Anagram recommends buying NTPC on declines

MUMBAI: Anagram StockBroking has recommended ‘buying on decline’ in NTPC at around Rs 160. NTPC is India's largest and most efficient power producer with capacity of 27850 MW (excl JVs). Through joint ventures the company has emerged as an integrated power company undertaking EPC business, coal mining, equipment manufacturing etc which will ensure timely execution of projects and better PLF.

The company has targeted to add 22430 MW in eleventh plan out of which 1990 MW has already been added. By the end of 2012, 80 per cent of its capacity will be coal based, 16 per cent gas based and 4 per cent hydro.

Growth in topline comes with capacity addition as the company's have no pricing power as tariffs are capped (14% ROEs) but looking at the current deficit scenario and capital expenditure plans till 2011-12, the company will grow at 15 per cent CAGR over four years.

As super critical technology comes onstream, Anagram expects the company to generate revenues from sale of carbon credits. The stock trades at 21.5x its TTM EPS of Rs 8.2 and 2.7 times its book value.

During Apr-Jun 2008-09 quarter, the company formed joint venture with BHEL and Bharat Forge.

NTPC has been allocated seven coal blocks of which two are in joint venture with Coal India. The company intends to mine 12 mtpa by 2011-12.