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NTPC share price falls over 6% post Q2 earnings

NTPC share price falls over 6% post Q2 earnings

Earlier, the NTPC stock opened with a gain of 3.19% to hit an intraday high of Rs 92.1. However, NTPC shares erased early gains and fell 6.72% to intraday low of Rs 83.25 as against the last closing of Rs 89.25  on BSE

The initial rise in share value was backed by the board's announcement of Rs 2,275 crore buyback plan The initial rise in share value was backed by the board's announcement of Rs 2,275 crore buyback plan

Shares of electricity generator NTPC were trading 6% lower on Tuesday's after the company reported its July- Sept quarter earnings.

NTPC stock has fallen after 2 days of consecutive gain.

Earlier, the NTPC stock opened with a gain of 3.19% to hit an intraday high of Rs 92.1. However, NTPC shares erased early gains and fell 6.72% to intraday low of Rs 83.25 as against the last closing of Rs 89.25  on BSE.

The initial rise in share value was backed by the board's announcement of Rs 2,275 crore buyback plan.

The company reported 7.43% year-on-year (YoY) growth in net profit at Rs 3,504 crore for the quarter ended September on account of exceptional gains of Rs 560.43 crore.

Following the update, NTPC share price touched an intraday high of Rs 88.3 on BSE, rising 4.25% against the last close of Rs 84.70. The stock price of NTPC also touched an intraday low of Rs 85.30, after opening at Rs 86.20. NTPC stock has risen 5.57% in the last 2 days.

NTPC shares trade higher than 20-day moving averages but lower than 5, 50, 100 and 200-day moving averages. Market capitalisation of the firm stood at Rs 84,994 crore as of today's session.

The company's revenue from operations rose 8.40%  to Rs 24,677.14 crore.

NTPC said it received the board's approval for a share buyback. The board of directors approved the buyback of up to 197.8 million equity shares for Rs 2,275.74 crore. The company has fixed November 13 as the record date for the purpose of ascertaining the eligibility of shareholders for buyback of equity shares.

NTPC's 2Q FY21 outlook

JM Financial Institutional Securities said in its note,"Having overcome past dampeners (FY18-19) of low coal supply/PAF-led fixed-cost under-recoveries, NTPC currently enjoys high coal stocks (18 days) with high plant PAFs (92%). At the current run rate of 17-18% core RoE and 12-15% annual growth in regulated equity (5-6GW annual Capex), we believe NTPC can deliver 13-14% EPS CAGR over FY20-22 while the stock trades at 0.67x BV and 5.4x P/E on an FY22 basis. Considering the strong 1HFY21 performance, we have upgraded our FY21/22 earnings by 11.8%/3.5% respectively. We reiterate BUY with a revised TP to INR 143 (vs 160 earlier) factoring bear case terminal growth of 2% vs 5% earlier. Key Risk: Delays in Capex and prolonged stretch in receivables."

The brokerage added,"  We continue to prefer regulated entities such as NTPC, NHPC, GIPCL and PGCIL due to their attractive valuations and risk-averse regulatory business model. The business model of these entities remains intact during the lockdown period as the tariff structure was maintained by the government and the RoE will continue to be determined on the basis of availability."

Yash Gupta Equity Research Associate, Angel Broking said," NTPC Ltd consolidated revenue from operations for Q2FY21 stood at Rs 707 crores up by 7.8% YoY from Rs 25,708 crores in Q1FY21. Revenue from generation business has increased by 8.6% from Rs 25178 in Q2FY20 to Rs 27343 crores in Q2FY21. Profit before tax for the quarter stood at Rs 3729 crore down by 9.3% as compared to Rs 4112 Crore in Q1FY20, due to Central electricity regulation commission has directed that late payment surcharges shall apply at a reduced rate of 12% instead of normal rate of 18%. Profit after tax for the quarter stood at Rs 3088 Crore up by 7.8% as compared to Rs 2865 Crore in Q1FY20.While the company posted a good set of numbers for the quarter. Company has fixed 13th November, 2020 as the record date for the purpose of ascertaining the eligibility of shareholders for Buyback of equity shares."  

Motilal Oswal also maintained buy, with DCF-based target price of Rs 140/share  and siad it expects the company to drive regulated equity CAGR of 11% over FY20-23E and boost RoE.

"Receivables, though, would remain the key monitorable and it expect the situation to improve as power demand recovers and money from the PFC-REC scheme flows through. The stock trades attractively at FY22E P/BV of 0.7x and dividend yield of ~8%," it added.

Research house CLSA maintained buy rating with a target at Rs 140. CLSA said," The visible signs of a rebound & ESG focus gets sharper. Q2 saw 18% growth in regulated equity & 23% YoY core PAT growth."

NTPC shares closed 3.75% lower at Rs 85.90 apeice on BSE.

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