Maintain ‘buy’ on NTPC and target price of R157 per share, valuing the stock at FY16f P/B of 1.4x. We maintain that NTPC would be able to achieve a 17%-plus operating Return on Regulated Equity (RoRE) under the new tariff regulations. At the current market price, the stock trades at FY16f 1.2x P/B and 12.7x P/E.
Indicative coal fired PLF/PAF for Q3FY15 is 81% and 93% Coal-fired PLF for nine months of FY15 was 78%. Notably, four out of 16 coal-fired projects aggregating 8.6 GW capacity operated at a PLF of less than 85%; electricity generation in excess of 85% PLF was 1277 MUs, implying incentive-linked income at R6130 crore. While a sequential uptick in coal-fired PAF/PLF for Q3FY15 is on expected lines, a 1.6% and 3.1% y-o-y decline in PLF and PAF for the quarter is a bit disappointing. Going forward, the PAF/PLF for Barh-II and Mauda would be worth monitoring.
As per latest available data from the Central Electricity Authority (CEA), the tentative monthly generation report for December 2014 – utilisation level (PLF) of NTPC’s overall wholly-owned capacity stood at 75.5% (down 50 bps m-o-m and 660 bps y-o-y). For December 2014, NTPC’s wholly-owned coal-fired PLF stood at 81.4%. Typically, NTPC witnessed a sequential pick-up in PLF in December. However, this time around, overall PLF remained flat.