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Saturday, October 4, 2008

NTPC

Posted by Suman.K, B.Tech, MBA. at 10:49 PM

Analysts' picks: NTPC
4 Oct, 2008.

CMP: Rs 171.85
Target price: Rs 208

Goldman Sachs Research has initiated coverage on the stock with a ‘buy’ rating, saying NTPC’s business model entails a high degree of earnings visibility with core business consistently yielding 20% plus return on equity (RoE).

“NTPC scores well as a defensive growth option. It has the lowest risk to funding amongst its peers, competitive cost of generation, RBI guarantee for payment realisation from its customers (financially-constrained SEBs) up to FY2016 and inexpensive valuations,” said Goldman Sachs Research in a note to its clients.

The firm expects the company’s net profit to grow at a compounded annual rate of 7.3% between FY2008 and FY2011E (estimated) on the back of a 30% growth in wholly-owned commercial generation capacity over this period.

“Net income growth would rise progressively over the next three years, as we expect around 45% of the 7,760MW of commercial capacity addition over this period only in FY2011E,” the note said.

 

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