Prabhudas Lilladher is bullish on NTPC and has recommended accumulate rating on the stock with a target of Rs 190 in its October 28, 2011 research report.
“In Q2FY12, NTPC’s PAF at 83.4% declined by 2.5% YoY on account of planned outages which is mainly on account of lower coal receipts. Thus, the loss on units stands at 3bn units on account of coal shortages. The average receivable days for the company have increased on an average by 20-25 days on account of bad financial state of SEBs. NTPC plans to add close to 4320MWs in FY12E (only 660MWs commissioned up till now) and has 15GWs under construction.”
“Revenue for Q2FY12 increased by 15.4% YoY, which was mainly on account of an increase in operating capacity and higher coal cost. ESO stood at 46.9bn units (lower by 3.7% YoY) as the generation suffered on account of coal shortages, planned outages, grid restrictions and backing of SEBs as they received higher hydro and nuclear power. PLF for the quarter stood at 78% as against 82.9% in Q2FY11. Adjusting to other items, adjusted PAT (as indicated by mgmt) stands at Rs17bn (reported PAT Rs24.2bn) for Q2FY12, registering a growth of 23% YoY; this was mainly aided by an increased other income of Rs3bn.”
“We have downgraded the operating numbers on account of lower generation and also incentives (which affect the ROEs). The stock is trading at a P/BV of 2.0x FY12E and 1.8x FY13E based on our conservative estimates. On account of looming fuel crisis and dissuading situation of SEBs, the risk-reward ratio has turned unfavourable towards NTPC and the power sector in general. However, as the macro headwinds change, the stock will stand to benefit faster than peers and thus, we maintain ‘Accumulate’ on the stock but lower our TP from Rs 198,”says Prabhudas Lilladher research report.
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“In Q2FY12, NTPC’s PAF at 83.4% declined by 2.5% YoY on account of planned outages which is mainly on account of lower coal receipts. Thus, the loss on units stands at 3bn units on account of coal shortages. The average receivable days for the company have increased on an average by 20-25 days on account of bad financial state of SEBs. NTPC plans to add close to 4320MWs in FY12E (only 660MWs commissioned up till now) and has 15GWs under construction.”
“Revenue for Q2FY12 increased by 15.4% YoY, which was mainly on account of an increase in operating capacity and higher coal cost. ESO stood at 46.9bn units (lower by 3.7% YoY) as the generation suffered on account of coal shortages, planned outages, grid restrictions and backing of SEBs as they received higher hydro and nuclear power. PLF for the quarter stood at 78% as against 82.9% in Q2FY11. Adjusting to other items, adjusted PAT (as indicated by mgmt) stands at Rs17bn (reported PAT Rs24.2bn) for Q2FY12, registering a growth of 23% YoY; this was mainly aided by an increased other income of Rs3bn.”
“We have downgraded the operating numbers on account of lower generation and also incentives (which affect the ROEs). The stock is trading at a P/BV of 2.0x FY12E and 1.8x FY13E based on our conservative estimates. On account of looming fuel crisis and dissuading situation of SEBs, the risk-reward ratio has turned unfavourable towards NTPC and the power sector in general. However, as the macro headwinds change, the stock will stand to benefit faster than peers and thus, we maintain ‘Accumulate’ on the stock but lower our TP from Rs 198,”says Prabhudas Lilladher research report.
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