Buy NTPC; target of Rs 200: Sharekhan

Sharekhan is bullish on NTPC has recommended buy rating on the stock with a target price of Rs 200 in its research report dated January 27, 2023.

Broker Research

January 31, 2023 / 16:11 IST

Sharekhan's research report on NTPC

Q3FY23 adjusted PAT grew strongly by 18% y-o-y to Rs. 4,424 crore (19% above our estimate) supported by 7% y-o-y rise in regulated equity base, fixed cost over recovery of Rs. 170 crore and higher incentive income of Rs. 125 crore partially offset by higher interest cost. Management guided for commercialisation of 5.5 GW/6 GW/4.7 GW of capacities in FY23E/FY24E/25E. Double digit growth in regulated equity base over FY22-25E (led by robust commercialization target) and lower FC under-recoveries (target of reduce to Rs. 250 crore by Mar’23) to drive 15% PAT CAGR over FY22-25E. NTPC’s plan monetise 10-20% stake in NTPC Green Energy by March 2023 is on track. Monetisation could unlock value for NTPC and pave for high dividend payouts.

Outlook

We maintain a Buy on NTPC with an unchanged PT of Rs. 200, as it is attractively valued at 1.1x its FY24E P/BV despite strong earnings visibility, focus to ramp-up RE portfolio, decent RoE of 14% and dividend yield of ~4%.

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