INSUBCONTINENT EXCLUSIVE:
Citi has a buy call on NTPC with a target price of Rs 203.
The current market price of NTPC is Rs 158.90.
Time period given by the brokerage
is one year when NTPC price can reach the defined target
at Rs26.3bn on lower other income (reduction in surcharge) higher wage provisions
Under-recoveries were Rs4.9bn in 1QFY19 (v/s Rs3.04bn in 1QFY18)
Logistical issues faced by NTPC for domestic coal transportation have eased after it signed an MoU with the Indian Railways in Apr18 and
paid nearly Rs50bn advance towards haulage charges
NTPC's board has also approved 5m tons coal imports; NTPC will be issuing a 2.5m ton tender soon
Additionally, other power producers have also given coal import orders; consequently, stress on domestic coal demand should ease
Rs10-12bn in case CEA's opinion to CERC on the issue is implemented
It expects a resolution before the next tariff regime commences
commercialization of nearly 4.8GW in FY19E and 4-5GW addition in FY20E
Over the next 3-4 years, capitalization should exceed capex implying RoE expansion as equity invested in under-construction projects starts
earning returns; CWIP as a per cent of gross block could decline to 22 per cent in FY22E from 45 per cent in FY17.
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