NTPC Share Price Rises After 3-Fold Jump in Q4 Profit; Brokerages Expect up to 29% Upside
The stock trades attractively at FY22E P/BV of 0.8x and dividend yield of 6 percent. We maintain buy, with DCF-based target of Rs 145 per share, Motilal Oswal said.
NTPC share price gained over 2 percent in the morning session on June 21, after the company declared its March quarter results on June 19.
The state-owned power giant on June 19 posted nearly three-fold jump in consolidated net profit to Rs 4,649.49 crore for March quarter 2020-21 on the back of higher revenues. The consolidated net profit of the company in the year-ago period was Rs 1,629.86 crore, a BSE filing said.
Total income in the quarter under review rose to Rs 31,687.24 crore from Rs 31,330.25 crore in the same period of 2019-20.
Net profit in last financial year was Rs 14,969.40 crore compared to Rs 11,191.98 crore in 2019-20. Total income in 2020-21 was Rs 1,15,546.83 crore, up from Rs 1,12,372.58 crore in the previous year.
The company’s board has recommended a final dividend of Rs 3.15 per equity share for 2020-21. This is in addition to the interim dividend of Rs 3 per equity share paid in February 2021.
The board has also approved enhancement of borrowing limit of the company from Rs 2,00,000 crore to Rs 2,25,000 crore.
The stock was trading at Rs 116.30, up Rs 2.75, or 2.42 percent at 09:40 hours. It has touched an intraday high of Rs 116.60 and an intraday low of Rs 113.
Global research firm Credit Suisse has an outperform call on the stock and has raised target to Rs 135 per share. It is of the view that high renewable expectations have several challenges adding that regulated return cut is a sizeable risk and is coming closer. It has revised earnings higher ny 1/3 percent, according to a CNBC-TV18 report.
CLSA also has a buy rating with target at Rs 150 per share. The company ended FY21 on a good note with Q4 profit up 13 percent YoY and has emerged as a leader in solar bids with market share of 43 percent, it said.
“NTPC has three GW solar capacity target by FY22, 14 GW by FY24 and 60 GW by FY32. The company’s cashflow from operations improved 25 percent as its receivables declined 12 percent YoY and has doubled its dividend despite a buyback, the brokerage firm added.
According to domestic research and broking firm Motilal Oswal, NTPC has increased its longer term RE capacity target to 60GW by 2032 (earlier: 32GW).
While this seems ambitious, implying 5–5.5GW p.a. of RE additions over the next 11 years, the company has taken steps to improve its renewables footprint. It has emerged as the lowest bidder for 1.4 GW of competitively bid out renewable projects and has ~3GW of renewable capacities under construction, it said.
“Even as the company gradually scales up on its renewables journey, we expect continued capitalization for its thermal projects to drive 12 percent growth in regulated equity over FY21–23E and improve RoEs,” it added
“Receivables have significantly reduced as money from PFC–REC has come through and power demand continues to recover. The stock trades attractively at FY22E P/BV of 0.8x and dividend yield of 6 percent. We maintain buy, with DCF-based target of Rs 145 per share.