Reco price: Rs 196
Current market price: Rs 194.2
Target price: Rs 200
As per provisional numbers, NTPC achieved the highest ever volume of 56.9 billion units (BU) in Q4 FY09, which is the primary contributor to the growth in revenues. Generation at coal-based station witnessed a y-o-y growth of 7.1 per cent in Q4FY09. However, average realisation per unit declined 3 per cent to Rs 2.24 compared to Rs 2.31 Q4FY08. PLF of the coal-based stations has improved q-o-q to 96.6 per cent in Q4 (from 94.1 per cent). NTPC, in order to resolve the coal crunch situation in Q3, has started increasing the proportion of imported coal in the overall coal usage.
NTPC’s capacity addition plans are running behind schedule, thus, we have reduced the earnings CAGR (FY08-FY11E) from 8.9 per cent to 7.8 per cent. Projection of capacity addition looks an uphill task as NTPC is expected to add 19,700 MW over the next three years and has been able to achieve only 2,700 MW in the past two years. At Rs 196, the stock is trading at 20.7x and 19.1x its FY09E and FY10E earnings, respectively.