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.
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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