NTPC

POSTED BY Ajinkya Darshane ON April 1, 2012 7:36 pm COMMENTS (9)

finally folks! I m posting why i want to invest in NTCP, as i am a newbie i will participate less in this discussion and love to hear ur opinions

1. good dividend paying history

2. revenue – avg growth rate 10+ %

3. net cash flow has increasing pattern

4.gross margins – approx 20% +

5. operating margins – sustainable about 30 %

6. India has always been a power-deficient country and considering the ever increasing demand for power in India, huge capacity additions are required in this sector. NTPC has set a target to become a 1,28,000 MW company by year 2032. Keeping this target in mind, the Company has embarked on plans to have 75,000 MW of generation capacity by 2017. As of now, 14,088 MW of generation capacity is under construction via different projects which are under various stages of completion.

7.NTPC primarily sells power to State Electricity Boards (SEBs) whose financial health has been bad over the years. Hence there is a risk for NTPC of its bills not getting realized. However, NTPC has been able to realize 100% of its billing to customers continuously for the past 8 years thus indicating that it has efficient collection mechanisms in place. This has been possible as NTPC has entered in to a tripartite agreement with state distribution companies and RBI until 2016 which helps NTPC in full realization of its billing.

8.Coal is an important raw material for NTPC as currently 80% of its power generation capacity is coal based and in future also, a considerable portion of generation capacity is going to be coal-based. NTPC has entered in to a Long Term Supply Agreement with Coal India Limited for supply of coal for a period of 20 years. Hence, NTPC’s projects carry negligible fuel supply risks.

9 replies on this article “NTPC”

  1. Ajinkya Darshane says:

    @TheZionView

    yup…i will list the negative ones as well…

  2. TheZionView says:

    the points you show suggest mostly has positives and i might add that you should try really hard and find the flip side of the business and other negatives …cos that will give you exact picture

    @rmohan
    there is nothing wrong in discussion and getting other perspective even if you are convinced ,,,they might look at it the way you never seen.

  3. Ajinkya Darshane says:

    @rmohan – ya, i will try posting it in that forum

    @ashal – no its not my personal research, i m searching for anything related to NTPC since last 5 months, so anything useful i get on net, i paste it on drafts, from that i have taken some important points and shared it here, the analysis is done 1 yr back, thats true…
    as i have mentioned i m a newbie so i still dont know how to get access to various info which fundamental analysis needs…

    1. Dear Ajinkya, There is nothing wrong in collecting info from every where but at the end of the day, you should not take a biased decision. All this I can say to you.

      Thanks

      Ashal

  4. somasekhar says:

    You can go for Power Grid Corporation. NTPC has never given profits to investors.

  5. somasekhar says:

    Stay away from Govt Interference stocks…….

  6. rmohan80@gmail.com says:

    Hi Ajinkya,

    If you’re convinced, then why are you waiting for somebody to validate your opinion? From my limited knowledge of dealing with shares, when it comes to shares as such, every person/expert has his/her own opinion

    A forum like this may be better geared to providing mutual funds and other investment details. Traderji.com is a good forum where there are experienced folks who can give you detailed technical analysis of this stock if you want

    Thanks,

    Ram

  7. Dear Ajinkya, is it your own research or you copy pasted from else where? The reason I’m asking –

    Quote –

    11. Under the Government’s “Power for all by 2012” plan, it has targeted per capita consumption of 1000 kWh by the end of the 11th Five Year Plan (2007-2012) as compared to levels of 734 kWh in 2008-09. With just a year left,

    Unquote –

    These wordings indicate that this research report is at least 1 Y old.

    Thanks

    Ashal

  8. Ajinkya Darshane says:

    9. NTPC has tied up 1,00,000 MW under long term Power Purchase Agreements thus ensuring market for the power it generates in the coming years.

    10. NTPC’s comfortable funding position is its biggest strength even as private players struggle for financial closure. The Company has a comfortable cash balance of around Rs. 16,000 Cr. and SEB bonds worth Rs. 8170 Cr. which should help the company to meet its capacity expansion plans.

    11. Under the Government’s “Power for all by 2012” plan, it has targeted per capita consumption of 1000 kWh by the end of the 11th Five Year Plan (2007-2012) as compared to levels of 734 kWh in 2008-09. With just a year left, it seems highly unlikely that this target will be achieved The target now set for the 12th Five Year Plan is to add 1,00,000 MW of generation capacity. This shows that huge capacity additions are required at good efficiency rates, indicating that the opportunities available in this sector are huge. NTPC being a state-owned company has huge opportunities as it plays a crucial role in the Government’s plans regarding the power sector.

    risks and concerns –

    1.Power Sector is a highly capital-intensive industry with long gestation periods, before the commencement of revenue generation. Since most of projects have a long time frame (4-5 years of construction period and operating period of over 25 years), the uncertainties and risks involved are high. Delay in commissioning of projects is also a concern as it leads to delay in inflow of revenues.

    2.NTPC being the most important power company in the country, was allotted coal blocks a few years back so as to assure adequate coal supply for the Company. However, recently the Government cancelled allocation of 5 out of the 7 coal blocks NTPC was earlier allotted. The blocks were de-allocated because of slow progress on the development of these blocks by NTPC. Further the Government has warned NTPC of de-allocating the remaining 2 blocks if work on these blocks is not given due attention. This de-allocation comes as a big concern for the Company as NTPC had plans of procuring 47mt of coal by 2017 from these blocks. The cancellation won’t affect NTPC in the short term, however in the long term this disruption in coal supply will have an adverse impact on the Company.

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