rs145 valuing the stock at 1.2xFY22EP/BV.

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