NTPC plans to commercialize 4.4 GW of coal-based capacities in FY21 even as only 660 MW has been commercialized in 1HFY21.

Chirag Batavia • 18 January 2021

NTPC Ltd

 NTPC plans to commercialize 4.4 GW of coal-based capacities in FY21 even as only 660 MW has been commercialized in 1HFY21. It plans to commercialize another 5.7 GW in FY22E and 5 GW in FY23E.

 We estimate regulated equity to grow at 11.6% CAGR between FY20 and FY23E to Rs.86,000 cr as NTPC adds 12 GW of incremental capacity over the next three years.

 Core ROE stood at 18% in 2QFY21 reflecting the underlying strength of the cost-plus business as regulated equity for the company increased 19% yoy to Rs.63,500 cr.

 NTPC has incorporated a new subsidiary NTPC renewable energy to increase the push towards renewables and have 25% share of renewables in the overall generation capacity. It has already commissioned 1.07 GW of renewable projects and has 2.4 GW of solar projects under implementation.

 Earnings growth has strong visibility over the next three years as 12 GW of under-construction coal-based capacities will likely be commissioned. Our Fair Value stands at Rs125/share noting inexpensive valuations of 0.75x Price/Book Value and 6.7x P/E on Mar’22 earnings.

NTPC: BUY
Dated: 18th January 2021
CMP: Rs.100
Fair Value: Rs.125
Potential Upside: 25%
Market Cap: Rs. 48,702 Cr
Time Frame: 12 months

Note: The above is a brief note on the company, based on the inputs of KIE research report dated 3rd November 2020, which is available on their website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamental.      
Disclaimer: http://bit.ly/2n5AxIE


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