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Buy NTPC; target of Rs 180: Emkay Global Financial

Emkay Global Financial is bullish on NTPC has recommended buy rating on the stock with a target price of Rs 180 in its research report dated December 27, 2021.

December 27, 2021 / 05:46 PM IST
 
 
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Emkay Global Financial's report on NTPC


NTPC continues to win solar/RE bids on the back of its low cost of funding, significantly strong cash flows and project management abilities. NTPC has won 500MW in SECI’s recent 1,785MW Rajasthan Tranche IV bid. Six players had submitted their bids in the Rs2.17-2.18 range, which highlights stiff competition. For the last one and a half years, management has been focused on RE. On its base thermal assets, we believe RoE will improve as more plants are commissioned. In our view, these factors will lead to a re-rating. NTPC’s ability to source low-cost funds will enable it to resourcefully attain its RE plan. NTPC is expected to add ~35GW of RE capacity by 2027. Moreover, ~10GW of thermal units will be added in the next few years.



Outlook


We maintain Buy on NTPC with a Dec’22 TP of Rs180. At CMP, the stock trades at 0.86x/0.8x PB on FY23E/FY24E with RoE in the 12-12.5% range. NTPC plans to float an IPO of its RE business in the next 1-2 years.

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first published: Dec 27, 2021 05:46 pm
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