Buy NTPC; target of Rs 192: HDFC Securities

HDFC Securities is bullish on NTPC has recommended buy rating on the stock with a target price of Rs 192 in its research report dated January 27, 2023.

Broker Research

January 31, 2023 / 16:20 IST

HDFC Securities' research report on NTPC

Generation/sales increased materially by 8.3%/7.7% YoY to 78.6/72.9bn units in Q3FY23, led by higher demand. PAF also improved for both coal/gas in Q3 to 92.7/98.5%, vs 85.9/89.9% YoY, led by better fuel availability. While revenue increased 39.3% YoY to INR414bn, adjusted PAT was up by 17.7% YoY to INR44.2bn, 12% above the consensus estimate. NTPC has a total of 18.2GW under construction segregated into 11.3MW of coal capacity, 2.3MW of hydro capacity and 4.7MW of RE capacity. NTPC has targeted to add 5-6GW of RE capacity p.a. Further, the company plans to venture into the nuclear segment by forming a JV with NPCIL, under which it aims to add 4.2GW capacity by 2035. We have maintained our earnings estimates and expect PAT to grow at a 9.3% CAGR while generating INR288bn in FCF over FY22-24E. Management plans to dilute a 10-20% stake in its renewable business portfolio of 2.9GW by Q4FY23, which will enhance the value proposition for stakeholders.

Outlook

We maintain BUY with a TP of INR 192/share, assigning a 1.3x BV to its regulated equity and a 1.1x BV to its equity investment in 12GW of new solar capacities.

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