Buy NTPC; target of Rs 170: Edelweiss

NTPC reported a strong Q1FY17 numbers, with net income at INR 23.6bn up 4% YoY. While these numbers are broadly in line with our estimates, we find the results interesting for the following (a) Q1FY17 also saw a further reduction in whole sale tariffs ( NTPC average realisation fell to INR 3.12/kwh (down 14 paise yoy); suggesting earnings are driven by volumes and related incentives (b) Average fuel cost/t was down YoY; despite doubling of clean cess and CIL price hike of 5% as company saw benefits from lower imports and more consistent quality coal supply (c) Post result commentary suggested that NTPC is going full fledged for commissioning of new capacities, which is also likely to drive up regulated book and help sustain the current exit multiples for company. Retain ‘BUY’.For all recommendations, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.