NTPC missed capacity addn trgt; maintain underperform: CLSA

Moneycontrol Bureau

Brokerage house CLSA has maintained its 'underperform' rating on energy conglomerate NTPC, citing a significant miss in capacity addition.

"At consolidated level, the company missed 28 percent of capacity addition target due to delays at Nabinagar project in Bihar," says the report adding that the project execution remains challenging.

Other potential headwinds that will impact the stock, according to CLSA, are: the government's 5 percent divestment of NTPC and the poor state of state banks.

Excerpts from the report:

- The company missed FY15 new capacity add guidance by 17 percent at the parent level, as it missed project start at Bongaigaon coal based plant. With this NTPC commissioned only 1.3GW -17 percent YoY versus target of 1.6GW.

- The company's 4QFY15 / March'15 coal-based generation fell ~3.5 percent YoY. This weak performance was driven by poor health of finances of select states and not coal shortages

- Government's divestment plan: Weak execution coupled with divesture to act as an overhang on the stock. The stock underperformed by 5-17 percent three months before the last two divestures.

(Posted by Ritika Dange)