MOSL: NTPC (Buy)-Project commissioning augurs well for capitalization-Receding concerns to re-rate stock
​NTPC: Project commissioning augurs well for capitalization; Receding concerns to re-rate stock; Reiterating Buy
(NTPC IN, Mkt Cap USD20.9b, CMP INR164, TP INR198, 21% Upside, Buy)
Recent rapid commissioning has improved visibility of capitalization
NTPCsa (standalone) capitalization (drives regulated equity and PAT) will pick up pace after a lull period of 3-4 years (from ~1-2GW p.a. over FY14-17 to ~4.7GW in FY18E). NTPCsa has already commissioned ~3.7GW, and plans to commission additional ~2.6GW before the end of FY18. This augurs well for the pipeline of capitalization. NTPCjv (JVs) also targets to capitalize 250MW and commission 660MW. In addition, we expect capitalization of ~1GW solar projects.
Inorganic opportunities – Chhabra progressing, SJVN on cards
The acquisition of 1GW Chhabra thermal power plant in Rajasthan is pending for the transfer of coal linkage, which is expected soon. This will add another INR10b to regulated equity (upside to our numbers). Equity IRR is higher as the gestation period of 3-5 years is saved. The proposed acquisition of SJVN (Not Rated) will improve the share of renewable energy in the mix.
Pooling of tariff can lead to higher PLF incentives
The Ministry of Power is considering a proposal to pool tariff of NTPC plants. This will help in selling un-requisitioned low-cost power from its pit head plants at the cost of high-cost generation in other plants, and thus, save cost to Discoms and perhaps earn some additional PLF incentives for NTPCsa.
NTPC owns and operates power generation plants that supply power to state electricity boards throughout India. Co. also offers consultancy services related to infrastructure sector business such as: Fossil fuel based thermal power plants; Combined cycle power plants; Cogeneration plants; Water supply and treatment and Environment engineering and management. Co. runs a Power Management Institute (PMI), at NOIDA. PMI has over the years trained a number of professionals from Co., State Electricity Boards and other power utilities in the country. Also, participants in PMI programmes have come from various South Asian and Middle Eastern countries.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.