Subscribe to NTPC FPO: Reliance Money

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Subscribe to NTPC FPO: Reliance Money

Reliance Money has come out with a research report on NTPC's follow-on public offering (FPO). The research firm has recommended investors to subscribe to the issue.

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Reliance Money has come out with a research report on NTPC 's follow-on public offering (FPO). The research firm has recommended investors to subscribe to the issue.

The FPO of India's largest power generation company NTPC has opened for subscription. The floor price for the FPO of 412,273,220 equity shares of Rs 10 each is at Rs 201/share and the issue will close on February 5, 2010.

Reliance Money report on NTPC FPO -

During FY09, NTPC recorded a topline growth of 14.6% y-o-y to Rs 443 billion depicting an impressive performance with an installed capacity of 30644MW. Over the period FY06-09, NTPC's topline has grown at 17% CAGR, showcasing its robust financials in the power deficit scenario, followed by maintaining steady operating margins at about 28% and net profits growing at 7% CAGR. Moreover, strong cash balance (Rs 173 billion) and investment (Rs 138 billion) strengthens the balance sheet providing enough scope for further capacity addition which is a critical growth factor for power generation companies.

At the floor price of Rs 201, NTPC is priced at 2.6x of price to book value. Post dilution the ROE stands at 12.3%, better than its listed peers. Nevertheless, in view of its impressive track record, merchant power capacity addition and prolific avenues of nuclear power generation augers well for the company going ahead, hence we recommend investors to subscribe to the issue.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment