Maintain 'buy' on NTPC - TP Rs.200 - Geojit BNP Paribas

- Buy rating on NTPC has been maintained with a target price of Rs.200.

- 3QFY13 sales were lower than analysts' estimates on lower coal costs, which were passed on through users.

- Availability of cheap domestic coal improved, which reduced the consumption of imported coal. Thus, coal costs declined.

- EBITDA and EPS beat our estimates on better plant availability and higher power generation and lower operating expenses.

- Coal blocks re-allocation likely. While improvement in domestic coal availability is encouraging, the government is awaiting an opinion from the Law Ministry before returning the three coal blocks that were taken away from NTPC in June 2011.

- In addition, the company's board has approved implementation of the 1980 MW New Nabinagar power plant.

- Retain 'buy' rating with a target price of Rs.200. Risks to the TP are capacity addition delays and fuel shortage.

- The stock's near term performance has been constrained by the overhang from the follow-on public offering (FPO) of the government's 9.5% stake in NTPC scheduled for early February 2013.

- Investors are advised to add the stock to their position during the upcoming FPO.

Source : Equity Bulls

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