PINC Result Update – NTPC - Q4FY11 Provisional Results

NTPC reported its FY11 provisional results. Although generation remained flat at 220BU, revenues grew by 17% YoY to Rs537bn. However, PAT remained flat at Rs88bn. Both these were in line with our estimates. NTPC commissioned 2,490MW during the year against its revised target of 3,150MW – 660MW Sipat slipped into FY12.

* RoE grossed up by corporate tax rate against MAT earlier
* Capacity addition target missed yet again
* CEA estimates 3.0GW to be added during FY12

VALUATIONS AND RECOMMENDATION

With NTPC missing its capacity addition target yet again in FY11, we remain skeptical on its capacity addition plan for FY12. However, we continue to build in its targeted addition for the year and will review it when the audited results will be declared in May. Despite this, we believe it offers better safety and steady returns vis-à-vis its private IPPs like JSW Energy. NTPC has tied up 100GW under long term PPAs thus providing steady returns. At the current price, NTPC trades at 2.2x FY12E book. We value the stock at 2.1x FY13E book to arrive at our target price of Rs216, maintain HOLD.

Source : Equity Bulls

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