Buy NTPC; target of Rs 192: Reliance Securities

Reliance Securities' research report on NTPC

NTPC’s reported earnings declined by 25.0% YoY to Rs 20.8bn in 4QFY17 owing to impairment of Rs 7.8bn in Ratnagiri Gas & Power and Rs 8.7bn provisioning towards incremental employee cost (revision as recommended by 7th Pay Commission). Out of Rs 8.7bn provisioning, Rs5.2bn has been considered as pass-through by way of regulatory asset.

Outlook

Looking ahead, we expect NTPC’s business to improve further backed by higher capacity commercialisation, better fuel availability and likely improvement in demand owing to UDAY scheme. Rolling over our estimates to FY19E, we reiterate our BUY recommendation on the stock with a revised Target Price of Rs 192 (from Rs 178 earlier).