RESEARCH: CITIGROUP
RATING: BUY
CMP: RS 203
NTPC has underperformed the BSE Sensex by 70% over the last one year and the current price provides an attractive entry point for investors wanting a defensive play on India’s persistent power deficits. Citigroup increases target price of NTPC to Rs 229 from Rs 220. At the new target price, NTPC would trade at a P/BV of 2.7x FY11E. Out of a target of 22.4 GW in the XIth Plan (FY08-12), NTPC commissioned 2.7 GW over FY08-09 and an additional 9.5 GW in FY10E-12E. Targets in the XIIth Plan are expected to be bigger at 28 GW and the company expects to place 34 GW of orders over the next 1.5 years. The NTPC-DVC block 11X660-MW tender has received two bids for boilers and five bids for turbines. Evaluation of techno-commercial bids will be completed in two months and after that the price bids will be invited. NTPC expects to award the contract by August ‘10. NTPC also plans to procure 800-MW supercritical units through the bulk ordering route and expects to issue the tender in three months for the supply of seven units. NTPC’s Q3FY10 PAT at Rs 2,370 crore, up 5% Y-o-Y, was in line with the estimate of Rs 2,390 crore. In 9mFY10 NTPC has delivered recurring PAT of Rs 6,540 crore, up 18% Y-o-Y, which is ahead of our FY10E expectation of 16% Y-o-Y.