Reduce NTPC, target of Rs 180: Prabhudas Lilladher

Prabhudas Lilladher has recommended a reduce rating on NTPC with a target price of Rs 180 in its March 17, 2009 research report. "On account of limited capacity addition in the startup years of the 11th Five Year Plan, we expect flat growth in revenues (CAGR of 8% FY08-FY11E) and PAT (CAGR of 6% FY08-FY11E) growth. We believe that the new tighter CERC norms will reduce NTPCs incentive earning capacity and thus, will further reduce the RoEs on core investments (13.8% in FY10E)." "We value NTPC on a Two-Stage model, where the explicit growth is discounted to equity (DCFE) for FY10E-FY14E (COE 12%), and the long-term growth (beyond FY14E) is valued on implied Price/Book value basis. Thus, we initiate coverage on NTPC with a Reduce rating, target price of Rs 180," says Prabhudas Lilladher's research report. Source: Moneycontrol