ICICI Direct recommended hold rating on NTPC with a target price of Rs 160 in its research report dated November 05, 2018.
ICICI Direct's research report on NTPC
NTPC reported a muted set of Q2FY19 numbers, which were below our estimates operationally as higher-than-expected fuel and other expenses impacted profitability. Accentuation of under recovery of fixed costs was pegged at Rs 932 crore (YTDFY19), which was on account of lower PAF and unviability of coal at a few plants Reported revenues came in at Rs 22261.1 crore vs. estimate of Rs 21385.9 crore. However, on an operational basis, gross generation grew 1.4% at ~66 billion units (BUs) vs. estimate of 66.3 BUs whereas energy sold grew 1.9% YoY to 61.6 BUs vs. our estimates of 62 billion units. PLFs of coal plants were at 72.6% vs. 76.6% in Q2FY18. During H1FY19, the company commissioned capacity to the tune of 1908 MW as commercial capacity was at 45300 MW. Average tariff for H1FY19 was at Rs 3.42/Kwhr EBITDA came in at Rs 5592.4 crore vs. our estimate of Rs 5870.2 crore. The miss on EBITDA was on account of higher-than-expected fuel and other expenses. The fuel cost per unit in Q2FY19 was at Rs 2.04/unit vs. Rs 1.99/unit QoQ Reported PAT came in at Rs 2426 crore vs. our estimate of Rs 2407 crore, on account of higher other income and regulatory income.
Hence, we continue to value the company ay 1.2x FY20E book value and continue ascribing a fair value of Rs 160 per share.
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