February 14, 2017 / 13:21 IST
HDFC Securities' research report on NTPC NTPC’s 3QFY17 recurring PAT of Rs 22.4bn was in line with our estimates. Pan-India coal PAF for 9mFY17 stands robust at 90.3% (vs 90.8% YoY), leading to negligible under-recovery in fixed costs. Commissioning of new capacities (thermal and solar) led to the increase in power generation (+1% YoY) despite a drop in coal PLF’s (-100bps, 77.2%).
Outlook
A pick up in capacity addition (23GW in FY16-FY21 as against 8GW in FY11-FY16) would be the key driver for earnings and return ratios for NTPC. Easing interest rates also augurs well for the company’s assured RoE business model (with cost pass through). We reiterate BUY with a TP of Rs 201/share (1.5x Dec-18 P/B).
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