Q1FY23 adjusted PAT of Rs. 3,359 crore (up 6% y-o-y) was below our estimates due to a lower-than-expected rise in regulated equity base, lower surcharge income and higher tax rate. Management guided for robust commercialisation of 5.8 GW of capacities in FY23E. It expects consolidated regulated equity base to register 11% CAGR over FY22-24E. Fall in CWIP ratio (expected at 19% in FY25E versus 28% in FY22) will would free-up equity blocked in CWIP and the same would start earnings regulated returns. NTPC retained its aim to monetise stake in subsidiary NTPC Green in FY23, which could unlock value for NTPC and pave for high dividend payouts.
OutlookWe maintain a Buy on NTPC with a revised PT of Rs. 185, as it is attractively valued at 1x its FY24E P/BV despite strong earnings visibility, focus to ramp-up RE portfolio, decent RoE of 14% and dividend yield of ~4-5%.
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