NTPC shares rebounded a percent on Wednesday after nearly 3 percent correction in previous session on equity dilution by the government through offer for sale issue. The stock price was quoting at Rs 169.90, up Rs 1.40, or 0.83 percent, at 11:16 hours IST. The offer for sale, which opened on Tuesday, will close today at 3:30 pm. It is opened for retail investors today while non-retail investors, which helped the issue get oversubscribed 1.4 times yesterday, can continue to subscribe. Institutional investors put in bids worth nearly Rs 7,800 crore yesterday at the floor price of Rs 168 a piece. Retail investors will get shares at a 5 percent discount over the floor price. The government is selling over 41.22 crore shares (representing 5 percent of paid-up equity) through the two-day offer for sale issue, with an option to retain a similar portion in case of over-subscription. The stake sale in NTPC is a part of divestment programme announced by the government in the Union Budget FY18. The government has so far in FY18 raised over Rs 8,800 crore through disinvestment in six companies. It is targeted to raise Rs 72,500 crore in 2017-18 through stake sale in PSUs, which includes Rs 46,500 crore from minority stake sale, Rs 15,000 crore from strategic disinvestment and Rs 11,000 crore from listing of PSU insurance companies.
Meanwhile, research house SMC expects the stock to see a price target of Rs 191 in 6-8 month time frame on a current P/E of 13.85x and FY18 expected EPS of 13.77. The company is the most preferred power company and rationalisation of movement of coal to reduce electricity costs, and rationalisation of coal grades based on gross calorific value for correct tariff fixation would give further lead to transformational changes in power sector, it reasoned. Moreover, NTPC had added 4,028 MW of renewable capacity, which highlights the accelerating speed of solar and wind capacity addition along with conventional capacity. Delay in capacity additions as against the guidance is the key concerning area in the company, according to the research house. But it is believed that the concerns are mostly priced in and now NTPC is better placed to address fuel supply concerns as it is getting into fuel supply agreement (FSA) with Coal India. The current installed capacity is 41,684 MW with the commissioning of the Unit-VI of 500 MW of Rihand Super Thermal Power Project on October 7, 2013. With this the total installed capacity of Rihand Super Thermal Power Project has become 3000 MW (6x500MW) and the company plans to become 128,000 MW plus company by 2032, SMC said.