Target: ₹188
CMP: ₹140.75
NTPC's coal unit PLF is back to the good old days, with the PLF standing above 80% in Q1FY23. This is the highest Q1 coal PLF since Q1FY17 and was driven by strong power demand in the country. Thermal units across the country have seen an uptick in PLF.
The role of thermal units continues to be vital now, with thermal generation accounting for 80 per cent of the incremental demand in Q1-FY23 compared with Q1FY22. RE/hydro met 18 per cent/3 per cent of the incremental demand in the quarter.
It is pertinent to note that while H2 of any fiscal year sees lower power demand, thermal generation is higher as hydro and RE generation is weak in that part of the year.
We maintain Buy on NTPC as the strong power demand should keep the utilisation of coal assets high in the medium term. This, along with growth in the RE space, bodes well for the company. After including DPS as part of the calculations, our SoTP value stands at ₹188/share (₹180 earlier). NTPC is trading at 0.94x FY24E PB with an RoE of about 12 per cent.